Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I accept Deputy Burton's point about this being a technical matter that the Revenue Commissioners, the Department and the committee are working to address. Much work has gone into drafting, improving and informing this section, which amends the Taxes Consolidation Act. I do not propose to go over ground that has been covered in detail on previous Stages as we have dealt with this matter. I will speak to the intention of the section in terms of why we are putting this in and what we hope to achieve.

Section 22 provides for the introduction of a tax regime for IREFs by inserting a new Chapter 1B into Part 27 and a new Schedule 2C into the Taxes Consolidation Act 1997. The objective in this regard is to provide for the introduction of a taxation regime for investment undertakings where 25% of the value of an undertaking is made up of Irish real estate assets. The IREF must deduct a 20% withholding tax on certain property distributions. The amendment addresses the issue of non-resident investors who have been investing in Irish property through fund structures thus avoiding a charge to Irish tax on profits arising from Irish real estate. The 20% withholding tax will not apply to certain specific categories of investors who provide appropriate declarations, including pension funds, life assurance companies, other collective investment undertakings, charities and credit unions. I should emphasise that the provisions do not in any way reduce the tax payable by investors and that any exemptions provided for in this provision are merely a restatement of existing exemptions.

Deputy Donnelly anticipates behavioural change that may not take place.

They say that we are moving a tax base out of Ireland, when the effect of the amendment to delete section 22 does the opposite. It is now about catching non-resident investors who have been investing in Irish property. That is what we are working towards in this section. To delete the section as the amendment proposes would mean that the proposed withholding tax would not take effect. This would ultimately result in a non-resident still being able to invest in Irish property through funds and pay no Irish tax on the Irish property transactions. Therefore, it is not proposed to accept the amendment.

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