Written Answers Nos 1-30
13. Deputy Michael McGrath asked the Minister for Finance if he is satisfied that there is an adequate and fair independent appeals mechanism in a bank (details supplied) in relation to a group; and if he will make a statement on the matter. [21454/18]
Amharc ar fhreagraIt is a matter for the Central Bank to oversee the operation of regulated financial service providers in Ireland. That said, I have contacted Ulster Bank about its complaints process in relation to Global Restructuring Group.
Ulster Bank have confirmed that following on from the UK Financial Conduct Authority’s (FCA) appointment of a Skilled Person to undertake a review, Royal Bank of Scotland in an agreement with the FCA, announced two measures in November 2016:
- a Global Restructuring Group complaints process, overseen by an Independent Third Party - Sir William Blackburne, a retired UK High Court Judge, and
- a voluntary automatic refund of complex fees paid by customers in Global Restructuring Group during the period between 2008 and 2013
Ulster Bank advised that they have identified all of their customers who are eligible for a refund of the complex fees which were paid to the Bank and have either processed their refund or contacted the customers for further information to facilitate the refund payment.
Ulster Bank have been addressing the complaints received from their customers and these are now being assessed through Ulster Banks Global Restructuring Group complaints process. If any of these customers are unhappy with the bank’s decision, they will have the opportunity to refer their complaint to the Independent Third Party.
Ulster Bank have a specific listing of Global Restructuring Group Frequently Asked Questions which will help customers to understand if they are in scope for the Global Restructuring Group complaints process, means by which they can make a complaint, and how these complaints will be handled under Consumer Protection Codes and SME Regulations.
Ulster Bank Ireland DAC has voluntarily fully participated in this process.
14. Deputy Eamon Scanlon asked the Minister for Finance if an increase to the payment of country money (details supplied) in line with the consumer price index will be examined; when the working group on construction is due to meet; if representatives from his Department will attend and examine the issue at a meeting of the group; and if he will make a statement on the matter. [21236/18]
Amharc ar fhreagraThe exact rate of travel time allowances, or ‘country money’, paid in the construction sector is an issue to be dealt with in the normal course of industrial relations, either at a company level between employers and unions, or through the usual industrial relations mechanisms available. Indeed, in 2017, the Labour Court chose not to recommend the inclusion of a travel time allowance in the Sectoral Employment Order relating to the construction sector.
A healthy, sustainable, competitive and well-functioning construction industry that offers good quality long-term employment and construction output is essential to the achievement of the goals of the National Development Plan. In order to help facilitate the development of such an industry, the establishment of a construction sector group was announced as part of the National Development Plan.
The group will ensure regular and open dialogue between Government and the construction sector. The group is now in the process of being established with all details yet to be fully finalised, including its remit, membership and date of the first meeting. I expect the Group will facilitate an exchange of views and an engagement between the various parties on how the industry can grow in a sustainable manner and play a crucial role in achieving the priorities as set out in the National Development Plan.
15. Deputy Maureen O'Sullivan asked the Minister for Finance further to Parliamentary Question No. 110 of 27 March 2018, the premises the Revenue Commissioners inspected; the findings and outcome regarding breeders that fall outside the scope of the Dog Breeding Establishments Act 2011; and the relevant tax paid. [21438/18]
Amharc ar fhreagraSection 9 of the Dog Breeding Establishments Act 2010 provides that each local authority must maintain a register of dog breeding establishments located in its area of responsibility. The Act also places an obligation on any person seeking to operate a dog breeding establishment to have the premises included on the register. The commencement order for the Dog Breeding Establishments Act 2010 was signed by the Minister for the Environment, Community and Local Government on 21 December 2011 and the Act came into force on 1 January 2012. Local Authorities are responsible for the implementation of the Act. As previously advised to the Deputy, Revenue does not have any role to play under the Dog Breeding Establishments Act and is not involved in inspecting relevant establishments to ensure compliance with the legislation.
