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

Some of the Deputy's points are better suited to the discussion on section 28, which begins to deal with the taxation of REITs, IREFs and so on and which will take place later tonight or tomorrow. In regard to the dividend withholding tax, the anchor of 25% is to try to make it equivalent to where we would be from the point of view of income tax, where there is a 20% rate and a USC rate of 4.5%. It is more in the nature of a compliance measure than a new policy measure because I am trying to make sure that the tax that should be paid as dividend withholding tax is paid. The Deputy asked if the dividend withholding tax was paid in all REITs or IREFs, and he is correct that the tax is reduced further for those that receive income in other jurisdictions with which we have a tax treaty, which is a factor behind the levels of tax that are being paid by some who receive income from REITs.

When I sat in front of this committee a year ago, I said I would do two things. First, I said I would get the Department of Finance to do some work for me to help us form a view on the impact these entities are having on the property market. That was done and the findings were published. Second, I said I would act on any advice in the aftermath of the Revenue Commissioners getting data on the levels of tax that were being paid. I have done this with some of the changes I brought in on budget night. Some of the behaviours and some policies that are being followed have to change, and that is why I am making the changes. Some of the provisions of the Finance Act 2016 were introduced with particular objectives in mind, but I have become aware of the extent to which the objectives have not been met so I am changing the law to deal with that. The Deputy may feel I should go further, but I believe the actions I have instigated in this Bill are powerful enough to deal with my absolute expectation that the entities that we are discussing pay taxes at the levels we expect. I will keep this under continual review, particularly in the area of the operation of IREFs.