Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 59:

In page 50, between lines 6 and 7, to insert the following: “Taxation treatment for self-employed contractors

50. The Minister shall within 6 months of the passing of this Act, prepare and lay before the Oireachtas a report assessing the taxation treatment of travel and subsistence expenses incurred by self-employed contractors, including but not limited to a comparison between the treatment in Ireland and other EU Member States and an impact assessment on foreign direct investment.".

This amendment relates to independent professional contractors, not bogus self-employment. It is about professional contractors who provide IT, engineering, pharma, bio-pharma and other services on projects and who, on that basis, are classified in tax legislation in Schedule D, Case II as distinct from Case I. The issue I am raising is that of the treatment of the travel and subsistence expenses they incur, not flat rate claims and so on. A question arises as to whether persons who are legitimately self-employed are incurring these expenses wholly and exclusively for the purposes of their work, the current definition used. There is an additional leg to this test for employees in that their expenses have to be incurred necessarily as well as wholly and exclusively for the purposes of their work. What is the attitude of the Revenue Commissioners and the Department to this cohort which is not huge in number who are self-employed and centrally involved in delivering major capital projects for companies in the pharma, bio-pharma and IT sectors and so on? In a situation where a self-employed person based in Cork travels to Dublin to work on a project for a number of weeks or months and pays his or her own accommodation and travel costs, should such costs be allowed as an expense for tax purposes?

Those raising this issue, including the consulting firms involved in projects, the companies hiring them and the independent contractors, make the argument that rates are increasing, that business is becoming less competitive and that there has been a flight of expertise and talent from Ireland because of unfavourable tax treatment. I have been trying for some time to get a straight answer from the Department and the Revenue Commissioners as to whether they have a case. It seems they do. I am not advocating special treatment for anyone. I just want to know whether persons who are genuinely self-employed and incurring expenses as they move from one project to the next should, from a tax treatment point of view, be able to deduct them accordingly. That is the net issue. Perhaps the Minister of State might outline the position.