Dáil Éireann Debate, Tuesday - 12 February 2019
186. Deputy Micheál Martin asked the Minister for Finance if his attention has been drawn to delays in the processing of section 481 applications by the Revenue Commissioners (details supplied); and if he will make a statement on the matter. [7083/19]
Amharc ar fhreagraThe purpose of the film corporation tax credit, found in section 481 Taxes Consolidation Act 1997, is to contribute to the development of a successful and dynamic audio-visual industry in Ireland contributing to the promotion of culture in the State, which can be referred to as the cultural dividend of the scheme.
Significant changes to the film tax relief were introduced in 2015, changing it from an investor based tax relief to a corporation tax credit. The Deputy will be aware that my Department, in line with their Guidelines for Tax Expenditure Evaluation, carried out a 3-year cost benefit analysis of the film corporation tax credit during 2018. That analysis found that the net economic cost to society, the cost of the cultural dividend of the scheme, was €72m for 2016.
Since 2015 the film corporation tax credit, which is a notified and approved State Aid, has operated on the basis of companies submitting a film budget to Revenue. Based on the anticipated expenditure in Ireland set out in that budget, Revenue will issue a certificate for a maximum interim corporation tax credit and the company amends its corporation tax return and claims a payment of that amount. Once the film is completed, the company submits details of the actual amounts spent on making the film in Ireland. Revenue must review the details of the actual expenditure and will issue a final certificate. Upon receiving that certificate, the company amends its corporation tax return and claims a payment of the balance over any interim credit claims.
I was advised by Revenue in 2018 that there was an issue with the design of the scheme for Film Relief. The scheme requires upfront certification by Revenue which, means that the normal tools to discourage incorrect claims (being interest, penalties, publication and prosecution) are not available. Accordingly, a considerable amount of Revenue time is being taken up addressing incorrect claims. Revenue has informed me that there has often been protracted correspondence with claimant companies who do not have sufficient records to support their claims, and this in turn leads to inevitable delays.
The level of Revenue examination of these applications must match the risk to the Exchequer given the rising cost of the credit, with the tax credit value of applications received in 2018 alone totalling €95 million.
As the Deputy will be aware, in Finance Act 2018, I brought forward changes to the way in which companies claim the film corporation tax credit to address these two difficulties. Those changes, once commenced, will put all claims on a self-assessment footing, with companies’ compliance assessed by Revenue in the same way as compliance with all other tax reliefs. Revenue is bringing forward the Regulations which are necessary to support the Finance Act 2018 amendments. Those Regulations must be made with the consent of both myself and my colleague, the Minister for Culture, Heritage and the Gaeltacht, and I understand that officials in both departments are currently reviewing the proposed regulations. As soon as those regulations are prepared, I will commence the Finance Act 2018 amendments which will convert all film corporation tax credit claims currently in progress into self-assessment claims.
