Brian Lenihan Jnr (Dublin West, Fianna Fail)

I agree with the sentiments expressed by Deputy Burton that in a republic such as ours there is an onus on all persons who are citizens and who are resident here for tax purposes to comply with their tax obligations. That is the law of the State and I agree with it. The law of the State in this regard is no different from the laws of other states. However, there is a difficult issue to be resolved relating to tax administration, which is that persons might reside in different places and the law must strike a balance in that regard. One can tax a person on their income that arises in Ireland, and all persons resident here, irrespective of duration, pay tax on income they receive in Ireland.

However, in the case of the overseas income of persons who are not resident here, there is a difficulty under the OECD arrangements. Under the current arrangements there must be reciprocity. If a person spends the majority of their time elsewhere, they are clearly not living in Ireland for the purposes of taxing their worldwide income. That is the practical difficulty which any Minister for Finance faces in this area. A rule was introduced by a previous Government which enabled midnight to count as a day for tax purposes. I eliminated that last year, which is a substantial restriction on the scope for any possible abuse of this provision. However, it is a fact that if one does not live half the days of the year here, one does not pay tax on one's overseas income. There is nothing unusual in that. The rule does not just apply in Ireland but in many countries throughout the world.

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