Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 166:

In page 142, between lines 19 and 20, to insert the following:

“Report on the use of contracting companies in entertainment industry

60.The Minister shall, within 6 months of the passing of this Act, prepare and lay before Dáil Éireann a report on the actions to be taken to prevent the use of contracting companies to avoid tax in the entertainment industry including at State broadcasters.”.

The Minister may be aware the Committee of Public Accounts is currently looking at documents in regard to how the entertainment industry and some of our State broadcaster's top earners and others use company structures. To quote from one of the documents, it is "primarily for the purpose of reducing their exposure to income tax". This allegation - I stress that it is an allegation - is included in the discussion document being considered by the PAC. We had the chiefs of RTÉ before the PAC earlier this year. It has been claimed as late as last night that the use of personal service companies by top earners is entirely legitimate. It is also common practice across the industry, which I do not dispute one bit. I am not suggesting there is anything untoward here. What we are talking about is whether the law should be changed in the future.

I have raised this on a number of occasions with the Minister, in particular as to whether his attention had been drawn to the work of the British tax authorities, who found against persons who worked for the BBC organisation and used contracting companies to avoid tax, and whether the Revenue Commissioners were investigating how this operates here. It is provided for in Irish law. The question is whether it is appropriate or fair, as I believe it is not. A commitment was given to me at time, as follows:

I am advised by Revenue that we have no comparable legislation in Ireland governing the taxation of individuals engaged through intermediary companies. As a consequence, there is no basis for Revenue to seek to ignore contractual arrangements entered into by such a company and to apply the tax treatment that gave rise to the appeal.

In relation to the question of an investigation or audit, I am further advised by Revenue that it cannot comment on matters relating to any specific identified taxpayer or narrowly defined group of taxpayers. However, in the absence of legislation similar to that referred to above, there is no statutory basis for Revenue to take the approach that gave rise to the recent UK appeal.

The question is whether there should be a statutory approach and whether we should put something into the law that allows for this. These types of contracting companies are similar or identical to the types operating in Britain, which has closed them down. I argue through this amendment that we should look at this in a detailed way, given there could be unintended consequences. I believe this should be examined by the Department and Revenue officials prior to the Finance Bill next year.