As regards taxation, the profits of any dog breeding business are liable to tax irrespective of whether it is included on a register of dog breeding establishments or not. The Deputy will be aware from my reply to Parliamentary Question No. 110 of 27 March 2018 that Revenue examined a number of dog breeding establishments as part of its 2017 compliance programme. Revenue has confirmed that most of the businesses involved were found to be tax compliant, with enquiries still ongoing in a small number of cases. However, taxpayer confidentiality provisions contained in section 851A of the Taxes Consolidation Act 1997 precludes Revenue from providing any further information in regard to the cases examined or providing any information that could identify them. The section formalises taxpayer confidentiality and specifically prohibits unauthorised disclosure of taxpayer information.
In addition to administering the tax and duties system, Revenue enforces a range of restrictions and product safety regimes on behalf of other State Agencies at the point of import and export. One such example is the work Revenue does with bodies like the Dublin Society for Prevention of Cruelty to Animals (DSPCA) and it has achieved some notable successes as part of this joint working initiative. Revenue collaborated closely with DSPCA and other agencies in Operation Delphin, to disrupt the illegal cross-border trade in pups. During 2017, Revenue took custody of 33 pups being transported without pet passports and not microchipped, as required under the Animal Health and Welfare Act, 2013. All were passed to the DSPCA to be cared for.
On 8 May 2018, Revenue officers at Dublin Port took custody of four dogs, including three pups, when they stopped and questioned a UK national, in routine operations. The man was travelling to the UK, and did not have pet passports for the dogs, nor were the pups microchipped as required under the Animal Health and Welfare Act 2013. The dogs were transferred into the care of the DSPCA, where they are receiving veterinary attention.
16. Deputy Joan Burton asked the Minister for Finance if he will report on his attendance at the ECOFIN meeting on 28 April 2018; and if he will make a statement on the matter. [21287/18]
Amharc ar fhreagraThe meeting I attended on 28 April 2018 was the scheduled Informal Meeting of Economic and Finance Ministers held under the auspices of the Bulgarian Presidency in Sofia. These meetings occur twice a year - held in the country of the rotating Presidency. They are designed to allow participants to come together to discuss items of topical or potential interest in a less formal atmosphere with a view to possible orientation for future work.
I was accompanied to the event by the Governor of the Central Bank of Ireland who attended the Friday Working Sessions.
I also availed of the opportunity to have bilateral exchanges with colleagues.
On the first day there were separate lunches for the Ministers and Central Bank Governors.
At the Ministerial lunch we addressed the topic of Deepening of EMU with a particular focus on the Roadmap on completing Banking Union in view of the pending June European Council and Euro Area Summit. The Eurogroup President updated Ministers on current work on the reform of the European Stability Mechanism - also to feature at the June European Council/Euro Area Summit. He also took the opportunity to inform Ministers of matters discussed that morning at the Eurogroup meeting.
The first Working Session covered the topic of Convergence in the EU – Inside and outside the Euro Area and was supplemented by a paper prepared by the Centre for European Policy Studies. As part of that session we also addressed the issue of Further reducing fragmentation within the Capital Markets Union - this time assisted by a contribution from Bruegel - a Brussels based "think-tank". Under a Miscellaneous Item a debrief of the 19-20 March meeting of G20 Ministers and Central Bank Governors meeting in Buenos Aires was provided by the Presidency.
The second day's sessions were dominated by discussions on tax matters where Ministers addressed the topics of Towards a common agenda for modern tax administrations: Improving revenue collection and fighting tax fraud in the single market and A renewed approach for the corporate taxation in the Single Market and tax challenges of the digitalisation of the economy.
17. Deputy Joan Burton asked the Minister for Finance his plans in respect of reforming the capacity of bailed out banks to offset their historic losses against tax bills; and if he will make a statement on the matter. [21289/18]
Amharc ar fhreagraCorporation Tax Loss Relief is provided for by Section 396 of the Taxes Consolidation Act (TCA) 1997. It allows for losses incurred in the course of business to be accounted for when calculating a business’ tax liabilities. Loss relief for corporation tax is a long standing feature of the Irish Corporate Tax system and is a standard feature of Corporation Tax systems in all OECD countries.
