Michael D'Arcy (Wexford, Fine Gael)
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I move:

(1)THAT Chapter 2 of Part 20 of the Taxes Consolidation Act 1997 be amended, with effect from 10 October 2018, by substituting the following for sections 627 and 628:“Charge to exit tax

627.(1) (a) In this section and in section 628 -

‘designated area’, ‘exploration or exploitation activities’ and ‘exploration or exploitation rights’ have the same meanings respectively as in section 13;

‘Directive’ means Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market;

‘exploration or exploitation assets’ means assets used or intended for use in connection with exploration or exploitation activities carried on in the State or in a designated area;

‘market value’ means the amount for which an asset can be exchanged or mutual obligations can be settled between unconnected willing buyers and sellers in a direct transaction;

‘relevant event’ means one of the events referred to in subsection (2);

‘tax’ means corporation tax or capital gains tax chargeable by virtue of subsection (2);

‘the new assets’ and ‘the old assets’ have the meanings respectively assigned to them by section 597;

‘third country’ means a territory other than the State or another Member State;

‘transfer’, in relation to assets, means any transaction whereby (apart from the effect of this section) no liability to corporation tax or capital gains tax in respect of the assets, the subject of the transfer, arises, notwithstanding that those assets remain under the legal or economic ownership of the same entity.

(b)For the purposes of subsection (2), paragraph (c) of section 29(3) shall apply as if the reference in that paragraph to a trade were to a business and as if the references to a branch or agency were to a permanent establishment.

(c)A word or expression that is used in this section or section 628 and is also used in Article 5 of the Directive shall have the meaning in this section or section 628 that it has in that Article.

(2)For the purposes of the Capital Gains Tax Acts, a company shall be deemed to have disposed of the assets referred to in whichever of the following paragraphs is appropriate, other than assets excepted from this subsection by subsection (5), and to have immediately reacquired the assets at their market value (at the time of the occurrence of the event concerned) on the occurrence of any of the following events:

(a)the company, being a company that is resident in a Member State (other than the State), transfers assets from a permanent establishment in the State to its head office or to a permanent establishment in another Member State or in a third country;

(b)the company, being a company that is resident in a Member State (other than the State), transfers a business (including the assets of the business) carried on by a permanent establishment of that company in the State to another Member State or to a third country; or

(c)the company ceases to be resident in the State and becomes resident in another Member State or in a third country

(3)(a) Tax shall, notwithstanding subsection (3) of section 28, be chargeable at the rate of 12.5 per cent in respect of chargeable gains accruing on a disposal of assets to which subsection (2) applies (in paragraph (b) referred to as a ‘deemed disposal of an asset’), but this is subject to paragraph (b).

(b)A chargeable gain accruing on a deemed disposal of an asset arising from the occurrence of an event referred to in subsection (2) shall be chargeable at the rate specified in subsection (3) of section 28 where the event forms part of a transaction to dispose of the asset and the purpose of the transaction is to ensure the chargeable gain accruing on the disposal of the asset is charged to tax at the rate specified in paragraph (a) rather than the rate specified in subsection (3) of section 28.

(c)In this subsection ‘transaction’ has the meaning assigned to it by section 811C.

(4)Section 597 shall not apply where a company referred to in subsection (2)(c)-

(a)has disposed of the old assets, or of its interest in those assets, before the event referred to in subsection (2)(c), and

(b)acquires the new assets, or its interest in those assets, after that event,

unless the new assets are excepted from this subsection by subsection (5).

(5)Where at any time after the event referred to in paragraph (c) of subsection (2) the company referred to in that paragraph carries on a trade in the State through a permanent establishment—

(a)any assets which, immediately after the event referred to in subsection (2)(c), are situated in the State and are used in or for the purposes of the trade, or are used or held for the purposes of the permanent establishment, shall be excepted from subsection (2), and

(b)any new assets which, after that time, are so situated and are so used or so held shall be excepted from subsection (2), and references in this subsection to assets situated in the State include references to exploration or exploitation assets and to exploration or exploitation rights.

