Dáil Éireann Debate, Tuesday - 16 October 2018
167. Deputy Brendan Howlin asked the Minister for Finance the amount of revenue paid in each of the past five years as a result of the CGT exit tax rate of 33%; the number of companies it applied to as previously provided for in sections 627 and 628 of the Taxes Consolidation Act 1997; the estimated revenue which would be raised if the new regime was applied at 33% rather than 12.5%; and if he will make a statement on the matter. [42272/18]
Amharc ar fhreagraAs part of Ireland’s commitment to implementing the Anti-Tax Avoidance Directive (ATAD), in Budget 2019 I announced the introduction of a new ATAD-compliant exit tax regime, with effect from Budget night. The ATAD exit tax regime will tax unrealised capital gains at a rate of 12.5% where companies migrate or transfer assets offshore such that they leave the scope of Irish tax. The tax operates by deeming a disposal of the asset to take place at the time of exit and applying the exit tax charge on any unrealised gain.
This new exit tax replaces a previous, more narrowly-focused exit tax charge which was introduced in 1997 as a proportionate anti-avoidance measure to counter a number of identified tax avoidance transactions that were used to take chargeable assets outside the charge to Irish tax prior to disposal. The provisions were designed to influence behaviour, i.e. to prevent the avoidance behaviour identified, rather than to serve as a tax raising measure and I understand from Revenue that they have been effective in this regard.
The new ATAD-compliant exit tax is a broad-based measure and it is expected that in time it will give rise to Exchequer revenue. However, as this will only arise in cases where an asset, which has increased in value while held by a company in the State, is transferred out of the charge to Irish tax without an actual disposal, an estimation of the future yield would require predicting changing asset values, in addition to projections as to future restructuring of companies. As any such estimate at this point would be highly theoretical, no specific provision was made in the Budgetary arithmetic for future exit tax yield, and equally it would not be possible to estimate the change in revenue if an alternate tax rate were to be applied.
Payments in respect of the new ATAD-compliant exit charge will be separately identified in the relevant tax returns so it will be possible to monitor receipts from the new charge in future.
