Enda Kenny (Mayo, Fine Gael) | Oireachtas source

I move:

(1) THAT for the purposes of the State Aid de minimis rules the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended with effect from 13 October 2015 as follows –“Industrial building allowances: aviation services facilities

____.The Principal Act is amended –

(a) in section 268 –

(i) in subsection (1F), by substituting “then, notwithstanding that subsection, that capital expenditure shall not, as regards a claim for any allowance under this Part by any such person, be regarded as specified capital expenditure for the purposes of this Part,” for “then, notwithstanding that subsection, that building or structure shall not, as regards a claim for any allowance under this Part by any such person, be regarded as an industrial building or structure for the purposes of this Part,”,

(ii) by substituting the following for subsection (5A):

“(5A) Subject to subsection (5C), expenditure incurred by a person on the construction of an industrial building or structure (within the meaning of subsection (1)(n)) shall be treated as specified capital expenditure for the purposes of this Part─

(a) only to the extent that the aggregate of such expenditure does not exceed─

(i) €5,000,000, where the person concerned is a company, and

(ii) €1,250,000, where the person concerned is an individual,

and

(b) where the following information has been provided to the Revenue Commissioners before the first claim for a writing-down allowance is made, in accordance with section 272, by the person:

(i) the name, address and tax reference number (within the meaning of section 477B(1)) of the person making the claim;

(ii) the address of the building or structure in respect of which the expenditure was incurred or deemed to have been incurred;

(iii) details of the aggregate of the amount of such expenditure which has been incurred or deemed to have been incurred by the person making the claim.”,

(iii) in subsection (5B) –

(I) by substituting “subsection (5A)(b)” for “subsection (5A)(c)”, and

(II) by substituting “necessary to ensure compliance with the provisions of this Part and any European Commission guidelines, regulations or other reporting requirements, as the case may be, that may be relevant.” for “reasonably related to achieving the following objective.”,

(iv) by substituting the following for subsection (5C):

“(5C) Where capital expenditure has been incurred, or deemed to have been incurred, on the construction of an industrial building or structure (within the meaning of subsection (1)(n)) by 2 or more persons, being either individuals or companies, or both, the amount of such expenditure which is to be treated as specified capital expenditure for the purposes of this Part shall, if necessary and notwithstanding section 279, be reduced such that the amount determined by the formula─

(A x 50 per cent) + (B x 12½ per cent)

does not exceed €625,000, where –

A is the aggregate of all such specified capital expenditure which has been incurred, or deemed to have been incurred, by the individual or individuals concerned, and

B is the aggregate of all such specified capital expenditure which has been incurred, or deemed to have been incurred, by the company or companies concerned.”,

(v) by deleting subsections (5D) and (5E),

(vi) in subsection (9), by substituting the following for paragraph (k):

“(k) by reference to paragraph (n), as respects─

(i) specified capital expenditure incurred in the period commencing on the date of the coming into operation of section 31 of the Finance Act 2013 and ending on the fifth anniversary of that date, and

(ii) capital expenditure other than specified capital expenditure incurred on or after the date of the coming into operation of section 31 of the Finance Act 2013.”,

and

(vii) by inserting the following after subsection (11):

“(11A) Notwithstanding any other provision of this Part, capital expenditure which has been incurred on the construction of an industrial building (within the meaning of subsection (1)(n)) shall not be treated as specified capital expenditure where any part of that expenditure has been or is to be met, directly or indirectly, by grant assistance or any other assistance which is granted by or through the State, any board established by statute, any public or local authority or any other agency of the State.”,

(b) in section 272─

(i) by substituting the following for paragraph (k) of subsection (3):

“(k) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)─

(i) 15 per cent of the expenditure referred to in subsection (2)(c), if that expenditure is specified capital expenditure, and

(ii) 4 per cent of the expenditure referred to in subsection (2)(c), if that expenditure is not specified capital expenditure.”,

and

(iii) by substituting the following for paragraph (k) of subsection (4):