Section 396C of the TCA 1997 previously restricted losses for NAMA participating institutions to offset losses against 50% of taxable profits in a given year. At the time of its introduction the Government had limited involvement in the banking system. However, by Finance Bill 2013, this measure was considered to have outlasted its initial purpose as, due to the substantial holdings that the State had by that time acquired in the banking sector (99.8% AIB and 15% of Bank of Ireland at the time), the restriction was deemed to be acting against the State’s interests.
Section 396C was repealed to reduce the State’s role as a ‘backstop’ provider of capital and to protect the existing value of the State’s equity and debt investments. With the removal of Section 396C, AIB and BOI were restored to the same position as other Irish corporates including other Irish banks which effectively levelled the playing field.
As I have previously stated, I do not intend to change how tax losses are currently taxed for Irish banks, including those that were bailed out by the State, as I believe there could be consequences that would make it difficult for me to fulfil other objectives in respect of the Irish banking system.
There would be a material negative impact on the valuation of the States investments from any change in tax treatment of accumulated losses where the banks are concerned. It is critically important to understand that the State is actually getting value today from these tax losses through our share sales.
Despite the scale of losses accumulated the banks are contributing to the Exchequer through the financial institutions levy. To recognise the part that the banks played in the financial crisis, in 2013, the Government decided that the banking sector should make an annual contribution of approximately €150 million to the Exchequer for the period from 2014 to 2016. In Budget 2017, the payment of this levy was extended until 2021. It was anticipated that the bank levy could be expected to raise €750 million over five years.
At Committee Stage of Finance Act 2017, I agreed that my officials would produce a report on the effect of limiting tax reliefs on losses carried forward for banks, with the stipulation that the policy outlook I will adhere to is the maintenance of the bank levy. It is envisaged that this report will be submitted to the FinPer Committee in June 2018.
18. Deputy Jonathan O'Brien asked the Minister for Finance when the report on bankers' pay will be published; the person or body authorising same; if it will make recommendations on the future of the super tax on bonuses; and if he will make a statement on the matter. [21448/18]
Amharc ar fhreagraAs the Deputy is aware Government policy on banking remuneration has remained unchanged since the financial crisis. Extensive restrictions are in place, which, in summary, limit total remuneration for staff in AIB, Bank of Ireland and PTSB to €500,000 (excluding a standard pension contribution). Policy also dictates that bonuses and many other benefits cannot be paid to any staff. This policy impacts c. 23,000 workers across the three banks.
The Deputy will be further aware that I recently acknowledged that it is possible, in the future, that the context for bank pay could change; things are changing in the economy, Brexit is on the horizon and that will likely bring with it more intense competition for talent across the sector.
We are also likely to see more companies moving into Ireland, in the coming years, who will not be subject to the restrictions in the way that some of our banks are. With our economy almost back to full employment, the environment in which all of the companies who are based here operate has altered, and will continue to change. It is important that the right policies are in place to ensure a competitive but also a fair playing field.
For that reason, I have initiated a review of bank remuneration policy so that I can determine whether or not the bank pay policy that is in place is fit for purpose.
This will be done through the procurement of an external consultant to advise me on how policy in this area might best be developed in the future.
The review, I expect, will take most of the year to complete, and irrespective of what that outcome is, and what advice is given on the reintroduction of bonuses, the ‘super tax’, which sees 89% of bonuses being paid back to the State will remain in place. The power to alter that remains exclusively in the hands of the Oireachtas.
19. Deputy Thomas P. Broughan asked the Minister for Finance when the summer economic statement will be published; if the statement can be published in June 2018 to permit more effective pre-budget scrutiny by the Select Committee on Budgetary Oversight and other committees; and if he will make a statement on the matter. [21383/18]
Amharc ar fhreagraThe publication of the Summer Economic Statement (SES), forms a key part of the reformed budgetary process designed to complement the Stability Programme Update (SPU). Underpinned by the macroeconomic outlook set out in April as part of the SPU, the SES will broadly set out what the Government believes to be the appropriate fiscal policy for the year to come, taking into account Ireland’s stage in the economic cycle.
