Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Leas-Cheann Comhairle. The Companies Act 2014, which came into effect on 1 June 2015, consolidated and amended existing company law statutes. The main changes affecting the Taxes Consolidation Act 1997, the Stamp Duty Consolidation Act 1999 and the Capital Acquisitions Tax Consolidation Act 2003 related to company structures and the new streamlined procedures for the merger and division of companies. The Finance Bill also provides for updating the referencing in the Taxes Acts and the insertion of provisions in the Taxes Acts to ensure that the intended tax consequences of a merger or division under the Companies Act 2014 are provided for and do not have an unintended impact. This is addressed by means of sections 59, 60, 73,74 and 75.

Section 62 of Part 5 of the Bill provides for an amendment to section 85 of the Capital Acquisitions Tax Consolidation Act 2003. That section of that Act already provides for a CAT exemption on the inheritance of certain retirement funds to prevent a double tax charge on the same event, that is, income tax and CAT where the inheritance is taken by a child who is over 21 years of age. Section 85 now needs to be amended to remove the potential for such a double charge in the case of personal retirement savings accounts and retirement annuity accounts that were not vested on the death of the disponer after the age of 75.

Section 63 makes a number of minor amendments to the dwelling house exemption from capital acquisitions tax. The changes clarify that, first, a liability to inheritance tax will not be triggered where a donor dies within two years of making a gift to a dependent relative and, second, in the case of both gifts and inheritances, to qualify for the exemption, a property transferring to a dependent relative does not need to be the principal private residence of the disposer. This is line with policy changes made to the operation of the dwelling house exemption in last year's Finance Act.

I have described section 64 with section 29.

The final Part, Part 6, deals with miscellaneous matters. Section 66 makes a technical amendment to section 122 of the Taxes Consolidation Act, TCA, to ensure the provision operates as intended and to prevent certain tax avoidance opportunities in respect of employer-provided loans. Section 67 and Schedule 3 make minor amendments to a number of appeals-related provisions in the TCA.

Section 69 provides for a number of largely technical changes relating to the PAYE modernisation project. It is the most significant review of the PAYE system since its introduction in the 1960s and will result in a move to a real-time PAYE system from January 2019.

Section 71 introduces two amendments to the domicile levy legislation found in section 531AA of the Taxes Consolidation Act 1997. The amendments proposed ensure, first, that capital allowances and losses are not allowed as a deduction for the purpose of the world-wide income test. Second, there is a technical amendment to delete the term "final decision" from section 531AA as it conflicts with section 531AC of that Act on "Credit for income tax paid". These amendments will strengthen the legislation, thus reducing the number of domicile levy appeals and improving compliance, as well as serving to protect tax revenue.

Section 72 is the first step in the legislative procedure required to give effect in Irish law to the OECD base erosion and profit shifting, BEPS, multilateral instrument. Ireland signed the instrument on 7 June 2017 along with more than 60 other countries. The instrument provides a mechanism for countries to transpose recommendations made by the OECD BEPS project into existing bilateral tax treaties. Further legal steps will be needed before Ireland's ratification of the instrument is completed and these steps can begin once this Bill is enacted.

A small number of matters are still under consideration, which I may bring forward on Committee Stage. I will, of course, also give consideration to the suggestions put forward during our debate over the next few days and in the context of the Finance Bill process and discussions generally.

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