Tuesday, 13 October 2020
Financial Resolution No. 4: Corporation Tax
I would like the Minister to come back and explain what is happening here in some detail. The explanatory note we were sent, to which Deputy Boyd Barrett referred, simply says that the resolution amends the balancing charge rules in section 288 of the Taxes Consolidation Act 1997 to ensure that Ireland's tax regime for intellectual property is fully consistent with international best practice. That is just not good enough when asking people to vote on something important tonight. We get this note and are then expected to vote on the measure.
The resolution relates to the section in the Taxes Consolidation Act 1997 on balancing charges. Balancing charges are effectively the opposite of a capital allowance. They reduce the amount of tax relief of which a company can avail. The section, before being amended by this proposal tonight, says "a balancing charge shall not be made by reference to a wear and tear allowance made to a company [...] in respect of capital expenditure incurred on the provision of a specified intangible asset" within certain meanings. This is to be changed to "in respect of capital expenditure incurred before 14 October 2020 on the provision of a specified intangible asset". It draws a line and prevents the future operation of this effective exemption to balancing charges being made.
From my reading, it probably does cut off a certain tax loophole, although I would like the Minister to explain and clarify exactly how this measure works. If, however, it is to do what it purports to do, it would probably have significant financial implications so I wonder why a figure is not attached with regard to the money to be raised by it. It would be helpful to get some detail as to how this is to work.