Eoghan Murphy (Dublin Bay South, Fine Gael)
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What we are trying to do with the amendment is capture non-resident investors who are investing in property and not paying tax. It is a taxing right of the State to tax property. Irish residents and non-residents are treated differently in so far as the level of taxation they might pay is concerned and that is right and fair because people are resident in the State and see a return on the taxes they pay, while a non-resident investor will not. At the same time, that is not to say taxes should not be paid on the transaction made. What we are trying to do is capture that element. This is not about new tax avoidance measures; rather, it is about introducing new taxation. The measure does this in respect of the withholding tax of 20% on the distribution from funds and capital gains tax if an asset is disposed of within five years. These are the two new taxes we are trying to introduce in respect of funds provided certain criteria are met as to the level of property such funds hold. The criteria are set out in the amendments. This is not about exempting companies from capital gains tax. it is about introducing capital gains tax where an asset is disposed of within five years.

Obviously, there is a policy decision. As one looks to see how one will treat funds now and how they were treated previously and sees what the appropriate way to tax them is, one brings in the withholding tax, as appropriate. Then one sees that, from a policy point of view, one could introduce capital gains tax, but perhaps one could also use it as an incentive to hold on to property for longer and make a proper investment in the State rather than flip assets for a gain. That is the purpose of the provision that has been introduced on capital gains tax where an asset is disposed of within five years. It is not going to impact on REITS in the way Deputy Stephen S. Donnelly fears. As outlined, the advice is that it will not impact on REITS in that way. In so far as life assurance companies are concerned, we treat them as pension funds and they are exempt under taxation Acts generally. We are discontinuing this in so far as the amendment is concerned.

The exclusion of investment undertakings is provided for to ensure transfers between investment undertakings will not have the withholding tax applied. However, when the final transaction occurs, it will be a taxable event under the amendment in so far as an IREF is concerned and withholding tax will be applied. That is per the last-man-standing principle where there might be a couple of funds in the chain.