Paschal Donohoe (Dublin Central, Fine Gael)

I acknowledge the growing interest that there is in this policy area. Deputy Nash has requested to have a report on proposals to amend the Taxes Consolidation Act 1997 to facilitate the establishment of a greater number of employee share ownership trusts and their smooth and efficient functioning. As Deputies may be aware, an independent review of share-based remuneration carried out by Indecon Economic Consultants on behalf of my Department has been published. This review included a public consultation considering employee share ownership trusts and made a specific recommendation in this area suggesting that there “is merit in considering reforming the taxation of employee ownership trusts ... in line with the treatment of such arrangements in the UK". The term "EOT" does not appear in Chapter 2 of Part 17 of, or Schedule 12 to, the Taxes Consolidation Act. However, as alluded to by the recommendation of the Indecon review and by Deputy Nash, preferential tax treatment exists for the equivalent structure in the UK and it is not available here.

We will give consideration to this particular recommendation and my Department has engaged with stakeholders in this area and will do so again. Specifically, officials have now met representatives of the Irish Proshare Association, IPSA, to discuss proposals on employee ownership trusts in the past few months. Following these discussions, I have been informed that changes to several taxes have been raised with us by stakeholders and will need further consideration by my Department. These refer to the discretionary trust tax, DTT, capital gains tax, CGT, and to the close company surcharge. As part of any consideration of the amendments to the tax Acts in light of this recommendation, it is important to be more precise regarding what would be the potential benefits, and of course, what will be the costs of implementing changes to facilitate the establishment of employee ownership trusts, which is in line with my Department's guidelines for tax expenditure evaluation.

Given that an independent review of this has been published, made recommendations in this area and that my Department is now engaging with relevant stakeholders in this regard, it is not necessary to carry out a further review, which is why I will not propose to accept the amendment but I assure the committee that work in this area is now ongoing.