Seán Sherlock (Cork East, Labour)
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Question 8: To ask the Minister for Finance if he will introduce measures to ensure that persons living here, but who are non-resident for tax purposes, make some contribution to the Exchequer; his views on the introduction of a flat fee for tax exiles along the lines of a similar measure introduced in the UK in recent years; if he has studied and will comment on the application of this measure in the UK; and if he will make a statement on the matter. [44880/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The taxation of individuals in the State is in line with that prevailing in most other OECD jurisdictions, that is, individuals who are resident in the State for tax purposes, based on the number of days of presence in the State, are taxable here on their worldwide income; and individuals who are not resident here for tax purposes pay tax here only on income arising in the State and on income derived from working here. In section 15 of the Finance (No. 2) Act 2008, I amended the tax residence rules to provide that an individual will be regarded as present in the State for a day if he or she is in the State at any time during the day, not just at midnight. This applies for the 2009 tax year and subsequent tax years. It makes it more difficult for individuals based in Ireland to become non-resident for tax purposes. I remind the Deputy that, as outlined above, such persons pay tax on any income earned in Ireland.

I am aware that HM Revenue and Customs introduced changes to the remittance basis of taxation, under which certain individuals pay tax on foreign income or gains only if the money is remitted or brought into the country. The charge to which the Deputy refers is not imposed on non-residents. It is levied on UK residents who are either not ordinarily resident or not domiciled in the UK and who therefore can claim the remittance basis. These individuals now must pay a fee of £30,000 in order to claim the remittance basis and avoid paying tax on foreign income and gains unless this money is remitted to the UK. I am not considering implementing such a measure at this time.

The Deputy might ask whether I intend to impose a charge on individuals who become non-resident for tax purposes. There is no requirement on an individual leaving the State to declare, whether on a tax return or elsewhere, the reason he or she left Ireland, so there is no way to identify someone who has left for tax purposes. Individuals are perfectly entitled to change their residence and they do so for a variety of reasons, most of which have nothing to do with tax.

Joan Burton (Dublin West, Labour)
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Would the Minister agree that in a republic it is right that everybody makes a contribution proportionate to their means, and that in the case of those who, through hard work and good fortune or through inheritance, have very large incomes and fortunes, it is a republican thing that they should make a contribution? Would he agree with very successful and distinguished businessmen such as Warren Buffett and Bill Gates that the rich have obligations to contribute to taxation? Everybody has a moral obligation to contribute to charity but in a republic there is also an obligation to contribute to the costs of the infrastructure of the state of which one is a citizen. Will the Minister outline his philosophy with regard to people making a contribution, particularly as next Wednesday it is quite likely he will ask people on very low and modest incomes to make an enhanced contribution or to take cuts in income?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I agree with the sentiments expressed by Deputy Burton that in a republic such as ours there is an onus on all persons who are citizens and who are resident here for tax purposes to comply with their tax obligations. That is the law of the State and I agree with it. The law of the State in this regard is no different from the laws of other states. However, there is a difficult issue to be resolved relating to tax administration, which is that persons might reside in different places and the law must strike a balance in that regard. One can tax a person on their income that arises in Ireland, and all persons resident here, irrespective of duration, pay tax on income they receive in Ireland.

However, in the case of the overseas income of persons who are not resident here, there is a difficulty under the OECD arrangements. Under the current arrangements there must be reciprocity. If a person spends the majority of their time elsewhere, they are clearly not living in Ireland for the purposes of taxing their worldwide income. That is the practical difficulty which any Minister for Finance faces in this area. A rule was introduced by a previous Government which enabled midnight to count as a day for tax purposes. I eliminated that last year, which is a substantial restriction on the scope for any possible abuse of this provision. However, it is a fact that if one does not live half the days of the year here, one does not pay tax on one's overseas income. There is nothing unusual in that. The rule does not just apply in Ireland but in many countries throughout the world.

Richard Bruton (Dublin North Central, Fine Gael)
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Will the Minister comment on the proposal by the Commission on Taxation to move to a more economic definition of where people's interests lie as a basis for deciding whether they pay tax? Would that offer an opportunity to trap the tax of some very prominent individuals whose business interests are predominantly in Ireland and who ought to be paying tax here?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The commission proposed a test relating to the centre of vital interests. That formula is being examined by my Department but it is a formula of vague and uncertain application.

Deputy Bruton referred not to the centre of vital interest, but the centre of economic interest, which is a different test. Regarding many of the more high-profile individuals identified as persons with connections to Ireland, it should be said that many of their economic interests do not appear to lie in Ireland. This issue is not an easy one to resolve. I am not departing from my practice of not commenting on budgetary matters.

Written Answers follow Adjournment Debate.