(6)This section shall not apply to an asset—

(a)which relates to the financing of securities,

(b)which is given as security for a debt, or

(c)where the transfer takes place in order to meet prudential capital requirements or for liquidity purposes, where the asset is due to revert to the permanent establishment or the company, as the case may be, within 12 months of the transfer.

(7)Neither section 628A nor 629 shall be construed as having effect in relation to this section as it stands substituted by virtue of a resolution of Dáil Éireann passed on 9 October 2018.

Value of certain assets to be accepted for purposes of Capital Gains Tax Acts

628.Where exit tax is charged in a Member State (other than the State) in respect of an asset by virtue of Article 5(1) of the Directive,the value of that asset established under the law of that Member State for the purposes of that charge to tax shall be taken, for the purposes of the Capital Gains Tax Acts, as the acquisition cost of that asset unless that value does not reflect its market value.”.

(2)IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Amendment No. 1 is out of order.

Brendan Howlin (Wexford, Labour)
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I move amendment No. 2:

To insert the following new section into the Resolution after section 628:"Report on Exit Tax

A628A.The Minister shall within one month from the passing of this Resolution prepare and lay before Dáil Éireann a report on the number of companies that have been liable for the provisions of sections 627 and 628 of the Taxes Consolidation Act 1997 in each of the last 5 years inclusive of 2018; the total revenue raised in each year under these provisions; and the additional revenue that could be raised in 2019 if the Exit Tax was chargeable at a rate of 33 per cent.".

I have been dealing with budgets for a long time in this House. When I saw the financial resolutions there was something unusual. They are normally in the ministerial pack which is circulated during the course of the Minister's speech. They were not but I found them later. Two of the resolutions, this one and the next one, are unusual in that they do not need to be passed tonight. The idea of the financial resolutions is that there is usually a degree of urgency about a matter, such as a tax increasing from midnight for a particular and urgent reason.

Serious questions must be asked as to why this measure is tabled for tonight and not, in the normal way, in the Finance Bill, where there would be reports, teasing out, Committee Stage debate and all of that. That is not happening on this resolution. The capital gains exit tax is being reduced in this proposal from 33% to 12.5%. The Minister's own budget book tells us that this will actually not raise any money. If we look at the financial tables, it says zero for this tax. If this is not really used and there is no impact on revenue, as the Minister is telling us in the published tables accompanying his budget speech, then leaving the rate at 33% would not impact on revenue unless there is something we are not being told.

This tax measure is aimed at ensuring patents, intellectual property and other assets cannot be moved abroad to no tax locations so as to avoid tax. That is good. The budget document states that this change is part of Ireland's commitment to implementing the anti-tax avoidance directive. We have no issue with that. We support it and these rules are long overdue. The Labour Party has called for a standing commission on taxation for exactly these reasons. The question should be asked as to why the rate is being cut by nearly two thirds. There is no explanation for that. If this is never used, as would be implied by the zero impact on revenue, it has no impact and will not raise any additional money, as the budgetary documentation seems to imply, then why should the rate not be set at 33%? I refer to it not just being set but maintained because that is the rate.

Chartered Accountants Ireland published a useful note on its website on 1 October last. It says regarding the exit tax that Ireland currently has rules that provide for an exit tax. To give people an understanding of what we are talking about here, that is where the Irish tax-resident company moves its tax residence away from Ireland, broadly, and that exit event triggers a deemed deposal of assets at market value for capital gains tax purposes, resulting in the potential normal capital gains tax of 33% applying. There are some exemptions to the rule and in practice it is not a significant issue for most Irish tax-resident companies. That is what the Chartered Accountants Ireland publication says. Under the EU's anti-tax avoidance directive, the existing rules will be tightened significantly, making it more difficult to escape the Irish tax charge on migration of tax residence. This could be assessed as making it more difficult to move valuable assets such as intellectual property out of Ireland but will possibly encourage existing groups to stay. That could be seen as a positive move.

