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

I thank the Deputy for her questions. I was reflecting on the point she made regarding the Chinese economic zone. We will have to come back to her with an answer on that.

On the rationale for this section and whether it applies to leased aircraft, and the Deputy's important points on whether we conducted an risk analysis and what kind of benefit we thought it would have, I do not believe this measure adds to the opportunities for tax arbitrage in any way. The main saving and benefit for airlines will be a significant administrative change that I hope will lead to a cost saving for airlines registered in Ireland. I hope that will, in turn, be a factor in airlines registering more of their staff here. If there are tax arbitrage opportunities, which there are in terms of where airlines, aeroplanes and staff are registered, I do not believe this section will add to them in any way. This is about a significant simplification of how this process works.

On the Deputy's point regarding the leasing industry, this is an air crew measure only. To deal with the Deputy's point on whether it could apply to crew on aeroplanes that are leased, the answer to that question is "Yes, it could", but the benefit only applies to the crew rather than the capital equipment which, in this case, is the aeroplane.

More broadly, this is a measure that I have considered in other finance Bills and at other points, but I always believed it was not appropriate to introduce it at other points because of the large number of staff we already had registered in Ireland. The Deputy's concerns about dead weight and other measures would have a higher validity in the case of this measure if we brought it in at a point at which we already had a very large number of staff registered in Ireland. We have seen big impacts on the aviation sector in Ireland and we have seen the number of staff registered here decline, which are issues she is already well familiar with. If we bring this measure in now, it has a chance of having a far lower dead weight impact than it would have had at other points.

On whether this measure will apply to China, it will only apply to countries with which we have a double taxation agreement, DTA. Since we have such an agreement with China, it would, in theory, be able to benefit from this agreement. However, to avail of it, the crew in question has to be subject to tax in the country with which we have the DTA and they have to be resident here or in the relevant DTA country. I am afraid I do not know a huge amount about the operation of Chinese economic zones, particularly with regard to aviation. If those are environments in which crews pay no tax, they will have difficulties benefiting from this agreement. That is the short answer to the Deputy's question. Overall, China will be able to benefit from this change because we have a double taxation agreement with it, but from the discussion I have had with my officials on this, the vast majority of the drawdown for this scheme, if not all of it, will be in Europe.