Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

A very detailed examination of the operation of the EII scheme has just been completed and is available on the Department's website. The findings include the fact there is a continued need for the incentive but that the design of the relief is such as to cause major delays in obtaining approval. On foot of this, a package of priority measures has been brought forward in this Bill to address the shortcomings of the scheme. I intend to have further work carried out before the budget and Finance Bill next year on issues such as the calibration of the amount of tax relief that should be available to investors.

As the Deputy will be aware, section 24 of the Bill changes the operation of the reliefs for investment in corporate trades through the employment investment and incentive scheme and start-up relief for entrepreneurs, SURE, scheme as well as introducing the new start-up capital incentive, SCI, scheme. One of the key drivers in bringing forward this newly designed scheme was the time it was taking for applications to be approved by the Revenue Commissioners. The design of the scheme, as it stands before the Finance Bill 2018 amendments, is insufficient and cumbersome for all involved. In designing the scheme I have brought forward in the Finance Bill, the aim has been to strike a balance between the administrative burden being placed on companies and investors with any potential risk to the Exchequer. I believe the proposed new design does that. The new section will come into operation for shares issued on or after 1 January 2019. Companies that have raised financing to which one of the three reliefs - EII, SURE or SCI – will apply must let Revenue know they have done this within 60 days of the investment qualifying for the relief.

I am advised by Revenue that the majority of share issues occur in the last quarter of the year. Therefore, within three months of the passing of the Act there simply will not be enough data to report on the operation of the newly designed scheme, which would be expected to be in the last quarter of 2019. I assure the Deputy I appreciate how important it is for these three reliefs to be operated as intended. The operation of the new scheme will be monitored to see if there are any issues that need to be addressed in light of the substantial measures brought forward in Finance Bill 2018 to address the concerns. However, given the fact I have just published the detailed Indecon report, which already identifies a range of measures to enhance the operation of the schemes, and the fact the statistical information needed to compile a report in the manner the amendment proposes would not be available in short timeframe proposed, I cannot accept the amendment. I assure Deputy McGrath that I and the officials will monitor closely the effects of the changes to the scheme over the coming year with a view to taking forward further improvements in next year's Finance Bill, if necessary.

To put this into context, it was taking too long - up to three months - for approval to be granted to people applying for the EII scheme in previous years. We are moving from that to a self-certification scheme on the basis that, in the future, there will be audits by Revenue which will be a look-back at applications to see if the scheme is being applied correctly. The audit structure will apply on a selection basis and it is self-certification, which means it will be quicker, and we hope and anticipate it will be done better. As I said, it is also the case that the bulk of these occur in the last quarter of each year, so we will not have the data available within three months of enacting the Bill.

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