In reality, anything that reduces flexibility for existing groups or potential groups of new investors is not a good thing. All EU countries, however, will be obliged to introduce similar rules by January 2020 at the latest. There we have the nub of it. Under Article 5 of the anti-tax avoidance directive, we are obliged to have a measure compliant with the directive by January 2020. We have plenty of time to do this. We could do it in the convenience of the Finance Bill when we can go through this in some detail and not deal with it in 40 minutes with no notice and no background papers. That is why I have tabled the amendment seeking at least, if it is passed tonight, a report on it within a month. I am conscious of time but I want to say a few other things about it.

First, it begs the question of why the urgency. The Minister might give us some indication of why this midnight stroke of a pen approach to this long debated, and long in gestation, but distant timeline of January 2020 needs to be done suddenly and urgently tonight. It is unusual for such a major tax change, that apparently according to the documentation will have no impact on revenue, to be rushed through via budget resolution. In my long experience here, the normal way to deal with this matter would be by way of a proposal in the Finance Bill.The original sections 627 and 628 were anti-tax avoidance measures. They set a tax rate of 33% for capital gains that will accrue because this is, by the definition of the current law, a capital gain that will accrue. It is now envisaged that capital gains would not be taxed at the capital gains rate of 33% but would actually be taxed at the corporation tax rate of 12.5%. Why is that? Why is that neutral in respect of the volume of money that it will generate?

Why has the Department of Finance not published a tax expenditure report? What is proposed is a major change and it requires a budget resolution. Will we be sitting here in the future wondering why there was a windfall or a loss associated with this particular measure in respect of which we have no background information? I imagine most people in the House are not that familiar with it. Does the Minister know why this measure must be adopted tonight? Will he tell us? Are large technology companies planning to bring intellectual property into Ireland? Are they planning to do so tonight and is that the reason for this being done now? We need to know the answers to those questions before we are asked to vote on what is proposed. The industry has been lobbying for a reduction in capital gains tax to 12.5%. These are matters that should be dealt with properly in the context of the finance Bill.

A Department of Finance report published last month states:

Specifically, the ATAD exit tax regime seeks to tax unrealised capital gains where a taxpayer transfers its residence, transfers assets from its head office to a permanent establishment, or vice versa, in another territory, or transfers the business carried on by a permanent establishment to another territory, to the extent that the country from which the assets or business are transferred loses the right to tax the transferred assets or business following the transfer.

Member States must introduce the ATAD exit tax, or bring existing exit taxes into alignment with [that particular] tax where relevant, no later than 1 January 2020.

Why is this being done tonight? I have many more questions to ask, but I want to allow other people to come in on this. Perhaps the Minister can give a very simple, straightforward explanation that will avoid the need for me to ask further questions.

Mattie McGrath (Tipperary, Independent)
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I also want answers to the questions Deputy Howlin asked, so I will not labour the point. Why is there a panic to introduce this tonight if the implementation date is January 2020? We normally vote on issues which take effect at midnight and which , for various reasons, cannot be changed or moved. Why is the rate changing from 33% to 12.5%? Perhaps the Minister will be able to put us at ease and explain the panic and the changes to the rates.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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Deputy Howlin covered most of what I wanted to say. It is very unusual to have a financial resolution such as this when there is no necessity for what is proposed to be done before midnight. The only reason I could find for the rush is in the note from the Government that accompanied the financial resolution. It states the measure is being implemented on budget night to provide certainty for businesses currently located in Ireland and for those considering investing here in the future. It also states that the rate will be 12.5%. The only reason we have been given is that it will provide certainty tonight, even though it does not have to be implemented until 1 January 2020. We have been given very little information about this measure. It would be better to deal with it during the passage of the finance Bill, when we can have a more detailed discussion on the reasons we are not looking at the tax rate of 33%, or even the non-trading corporation tax rate of 25%. Why is the rate being reduced to 12.5%? We have been given no reason for that. We know that certain sectors of the industry have been lobbying very hard for the 12.5% rate to be applied. For that reason, we will be supporting the amendment tabled by the Labour Party. If the amendment is not accepted and there is a vote on the financial resolution, Sinn Féin will oppose it because we do not believe it is appropriate that this be done before midnight. There is no reason or rationale for rushing this through. It should be dealt with during the debate on the finance Bill, for example, on Committee Stage, when we can look at all of the evidence and some of the supporting documentation. I am sure the Department has such documentation, but it has not been shared with opposition spokespersons. Without that, we cannot support the financial resolution, but we will certainly support the amendment being put forward by the Labour Party.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Can the Minister allay the concerns of the Deputies?

