Seán Fleming (Laois, Fianna Fail) | Oireachtas source

I am on the bottom of page 5. If any member wants to take up this issue, that would be useful as we approach the next budget because this information can be used in discussions of tax matters. It is not exclusive to the Committee of Public Accounts.

We recommended separating the carry-forward losses for corporation tax between losses forward and capital allowances. We asked Revenue to distinguish between those and have a separate line on tax returns to capture that information. The Minister does not think this would provide much additional information. However, Revenue has since written back to us to say it is a legislative matter. It has separately told us that it cannot seek information to which there is no legislative basis, so if members want to achieve that, it would require an amendment to the Finance Bill. The committee has taken this issue as far as it can. It is now up to individual Deputies to decide if they want to bring it to the Oireachtas as part of the Finance Bill.

We made another recommendation on the sustainability of corporation tax. The Minister had previously prepared a paper on this for the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, which he has attached. It is a live issue, and we note that.

On double taxation agreements, we concluded: "The Department of Finance should ensure mechanisms are in place to verify any claims for double taxation relief made in Ireland by companies that are non-resident In Ireland." The final paragraph of the Minister's response states:

While Revenue do have information from corporation tax returns on the number of non-resident companies who file returns in Ireland and the amount of corporation tax paid, they do not have available information in relation to any claims for double taxation relief made by these companies in their country of tax residence. In practical terms it would be difficult to obtain such information and, as it is the country of tax residence that would be granting relief for Irish tax already paid on the same income, it would primarily be a matter for that country to verify the claim before granting the relief.

These companies are non-resident in Ireland for tax purposes and the Minister says the onus is on revenue authorities in the countries in which they are tax resident. We made a fair point and that is probably a legitimate answer.

We asked about the effective rate of corporation tax and recommended: "The Department of Finance should examine this matter such that there is general agreement on a single most appropriate method for calculating the effective rate of Corporation Tax on company profits." In his response, the Minister refers to about five different methods of calculation. Two or three of them are from the OECD but every international body has a different definition of the effective rate of corporation tax. The Minister says each report can add value because they all have different nuances. He does not agree that there should be one effective rate because there is no international agreement on the matter.

We referred to real estate investment trusts and stated: "The Department of Finance should carry out a review of the Real Estate Investment Trust (REIT) regime to ensure that domestic and EU ownership is being encouraged appropriately." Our concern was many of these REITs are from outside the EU. The Minister's conclusion states:

REITS provide a number of benefits for investors when compared to direct property investment, including diversification of risk, increased liquidity, lower entry costs, and regular income streams. They were designed to provide investors with access to investment in real estate without buying property directly. This reduces the risk to both landlords and tenants that results from the more common model, in the Irish residential property market in particular, of an individual landlord owning one or two heavily-leveraged rental properties.

The role of REITs which come into Ireland to buy up entire blocks is a big political debate. Local people cannot buy anything because everything is being bought by REITs. We will note the Minister's response and put it on the record. These are all policy issues, which we will be discussing.