Michael Noonan (Limerick City, Fine Gael)

The Deputy's amendment proposes to introduce a new section in the Bill. This new section would require the Minister for Finance, within three months from the passing of the Finance Act, to prepare a report on the contribution made to the Exchequer, in particular the contribution as a result of the measures introduced by the Finance Act 2012, and to lay that report before Dáil Éireann.

The basic reason I cannot accept the Deputy's amendment is that the impact of the domicile levy changes in this Bill will not be known until next year. As such, it will not be possible to report on this matter within the next three months. Before I get into the details, there is much misunderstanding as regards the tax treatment of tax exiles.

The taxation of individuals in the State is broadly in line with that prevailing in most other OECD jurisdictions. In general terms, individuals who are resident in the State for tax purposes are taxable in Ireland on their worldwide income and gains, and individuals who are not resident in the State for tax purposes pay tax in Ireland only on income arising in the State, income derived from working here and from certain assets in the State or from certain assets that derive their value from certain assets in the State. Also, not all non-resident individuals who file tax returns in Ireland are tax exiles. This includes, for example, "ordinary" Irish nationals who have moved abroad for work reasons but who prudently retain their homes in Ireland. Their tax returns are generally only in respect of rental income on their family homes in the State. This also includes foreign nationals who never resided in the State but who have investments, including property, here and foreign nationals who worked here for a period and who may not have acquired Irish tax residency for that period during a relevant tax year, for example, individuals who worked here on a temporary assignment.

In an Irish context, the discussion on what is termed "tax exiles" generally focuses on individuals of Irish origin who are perceived to be largely based in Ireland, but who arrange their affairs so that they are not tax resident in the State and, hence, pay less tax than they would if they were Irish tax resident. As the House may be aware, I stated in my Budget speech that I intended to keep the contentious issue of the tax treatment of tax exiles under constant review. Contained within the taxation measures for introduction in 2012 accompanying the budget is a commitment to publish in early 2012 a set of proposed amendments to the current tax regime as it applies to non-residents and to put out such proposed amendments to public consultation to inform preparation for further changes in 2013. The Deputy has sought a wider statement from me on this matter.

Reverting to the amendment, section 136 of the Bill gives effect to the proposal announced in the Budget Statement that citizenship be removed as a requirement for payment of the domicile levy. This means that, regardless of citizenship, the domicile levy will be payable by Irish-domiciled individuals whose Irish assets exceed €5 million, whose worldwide income exceeds €1 million and whose liabilities to Irish income tax for the relevant year is less than €200,000.

The amendment applies to the domicile levy chargeable for the year 2012 and subsequent years. It should be noted that payment of domicile levy for a particular year can be made at any time up to and including 31 October in the year immediately following the year in which the levy was chargeable. This means that payment of the levy for 2012 can be made up to and including 31 October 2013. As the impact of the changes made to the domicile levy by the Finance Bill will not be known until after 31 October 2013, I regret I cannot accept the Deputy's amendment.

There was much comment on Committee Stage about the small number of individuals who paid the domicile levy and the low yield from the tax. It should be noted that, if an individual pays more than €200,000 in income tax in a particular year, he or she does not need to pay the levy as well. Given that the levy sets a minimum level of tax payable in such cases, it should not be relied on as an indicator of the actual amount of tax paid by "tax exiles".

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