Brian Cowen (Laois-Offaly, Fianna Fail)

I do not think it has been envisaged that the tonnage tax system will be included in the review. I have no problem with ensuring that the system is examined in the context of the preparations for the 2006 budget, given the recent interest that people have shown in it. I do not think it was originally included in the review, but I can arrange for someone to examine it as part of the review.

The type of vessels that qualify for this type of tax are sea-going vessels of a sufficient size to engage in reasonable commercial operations and which comply with the requirements for navigation at sea imposed by the competent authorities of any country. Also included in the definition are vessels which are to be excluded from being a qualifying ship such as recreational vessels, including pleasure craft or dredgers.

I do not have information on tax foregone. Tonnage tax operates on the following basis. A company may elect into the tonnage regime. Where it does so, it must remain within the regime for ten years for all of its qualifying ships. The notional tonnage profit per day would be €1 per 100 tonnes, up to 1,000 net tonnes, which decreases to 25 cent for each 100 tonnes above 25,000 net tonnes. The 12.5% corporation tax rate is then applied to the total tonnage profit figure to arrive at the tax yield. However, a company cannot sustain the normal corporation tax regime based on normal taxation rules. It is a tax based on a notional profit for a qualifying ship dependent on the net tonnage of the ship or ships. The total notional profit for all the qualifying ships is aggregated and the 12.5% corporation tax rate is then applied to this total to determine the tax change.

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