Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 36:

In page 145, between lines 32 and 33, to insert the following:“Report on rate of exit tax

62. Within one month of the passing of this Act the Minister shall lay a report before Dáil Éireann on the implications of increasing to 33 per cent the rate at which the exit tax in section 31 is set at.”.

I welcome the introduction of a new exit tax because clearly the existing one was not fit for purpose. We know it is necessary under base erosion and profit shifting, BEPS, rather than a great initiative by this Government but, as usual, there is Irish exceptionalism when it comes to this exit tax. This tax applies to gains made on assets onshored and then moved offshore, so it seems like a straightforward case where capital gains tax should apply at the normal rate of 33%. If it is to be taxed as profit, then surely at least it would be on non-trading profit which, in our State, is a corporation tax rate of 25%. Either way, the 12.5% rate in this Finance Bill does not make sense.

We know from the tax strategy group papers that: "Responses to the Coffey/ATAD consultation focussed primarily on the rate to be applied in calculating the exit tax, with the majority favouring a 12.5% rate for assets in use for the purposes of a trade." On a quick scan through those submissions that came in, only KPMG suggested a 12.5% rate.

One could take that to the extreme and say that as KPMG was the only one it is the majority, but that is not a fair analysis or presentation of the facts. The exit tax needs to be tightened up. I welcome the fact that it is there; the issue we have is with the rate. The Minister has failed to convince me or my party as to why the 12.5% rate should apply. We have a capital gains tax rate of 33%. That relates to gains and this is about gains. It is likely that there will be depreciation in respect of these assets but any profits or gains should be taxed at the level at which we tax gains in this State. As I said, if it is to match the corporation tax rate it should at least be based on the rate for non-trading income, which is 25%, as opposed to the rate for trading income, which is 12.5%.

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