(1) THAT section 126AA of the Stamp Duties Consolidation Act 1999 (No. 31 of 1999) be amended in subsection (6) by substituting “170 per cent” for “59 per cent”.
(2) THAT paragraph (1) of this Resolution shall apply in relation to a statement to be delivered in accordance with section 126AA(2) of the Stamp Duties Consolidation Act 1999 for the year 2019 and each subsequent year.
(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).
Financial Resolution No. 3 amends section 126AA of the Stamp Duties Consolidation Act 1999, which imposes an annual levy on certain financial institutions for each of the years to 2021, inclusive, on the basis of the amount of deposit interest retention tax, DIRT, paid by them in a defined base year. Members will recall that in budget 2016 the Minister for Finance announced that he intended to extend the levy for a further five years to 2021. This would bring in an additional €750 million over the period of time. This was to be subject to a review of the methodology used for calculating the levy. The year 2015 was the base year for the levy in the years 2017 and 2018. Section 126AA provides that 2017 is the base year for the levy payable this year and for next year, 2020. This measure will increase the rate at which the levy is charged from 59% to 170% of the deposit interest retention tax collected by the relevant financial institution within that base year. The higher rate reflects the fall in interest rates, and hence DIRT, since 2011.
The new rate, combined with the 2017 base year, will preserve the existing contribution of €150 million paid by the affected financial institutions. In this regard, the financial resolution is being proposed tonight to ensure that the €150 million bank levy receipts due in under two weeks' time, on 20 October, are raised. This has been flagged already and will not come as a surprise to Members. The Minister for Finance announced his intention in May of this year.
I will now discuss Financial Resolution No. 4 which will increase the rates of stamp duty on non-residential property.
In doing so, I remind the House that Financial Resolution No. 4 provides for an increase in the rate of stamp duty applicable to non-residential property by 1.5%, with effect from midnight. It will, therefore, increase from 6% to 7.5%. The commercial property market continues to perform strongly, and it is expected that this increase can be borne by the sector without any real or significant impact. Based on Revenue's ready reckoner, it is estimated that this will generate an additional €141 million in a full year, assuming no behavioural changes. The measure provides for transitional arrangements whereby the existing 6% rate will apply to instruments executed before 1 January 2020 where a binding contract existed prior to today. It also provides for the maintenance of the stamp duty rate of 2% currently applicable in respect of the refund scheme for land converted to residential use. As this is primarily a revenue-raising measure, and in order to ensure that it does not distort the level of activity for the remainder of the year, it has been made subject to this Financial Resolution.
Financial Resolution No. 5 amends Part 5 of the Stamp Duties Consolidation Act 1999 in respect of company acquisitions to provide that a stamp duty of 1% is applicable where a scheme of arrangement that involves a so-called cancellation scheme in accordance with Part 9 of the Companies Act 2014 is used for the acquisition of a company. The need for this measure arises due to it having been established that, in certain circumstances where a company is restructured in accordance with a scheme of arrangement under Chapter 1 of Part 9, no stamp duty currently applies. Under such an arrangement, the company being acquired cancels its existing shares and reissues new shares to the acquiring company. This is known as a cancellation scheme. Currently, no stamp duty is payable in such circumstances, as there is no transfer or conveyance on the sale of shares, which would give rise to stamp duty of 1% on acquisition. This measure is being made subject to this Financial Resolution in order to ensure that it has immediate effect. In doing so, it ensures that the maximum revenue is protected for the Exchequer.