Whilst the economy is forecast to continue to grow strongly over the coming years, the SES will reflect the need to avoid any policy measures which could contribute to overheating in the economy. As a small open economy we are exposed to a number of external risks, particularly in relation to Brexit, changes in the international tax landscape and rising geopolitical tensions, all of which have the potential to destabilise our economy. The Government is cognisant of these risks and recognises the need to plan for the future and manage our resources in a prudent fashion. Given the uncertainty we face over the coming years we need to continue to focus on enhancing our competitiveness and building up resilience in our public finances.
The SES is designed to facilitate a discussion of the options available in advance of the Budget in October. The scrutiny provided by the Budget Oversight Committee and other Committees form an important role in these budgetary considerations and I look forward to engaging with the relevant Committees as part of this process.
I aim to publish the SES in the summer to allow sufficient time for these Committees to complete their work.
20. Deputy Willie Penrose asked the Minister for Finance if he will report on his meeting with Mr. Klaus Regling, Managing Director of the European Stability Mechanism on 8 May 2018; and if he will make a statement on the matter. [21376/18]
Amharc ar fhreagraI met with the Managing Director of the European Stability Mechanism (ESM), Klaus Regling, on Tuesday, 8 May 2018. We had a positive and constructive discussion on a number of issues including the Irish economy and the future of the Economic and Monetary Union, with a focus on the future role of the ESM.
Mr. Regling noted that Ireland’s economic recovery since the crisis is ‘remarkable’. I updated him on recent developments which highlight the robust recovery and strong performance of the economy. I also outlined some of the more pressing challenges that need to be monitored and managed carefully. We discussed Brexit and its potential impact on the Irish economy, the ongoing necessity for investment in infrastructure such as housing and transport, and the legacy issue of non-performing loans which continues to impact the banking sector.
In relation to Europe, we agreed on the need to continue to strengthen the economic and monetary union, and reviewed the possible development of the ESM in that context.
The creation of the ESM was one of the key euro area reforms after the crisis and it has proven itself to be a very effective and efficient institution. Four of the five countries that received loans from the ESM, or its predecessor, the European Financial Stability Facility, have now successfully ended their programmes, and have among the highest growth rates in the euro area. As part of the EU-IMF Programme of Financial Assistance, Ireland was also a beneficiary of the European Financial Stability Facility. Officials from the ESM therefore continue to visit Ireland on a twice-yearly basis, participating in Post-Programme surveillance reviews for the purpose of its Early Warning System. The ninth review is taking place this week.
Discussions on the future role and remit of the ESM include a review of the ESM lending toolkit and whether the ESM should play a greater role in programme design and monitoring in the future. The potential development of the role of the ESM of course requires careful consideration and deliberation and work is ongoing, at both technical and political level, in advance of the June European Council at which EU Heads of State of Government will reflect further on deepening the economic and monetary union.
21. Deputy Aindrias Moynihan asked the Minister for Finance his views on the policy of some insurance companies which refuse to insure vehicles that are over ten years old; his plans to address the issue; and if he will make a statement on the matter. [21386/18]
Amharc ar fhreagraI am aware of the concerns raised by the Deputy and have considerable sympathy for them.
However, neither the Minister for Finance, nor I, nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, neither the Minister nor I is in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of vehicles.
I understand that motor insurers use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. Factors include those such as the age of the vehicle, as well as the type of vehicle, the age of the driver, the relevant driving experience, the claims record, the number of drivers, and how the vehicle is used. Insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market. In addition, insurance companies will price in accordance with their own past claims experience, meaning that in relation to the age of a vehicle and the availability of cover, different insurance companies will use different age thresholds.
Notwithstanding the above, Departmental officials have continued to engage with Insurance Ireland in relation to the availability and cost of insurance for older cars, and have been informed that certain insurance providers have recently changed their acceptance criteria and increased their vehicle age threshold levels in this regard.
Finally, under the terms of the Declined Cases Agreement, the insurance market will not refuse to provide insurance to an individual seeking insurance if the person has approached at least three insurers and has not been able to obtain cover from them. In this regard, there are further details available on the Insurance Ireland website while the relevant e-mail address is: declined@insuranceireland.eu
22. Deputy Thomas P. Broughan asked the Minister for Finance the estimated size of the increased fiscal space available in 2019 based on the stability programme update April 2018; and if he will make a statement on the matter. [21382/18]
Amharc ar fhreagraSummer Economic Statement 2018 will update the figures on available parameters for Budget 2019 taking into consideration the publication of the European Commission's Spring Economic Forecast. These parameters will account for all policy changes introduced since Budget 2018.
