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

The special assignee relief programme, SARP, is designed to help reduce the cost for employers of assigning skilled individuals in their companies from abroad to take up positions in Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland. The scheme currently has a sunset date of 31 December 2022.

As I stated on Committee Stage, there is an essential context around SARP. The context is that it is part of our foreign direct investment policy which allows our country to be competitive and attract certain senior decision makers here to particular companies. This is fundamental to the creation and retention of other jobs. If we get rid of the scheme, it makes what we offer uncompetitive versus the offerings from competitor jurisdictions, for example, France, Portugal, the Netherlands and Italy, to name but a few.

Ireland's enterprise policy is based on export led growth. FDI has been and continues to be an integral part of Ireland's economic development. The existence of an incentive like SARP is an acknowledgement that we are competing on a global basis for highly skilled and mobile executives. Competition for this talent is intense, in particular the type of skills required to facilitate the development and expansion of businesses in Ireland. The existence of similar and, indeed, more attractive special assignee type tax reliefs creates a market failure that could not be addressed but for the continued existence of SARP.

On budget day, the annual Revenue report on SARP for 2019 was published. It found a significant reversal in the overall cost of the scheme in 2019 to €38.2 million, compared to 2018 when the cost was €42.4 million. The cost is €4.2 million lower than the figures quoted by Deputy Barry. This is attributable, at least in part, to my decision to introduce a salary cap of €1 million on the amount of a person's income that can benefit from the scheme in the Finance Act 2018. The change applies from 1 January 2019 for new entrants and from 1 January 2024 for existing recipients.

The aggregate number of jobs that were reported as created and retained as a result of the scheme has increased since 2018. There were 379 additional employees, compared to 226 in 2018, and the number of employees retained was 483 compared to 348 in 2018. This combined total of 862 SARP related jobs in 2019 represents a cost of €44,000 per job created or retained, a decrease in cost per job compared to 2018 when there were 584 jobs at an average cost of €73,000. This represents a decrease in cost of over 39%.

The benefits of SARP, apart from enhancing our international competitiveness, are detailed clearly in the Indecon report. They include the following: increased employment and retention of staff within SARP companies, associated additional investment, additional corporate tax receipts, additional PAYE receipts and research and development spillover activity.

In 2019, I commissioned an independent review of the scheme. The report of the review confirmed to me the strong policy rationale for the continued relevance of SARP to the Irish economy. The report is available on the website of the Department of Finance. The review highlights the following data regarding companies that availed of SARP for 2017: they paid €2.5 billion in corporate tax, employed over 155,000 individuals and paid over €1.9 billion in PAYE taxes.

With regard to the concerns of Deputies, I recognise that there is, of course, a balance to be struck between the principle of equity within our tax system and the need to compete internationally for highly skilled and mobile personnel. In this regard, and in order to seek to ensure that the appropriate balance is maintained, the issue is kept under regular review through detailed examinations of the type carried out by Indecon. As the scheme sunsets next year, there will be a further opportunity for review. Therefore, I do not propose to accept the amendment.

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