Dáil Éireann Debate, Tuesday - 26 June 2018
109. Deputy Pearse Doherty asked the Minister for Finance his plans to review section 135(3A) of the Taxes Consolidation Act 1997, as inserted by section 23 of the Finance Act 2017; if there is evidence that it has reduced tax avoidance; and if he will make a statement on the matter. [27498/18]
Amharc ar fhreagraSection 135(3A) of the Taxes Consolidation Act 1997 was introduced to counter a specific avoidance scheme identified by Revenue whereby taxpayers were seeking to extract profits from companies in a manner which avoided a charge to income tax. The scheme involved individuals avoiding a liability to income tax where the individual disposed of shares and arranged for the consideration for the disposal to be funded from the assets of the company. The measure introduced ensures that distribution treatment correctly applies to such transactions. The measure has no effect in relation to bona fide transactions entered into by SMEs.
Subsection (3A) came into effect in respect of arrangements entered into after 2 November 2017. Therefore, the first full year in which the provision has application is 2018. The relevant tax returns in respect of the year 2018 are not due to be filed until 2019. Accordingly, it is not yet possible to comment on the effect which the amendment has had in closing down the relevant avoidance scheme. I am informed by Revenue that they have engaged in extensive consultation with practitioners, as well as the Department of Business, Enterprise and Innovation and Enterprise Ireland in relation to the provision subsequent to its introduction. A detailed guidance note was also issued in relation to the provision in order to provide interpretative guidance on the measure which included practical worked examples in relation to the application of the new subsection.