The Stability Programme Update 2018 set out pre-committed expenditure of €2.6 billion for next year. This consisted of:
- €1.5 billion (National Development Plan related)
- €0.4 billion (to provide for demographic costs)
- €0.4 billion (to provide for the public sector pay agreement)
- €0.3 billion (to provide for carryover costs next year of measures that were introduced in the budget for this year).
This expenditure leads to a projected deficit of 0.1 per cent of GDP forecast for next year.
The resources available will become clearer within the next couple of weeks. However, any tax/expenditure package that goes beyond €2.6 billion will necessarily involve additional borrowing (i.e. the deficit would be greater than the 0.1 per cent that is currently projected)
Finally, as I have stated on numerous occasions, the Government will make policy based on what is right for the economy. At a time when we are approaching full employment, it is essential that Government budgetary policy does not repeat the pro-cyclical mistakes of the past and risk jeopardising the sustainability of our public finances and future living standards.
23. Deputy Michael Moynihan asked the Minister for Finance if he has met the CEOs of the Irish banks recently. [19095/18]
Amharc ar fhreagraAs the Deputy is aware I have regular meetings with the CEOs of the banks in which the State has a shareholding in addition to the other non Irish owned retail banks operating in the Irish market.
I met formally with the CEO of Bank of Ireland in March of this year and the CEO’s of AIB and PTSB last month during which a broad range of banking matters were discussed including the economic outlook, new lending in support of the economy, the tracker mortgage examination, progress in dealing with non-performing loans and initiatives in support of customers in difficulty.
I note that the banks in which the State has an investment continue to make good progress thanks to the continued improvement in the economy. All three banks are now generating profits and the rate of the regulatory capital build is encouraging as shown in their full year 2017 financial results. In the case of AIB and Bank of Ireland both recently released positive trading updates for Q1 2018 which highlight strong profitability, capital generation, continued loan book growth and further reductions in Non- Performing Exposures or NPEs. Ptsb released a trading update this morning which showed further progress in meeting its medium term objectives.
The ongoing Tracker Mortgage Examination is also a topic which I have discussed with the CEOs of each of the banks, and the most recent update from the Central Bank indicated significant progress has been made by each of the banks with 88% of impacted customers having been identified and received offers of redress and compensation with the remaining 12% expected to receive offers by end-June 2018.
I am also aware that other Ministers have met the CEOs of some of the banks recently including my colleague Michael Creed the Minister for Agriculture who discussed the impact of the prolonged winter on some individual farmers cash flow as well as the shortage of fodder in the sector.
24. Deputy Jonathan O'Brien asked the Minister for Finance the way in which he will ensure Ireland receives a fair return on its EU contribution in the coming years; and if he will make a statement on the matter. [21449/18]
Amharc ar fhreagraAs the Deputy will be aware, the European Commission’s proposal for the Multiannual Financial Framework (MFF) 2021-2027 was published on 2 May 2018. I welcome publication of the proposals which marks the start of an important debate on the future of the EU Budget.
The proposals come at a time of great change and adjustment for the EU; with new priorities (migration, security, climate change etc) and the departure of UK, the EU Budget needs to remain relevant.
As the Deputy will also be aware, with Ireland’s growing prosperity we have moved from being a net beneficiary to a net contributor to the EU budget. As such, it is important that the next MFF be an appropriately sized spending plan for the EU27 in a post-Brexit era, and that it will be capable of meeting EU 27 priorities. Negotiations on those priorities and how they should be funded will be complex.
It will be important that traditional policies – with demonstrated value – continue to be properly supported in addition to the newer priorities. The Common Agricultural Policy (CAP) remains a priority for Ireland. Cohesion also remains important, especially for less developed Member States.
We welcome the continued emphasis in the Commission's proposals on other policies which function well: Erasmus+, the Framework Programme for Research and Innovation, PEACE and Interreg programmes and the EU’s global instruments.
