Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I move amendment No. 23:

In page 23, to delete lines 17 to 19 and substitute the following:

“(b) in section 172A(1)(a)— (i) in the definition of “dividend withholding tax”, by substituting “a rate of 25 per cent” for “the standard rate in force at the time the relevant distribution is made”,

(ii) by substituting the following definition for the definition of “tax reference number”: “ ‘tax reference number’ means— (i) in the case of an individual who is or was resident in the State,

the Personal Public Service Number (within the meaning of section 262 of the Social Welfare Consolidation Act 2005) issued to the individual,

(ii) in the case of a person, not being a person to whom subparagraph (i) applies, or other body who or which is within the charge to income tax or corporation tax in the State, the reference number stated on any return of income form or notice of assessment issued to the person or other body by an officer of the Revenue Commissioners, and

(iii) in the case of any other person or body, the reference number stated on any return of income form or notice of assessment issued, or any other reference number allocated, to the person or body for the purposes of income tax or corporation tax or any tax which corresponds to income tax or corporation tax, by the tax authority of the country in which that person or other body is resident for the purposes of income tax or corporation tax or any tax which corresponds to income tax or corporation tax;”,

and

(iii) by inserting the following definition after the definition of “tax reference number”:

“ ‘ultimate payer’ means the company, authorised withholding agent, qualifying intermediary or other person from whom a relevant distribution, or an amount or other asset representing a relevant distribution, is receivable by the person beneficially entitled to the distribution as referred to in paragraph (a), (b), (c) or (d), as the case may be, of section 172BA(1).”,

and

(a) by inserting the following section after section 172B: “Obligation on certain persons to obtain tax reference numbers of persons beneficially entitled to relevant distributions

172BA.(1) As respects relevant distributions made on or after 1 January 2021—

(a) where the relevant distribution is made by a company directly to the person beneficially entitled to the relevant distribution, the company making the relevant distribution,

(b) where the relevant distribution is not made by a company directly to the person beneficially entitled to the relevant distribution but is made to that person through an authorised withholding agent, the authorised withholding agent from whom the relevant distribution, or an amount or other asset representing the relevant distribution, is receivable by the person beneficially entitled to the distribution,

(c) where the relevant distribution is not made by a company directly to the person beneficially entitled to the relevant distribution but is made to that person through one or more qualifying intermediaries, the qualifying intermediary from whom the relevant distribution, or an amount or other asset representing the relevant distribution, is receivable by the person beneficially entitled to the distribution,

and

(d) where the relevant distribution is not made by a company directly to the person beneficially entitled to the relevant distribution but is made to that person through one or more other persons who is not, or not all of, or none of whom are, a qualifying intermediary, the person from whom the relevant distribution, or an amount or other asset representing the relevant distribution, is receivable by the person beneficially entitled to the distribution, shall, in advance of the making of such a relevant distribution and in respect of each person who is beneficially entitled to such a relevant distribution, take all reasonable steps to obtain the tax reference number of that person and shall keep as a record that tax reference number, and section 886 shall apply in relation to that record as it applies in relation to records within the meaning of that section.

(2) The ultimate payer shall ensure that Article 5 of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) is complied with when the ultimate payer is fulfilling the requirements of subsection (1).”.”.

In the budget I announced a two-stage process to improve tax compliance focused on ensuring the correct amounts of income tax and USC are paid on the income from distributions, including dividends, of Irish resident companies. As part of the first stage in this process, section 23 of the Finance Bill increases the rate of dividend withholding tax from the 20% standard rate of income tax to a rate of 25% from 1 January 2020. The second stage of the process will be implemented from 1 January 2021, with the introduction of a modified dividend withholding tax that will utilise real-time data that are being collected under Revenue’s newly modernised PAYE system and allows a personalised rate of dividend withholding tax to be applied to each individual taxpayer. It is intended that the legislation for the new collection regime will be introduced next year in Finance Bill 2020, allowing Revenue time to engage with stakeholders who may be affected and to develop the new systems required to ensure the overall successful roll-out of the measure.

In order for the new system to be fully operational by 1 January 2021, the companies and intermediaries affected will need to have collected certain information in advance of that date. I am, therefore, introducing a Committee Stage amendment in Finance Bill 2019 to oblige Irish resident companies and intermediaries involved in the operation of dividend withholding tax to take all reasonable steps to obtain and keep a record of the tax reference number for each person beneficially entitled to receive distributions from 1 January 2021. The amendment will also require companies and intermediaries to comply with Article 5 of EU Regulation 2016/679 in the collection and processing of such personal data. The amendment is being introduced to give the companies and intermediaries affected sufficient time to collect the data and the first step to ensure the new regime will be fully operational by 1 January 2021. It is intended that the new regime will allow taxpayers to pay the right tax at the right time and significantly increase compliance levels of tax on income on distributions from Irish resident companies by further reducing the gap between the dividend withholding tax withheld and the final tax payable by the shareholders. I, therefore, recommend the amendment to the committee.