Oireachtas Joint and Select Committees

Wednesday, 17 November 2021

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach

Finance Bill 2021: Committee Stage (Resumed)

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

Section 1077E(15)(a) of the Taxes Consolidation Act and the corresponding provisions of VAT, stamp duty and capital acquisitions tax legislation were introduced to facilitate the foreign income and assets disclosure programme in 2017. The provisions were designed to restrict penalty mitigation in a case where a person has or had offshore matters as defined, notwithstanding the making of what would otherwise be a qualifying disclosure. The definition of "offshore matters" was extremely broad and essentially included any offshore income, gain, account or property. The provision removes any incentive for taxpayers to approach Revenue voluntarily to regularise their tax affairs where such regularisation involved offshore matters because there was no benefit in doing so. They cannot avail of mitigation of penalties and cannot avoid publication and potential prosecution, all of which are benefits normally associated with the making of a qualifying disclosure. Therefore, the existence of subsection (15)(a) and related provisions in other Acts is making it more difficult to finalise interventions in many cases. Revenue may be unable to agree the penalty with taxpayers as a higher rate of penalty will apply in any case with an offshore element. In the absence of agreement on the penalty, Revenue must have the penalty determined by a court. This, in turn, can often cause significant delays.

It is considered that the provisions have achieved the objective for which they were introduced, with 3,042 cases having been finalised with a yield of more than €90 million. As noted, the continuation of these provisions is, in some cases, acting as a deterrent to voluntary compliance and, in others, making it more difficult to finalise cases.

I am making this change not only on the advice of my Department, but after my Department has consulted the Revenue Commissioners. The advice from them is that the current maintenance of this provision is making it difficult for them to agree the settlement of issues in a timely way.

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