The Commission's proposals are detailed and will require careful examination over the coming period, particularly as further details emerge. All relevant Government Departments will examine the full package carefully to understand the overall implications for Ireland.
An Inter-Departmental group has been established which includes relevant Departments, chaired by my Department, with a lead role from the Department of Foreign Affairs and Trade. This group will feed into consideration at senior official level and at Cabinet level to develop an appropriate approach for Ireland to take in the MFF negotiations. Ireland will also engage constructively with European partners on these proposals. These arrangements will be kept under review as the pace of negotiations intensifies.
25. Deputy Niamh Smyth asked the Minister for Finance his plans to deal with the rising cost of motor insurance; and if he will make a statement on the matter. [21168/18]
Amharc ar fhreagraThe Deputy should note that the Minister for Finance is responsible for the development of the legal framework governing financial regulation. Neither he, nor I, nor the Central Bank can interfere in the pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on the risks they are willing to accept.
However, it is acknowledged that pricing in the motor insurance sector has been subject to a lot of volatility in recent years and, indeed, the problem of rising motor insurance premiums was the main impetus for the establishment of the Cost of Insurance Working Group. Its Report on the Cost of Motor Insurance was published in January 2017. The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out within an Action Plan.
Work is ongoing on the implementation of the recommendations by the relevant Government Departments and Agencies and there is a commitment within the Report that the Working Group will prepare quarterly updates on its progress. The fifth such update was published on 11 May and shows that of the 50 separate deadlines set to date within the Action Plan, 40 have been met. Substantial work has also been undertaken in respect of the nine action points categorised as “ongoing”.
It should be noted that the most recent CSO data (for April 2018) indicates that private motor insurance premiums have decreased by 19% since peaking in July 2016. While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore I appreciate many people may still be seeing increases. However, I am hopeful that the improved stability in pricing will be maintained and that premiums should continue to fall from the very high levels of mid-2016.
Finally, I would recommend drivers who are seeking or renewing insurance to consult the Competition and Consumer Protection Commission website, which has an informative section regarding the purchase of car insurance generally. One of the key tips listed to help cut costs is to “shop around” and “always get quotes from several insurance providers when you need to get or renew insurance”.
26. Deputy Richard Boyd Barrett asked the Minister for Finance the number of SPVs registered here in each of the past three years; the amount of tax paid by these companies; the amount of tax foregone due to particular tax breaks for SPVs; and if he will make a statement on the matter. [21489/18]
Amharc ar fhreagraIt is assumed that by SPVs the Deputy is referring to companies who have submitted notifications to Revenue that there are qualifying companies for the purposes of section 110 of the Taxes Consolidation Act 1997 (TCA) (known as “section 110” companies). Section 110 sets out a regime for the taxation of special purpose companies set up to securitise assets.
Securitisation is the process by which finance is raised in capital markets based on the intrinsic credit strength of assets or other sources of cash flow, independent of the creditworthiness of the original owner of the assets. Securitisation is an integral part of the global financial services industry. Its importance has been recognised by the European Commission through their work on Capital Markets Union, of which one of the aims is to seek to build a sustainable securitisation regime across the European Union.
I am informed by Revenue that the number of notifications received by Revenue from companies that are “qualifying companies” for the purposes of section 110 of the TCA since 1 January 2015 is as follows:
|
Year |
Number of Notifications Received |
|
2015 |
423 |
|
2016 |
477 |
|
2017 |
759 |
|
Year to 30 April 2018 |
171 |
|
Total |
1,830 |
The amount of tax paid by section 110 companies in each of the years 2015 to 2017 is as follows:
|
2015 |
2016 |
2017 |
|
|
€m |
€m |
€m |
|
|
Corporation Tax |
65 |
199 |
128 |
|
Value Added Tax |
16.4 |
11.2 |
14.8 |
|
Payroll taxes |
1.4 |
3.4 |
2.3 |
It is not possible to calculate the amount of tax that would have been payable by such companies had the section 110 regime not existed as the information necessary to determine this is not required to be returned to Revenue.
27. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he directly or through the aegis of the Central Bank has prepared plans to ensure that unregulated third parties acting on behalf of lenders are obliged to comply with regulations that take into account the efforts of borrowers (details supplied); and if he will make a statement on the matter. [21450/18]
Amharc ar fhreagraThe Deputy has referred to unregulated third parties acting on behalf of lenders and possible plans to ensure that such third parties are obliged to comply with regulations including Codes of Conduct.
Government policy has been that the sale of a loan book should not result in a loss of protections for borrowers. The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 restored protections to borrowers by making credit servicing a regulated activity and requiring firms which undertook credit servicing to be authorised by the Central Bank. Under the Act, purchasers of these loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank.
The Act also prevented loan owners giving instructions to credit servicing firms which would be prohibited if the owner was regulated and also prohibited the credit servicing firm from implementing such instructions. Therefore, it is not possible for unregulated entities to act on behalf of lenders.
Regulated credit servicing firms and other regulated entities must comply with all relevant requirements of financial services legislation, including the regulatory requirements set out in the Central Bank’s statutory Codes of Conduct and Regulations. These requirements include the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013.
I should also say that a customer who has a complaint against a regulated financial service provider which is not resolved by the provider’s internal complaints mechanism may make a complaint to the independent Financial Services and Pensions Ombudsman.
The Deputy may also be aware of a recent Private Member’s Bill which would require the regulation of loan owners. The Government supports the intent behind the Bill and has committed to assisting the Deputy in improving the Bill to make it more effective.
28. Deputy Richard Boyd Barrett asked the Minister for Finance if all information with regard to tax foregone by REITs since their establishment will be provided; and if he will make a statement on the matter. [21492/18]
Amharc ar fhreagraReal Estate Investment Trusts (REITs) are collective investment vehicles designed to hold rental investment properties in a tax neutral manner. They are focused on long-term holding of income-producing property as opposed to short term speculative gains.
The function of the REIT framework is not to provide an overall tax exemption, but rather to facilitate collective investment in rental property by providing the same after-tax returns to investors as direct investment in rental property and removing a double layer of taxation at corporate and shareholder level which would otherwise apply.
In general, trading profits of Irish companies are subject to Corporation Tax (CT) at the rate of 12.5% and rental profits are subject to CT at 25%. In contrast, rental profits arising in a REIT are exempt from CT, provided the REIT distributes at least 85% of its property income each year, for taxation at the level of the investor. While most property disposals by a REIT will not give rise to Capital Gains Tax (CGT), where a REIT disposes of a newly developed property within 3 years of completion of the development, CGT will arise. Other profits earned by the REIT are subject to CT in the normal way.
Dividend Withholding Tax (DWT) at 20% is levied upon distributions by a REIT. An Irish resident individual can claim a credit for this DWT against his or her income tax liabilities while a non-resident investor may be able to claim a full or partial refund of DWT under a double tax agreement. Pension schemes, life assurance companies, charities or NAMA may receive distribution gross subject to the completion of valid declaration.
As such, the estimated cost attached to the REIT relates not to an exemption from tax, but rather to the move from direct taxation of rental income to the taxation of dividends distributed from REIT profits arising from that rental income. The extent of any net tax cost of the REIT exemptions will therefore be the difference between the tax which would have arisen on the property income in non-REIT ownership, and the tax charged on the dividends paid out of that property income by the REIT to their investors.
Any potential loss of tax relating to foreign investors is due to the difference between how company dividends are taxed in the hands of foreign investors compared to how profits from direct ownership of property are taxed. Ireland, in line with most countries, retains the right to tax profits arising from land and buildings in the State, regardless of where the owner is located. In contrast, taxing rights for dividends are usually divided between countries, based on tax treaty agreements. In general, Ireland allows for dividends of Irish companies to be paid to shareholders resident in treaty partner countries without any liability to Irish tax. This is because tax should already have been paid on the company's profits in Ireland the dividends are paid out of the after-tax profits of the company and the dividends received will form part of the shareholder's income for tax purposes in their country of residence.