“(k) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)─

(i) where the expenditure is specified capital expenditure, 7 years beginning with the time when─

(I) the building or structure was first used, or

(II) where the expenditure is incurred on refurbishment, the building or structure was first used subsequent to the incurring of that expenditure,

and

(ii) where the expenditure is not specified capital expenditure, 25 years beginning with the time when─

(I) the building or structure was first used, or

(II) where the expenditure is incurred on refurbishment, the building or structure was first used subsequent to the incurring of that expenditure.”,

(c) in section 274(1)(b) by substituting the following for subparagraph (x):

“(x) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)─

(I) where the expenditure is specified capital expenditure─

(A) 7 years after the building or structure was first used, or

(B) where the expenditure is incurred on refurbishment of the building or structure, 7 years after the building or structure was first used subsequent to the incurring of that expenditure,

and

(II) where the expenditure is not specified capital expenditure─

(A) 25 years after the building or structure was first used, or

(B) where the expenditure is incurred on refurbishment of the building or structure, 25 years after the building or structure was first used subsequent to the incurring of that expenditure.”.

and

(d) in Schedule 25B –

(a) by substituting the following for clause (VIII) of paragraph (a)(i) of the matter set out opposite reference number 13:

“(VIII) section 268(1)(n) (inserted by the Finance Act 2013) to the extent that the writing-down allowances are referable to specified capital expenditure (within the meaning of section 268),”,

and

(b) by substituting the following for clause (VIII) of paragraph (a)(i) of the matter set out opposite reference number 15:

“(VIII) section 268(1)(n) (inserted by the Finance Act 2013) to the extent that the balancing allowances are referable to specified capital expenditure (within the meaning of section 268),”.

(2) THAT section 31 of the Finance Act 2013 be amended by substituting the following for subsection (2):“(2) This section comes into operation on 13 October 2015.”.(3) THAT section 33 of the Finance Act 2014 be amended by substituting the following for subsection (2):“(2) This section comes into operation on 13 October 2015.”.(4) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

In the budget of 2013 a scheme of accelerated industrial buildings allowances for certain aviation services facilities linked to the main aviation sector was announced. The scheme focuses on the construction and refurbishment of buildings and structures which could be used for the maintenance, repair and overhaul of commercial aircraft and the dismantling of such aircraft for the purposes of salvaging or recycling parts and materials. The relief, which provides for a seven year write-off for this capital expenditure, will operate for five years and is subject to all the normal rules for capital allowances. It was subject to a ministerial commencement order, principally to allow time to obtain European Commission approval for the scheme from a state aid perspective. In other words, it had to be in compliance with that regime.

I am happy to report that the discussions between the Commission and the officials of the Department of Finance have now been successfully concluded and this scheme will now take immediate effect, subject to a number of modifications which will be introduced by this financial resolution. The key change is to place an upper limit of €200,000 on the actual value of the relief available in any three year period for each individual project. This is to conform to EU state aid de minimisguidelines. In the case of a company, for example, this equates to overall construction expenditure of €5 million. The limit is on the amount of relief given, not on the amount of expenditure incurred.

For the information of Deputies, the other changes are as follows. First, the relief will apply to operations at all airports and is not limited under regional aid. Second, expenditure incurred in excess of the de minimislimit during the five-year period will qualify for normal capital allowances without any upper limit, as will expenditure incurred after the five-year period.

This is an important industrial sector which has the potential for significant job creation in the country. This scheme, which is commencing today, has the potential to create a favourable environment for the development of significant maintenance, repair, overhaul and dismantling operations. It will be of benefit to all airports, including regional airports like Ireland West Airport Knock, when presenting a business plan to potential investors, and will help to entice investment into the country in the aviation services sector at the airports around the country. Furthermore, section 31 of the Finance Act 2013, which introduced the scheme, and section 33 of the Finance Act 2014, which subsequently amended it, shall take effect as and from today, so the entire scheme is now operational. It is intended to put today's changes on a permanent statutory footing in the forthcoming Finance Bill and I, therefore, commend this resolution to the House.

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