Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The Minister needs to address the points made by Mr. Seamus Coffey in his blog regarding the impact this measure will have on Exchequer receipts. The Minister indicated previously that this is a timing issue and the amount of tax paid will be the same over the relevant period. Mr. Coffey questions that view, although he does not definitively state it is wrong.

Given the pace of change in corporation tax globally and in how these companies structure their affairs, it is a valid question to ask.

The Minister provided for a yield in the budget day book of €150 million in 2018 from this measure. I question the basis of that. The capital allowances related to the intellectual property, IP, that was onshored prior to budget day can be used to shelter 100% of relevant income and one would have to question whether these companies will continue to transfer IP to Ireland, what impact it will have on such activity and whether there will be a yield of €150 million from this measure in 2018. The Minister needs to explain the basis of that.

The impact of the removal of the 80% cap in budget 2015 was quite extraordinary. The scale of the impact was mind-boggling. In 2014, the capital allowances claimed on IP amounted to €2.6 billion and the following year, in 2015, they amounted to almost €29 billion. We have the data in respect of the onshoring. The Minister confirmed it in parliamentary questions that, "While data on the value of intangible assets onshored through this channel is more limited, the relocations in 2015 along with RandD related imports added approximately €300 billion to Ireland's capital stock." Corporation tax receipts increased quite substantially in 2015. That has to be acknowledged as well. They went up by €2.3 billion, increasing by 50% more than the Government had envisaged.

The changes in 2015, as a result of the removal of the cap, were staggering and we are still dealing with the fallout from that. The Minister is reinstating the cap at 80% and he has made what he has confirmed is a policy decision that the change only applies to IP that is onshored after budget day. In other words, the capital allowances relating to the IP that was already here on budget night can continue to be used to shelter 100% of the relevant income. The Minister needs to explain in detail the basis of that policy decision. We learned on Committee Stage that it is not a recommendation from the Department of Finance officials. It is very much a policy decision.

The Minister needs to explain the implications of not putting in the effective date of budget night. He needs to explain what would be the implications if he was to say that the future claims of capital allowances against all IP now here would be subject to the 80% restriction in terms of the relevant income that can be sheltered by it. Presumably, those implications, which the Minister has assessed and has thought through, are the reasons he has decided not to apply it in that manner.

Given the scale of what happened in 2015 and given that this is an important policy decision, the Minister needs to explain what level of consultation there has been and with whom, for instance, individual companies and representative bodies. All of that needs to be in the public domain and on the public record in order that we can have the fullest possible information as to what has guided and informed what the Minister stated is a policy decision, not a recommendation.

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