In the absence of any other provisions, foreign REIT shareholders would not have had any liability to Irish tax on REIT dividends, despite the fact that the REIT itself benefits from a tax exemption on qualifying profits of the rental business. In order to ensure that tax from foreign investors is retained, a Dividend Withholding Tax (DWT) at the standard rate of tax (currently 20%) was legislated for to specifically apply to REIT dividends. Foreign investors from treaty resident countries may be able to reclaim some part of this DWT if the relevant tax treaty allows for this. The taxation of dividends varies from treaty to treaty, but commonly a source State would retain the right to approximately 15% tax on dividends paid from that State.
I am informed by Revenue that their obligation to observe confidentiality for taxpayer information, and the small group of taxpayers involved, precludes them from providing more specific information.
29. Deputy Clare Daly asked the Minister for Finance the number of assessments conducted by the Revenue Commissioners investigating false self-employment; the number of investigations that found against the employer; and if he will make a statement on the matter. [21300/18]
Amharc ar fhreagraI am advised by Revenue that tackling shadow economy activity continues to be one of its key priorities.
As part of its compliance programme, Revenue works in co-operation with the Department of Employment Affairs and Social Protection (DEASP) and the Workplace Relations Commission (WRC) to pursue employers engaged in the misclassification of employees as self-employed individuals.
In 2017, Revenue identified 199 businesses that were not, but should have been, registered with Revenue for PAYE purposes and, following Revenue’s intervention, those businesses were registered for PAYE purposes. The figures for 2015 and 2016 were 112 businesses and 216 businesses respectively.
Also during 2017, Revenue identified 1,912 individuals who were not, but should have been, registered with Revenue as employees for PAYE purposes and, following Revenue’s intervention, they were correctly registered as employees for PAYE purposes. The figures for 2015 and 2016 were 1,364 individuals and 2,073 individuals respectively.
Finally, 485 individuals were reclassified from self-employment to employees. The figures for 2015 and 2016 were 365 individuals and 529 individuals respectively.
30. Deputy Pearse Doherty asked the Minister for Finance if he will amend the tax code in budget 2019 in order that the bailed out banks will commence paying corporation tax by introducing a 25% cap on losses that can be carried forward and a ten-year time limit in which losses must be used up. [21434/18]
Amharc ar fhreagraCorporation Tax Loss Relief is provided for by Section 396 of the Taxes Consolidation Act (TCA) 1997. It allows for losses incurred in the course of business to be accounted for when calculating a business’ tax liabilities. Loss relief for corporation tax is a long standing feature of the Irish Corporate Tax system and is a standard feature of Corporation Tax systems in all OECD countries.
Section 396C of the TCA 1997 previously restricted losses for NAMA participating institutions to offset losses against 50% of taxable profits in a given year. At the time of its introduction the Government had limited involvement in the banking system. However, by Finance Bill 2013, this measure was considered to have outlasted its initial purpose as, due to the substantial holdings that the State had by that time acquired in the banking sector (99.8% AIB and 15% of Bank of Ireland at the time), the restriction was deemed to be acting against the State’s interests.
Section 396C was repealed to reduce the State’s role as a ‘backstop’ provider of capital and to protect the existing value of the State’s equity and debt investments. With the removal of Section 396C, AIB and BOI were restored to the same position as other Irish corporates including other Irish banks which effectively levelled the playing field.
As I have previously stated, I do not intend to change how tax losses are currently taxed for Irish banks, including those that were bailed out by the State, as I believe there could be consequences that would make it difficult for me to fulfil other objectives in respect of the Irish banking system.
There would be a material negative impact on the valuation of the State's investments from any change in tax treatment of accumulated losses where the banks are concerned. It is critically important to understand that the State is actually getting value today from these tax losses through our share sales.
Despite the scale of losses accumulated, the banks are contributing to the Exchequer through the financial institutions levy. To recognise the part that the banks played in the financial crisis, in 2013, the Government decided that the banking sector should make an annual contribution of approximately €150 million to the Exchequer for the period from 2014 to 2016. In Budget 2017, the payment of this levy was extended until 2021. It was anticipated that the bank levy could be expected to raise €750 million over five years.
At Committee Stage of Finance Act 2017, I agreed that my officials would produce a report on the effect of limiting tax reliefs on losses carried forward for banks, with the stipulation that the policy outlook I will adhere to is the maintenance of the bank levy. It is envisaged that this report will be submitted to the FinPer Committee in June 2018.