Richard Bruton (Dublin Bay North, Fine Gael)
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The existing provision is very narrow. It was introduced solely as an anti-avoidance measure to prevent certain behaviours where abuses where occurring in the transfer of assets while seeking to avoid paying capital gains tax. That anti-abuse measure has been successful and Revenue is not aware of any revenue stream that has been generated by this tax. The behaviour changed so the tax did not generate revenue. This is not simply a replacement for that exit tax, which was a specific measure designed to stop a certain type of behaviour. This will be a new tax measure, effective from tonight, and will apply to the removal of assets from Ireland. These will be intellectual property assets rather than immovable assets such as land or buildings because they would still be liable for corporate gains tax in Ireland when sold. This measure would apply to assets moved out of Ireland which, unless this tax was introduced, would not represent a disposal and therefore would not be liable for any tax.

This measure was agreed with the European Union and is part of a broad range of anti-avoidance taxes we are introducing, including measures against controlled foreign companies, measures against hybrid transactions or entities and measures against interest abuses, which were advocated as being in conformity with the base erosion and profit sharing, BEPS, measures developed by the Organisation for Economic Co-operation and Development. These are measures the EU is taking which we have also agreed to take. It is being introduced now so that it will be effective from tonight. It is obviously prudent, when a tax of this nature is introduced, that it is introduced and implemented rather than introduced and then left for a large period of time. Such a measure could lead to transactions being executed specifically to avoid this impact. By introducing it in this way we avoid the possibility of gaming the regime. We need certainty in this area; the Coffey report on corporation tax advocated that certainty should prevail.

Deputy Howlin asked why we are not projecting significant revenues from this measure.

Brendan Howlin (Wexford, Labour)
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No revenue is projected.

Richard Bruton (Dublin Bay North, Fine Gael)
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It is believed that most of the intellectual property now located in Ireland is not rising in value. Most of the intellectual property situated here includes items such as patents on pharmaceutical products. The value of this type of item declines as the patent runs out. Revenue does not anticipate that much of the intellectual property located here will raise revenue because capital gains will not generally accrue. There are international trends which show that intellectual property is moving from jurisdictions.

This is a measure we should have in our tax code. If we are going to have such a measure, we should have it and introduce it cleanly. Revenue did not predict an amount of revenue to be raised through this tax because most of the intellectual property located here is not of the sort that would be expected to raise revenue. In terms of budget arithmetic, it would not have been prudent to add a sum of money on which we would be building other spending commitments when there is no prediction of a yield at this point. However, depending on other assets being in place, this tax is expected to raise revenue in the future.

I hope that has helped to address the concerns.

Brendan Howlin (Wexford, Labour)
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I am afraid it has not. The Minister basically told me what I told him. He says it replaces the current narrow provision and is not simply a replacement for the current exit tax. The current tax is capital gains tax, payable at 33%. There is no explanation of why the taxation of this intellectual property should be at a rate of 12.5%. That question was not answered.

Before the Minister replies, I have read the Coffey report and this evening I read the directive so that I would be up to speed on it. This is a very careful and calibrated discussion. The notion that there is an agreed approach that should be rubber-stamped this evening in a Financial Resolution that the House has only seen an hour or two ago is not true. Article 5 of the anti-tax avoidance directive requires Ireland, by 1 January 2020, to have an exit tax in four particular circumstances that are set out in the report. We currently have an exit tax, which will be replaced by this provision. What are the considerations that the Government has given in transposing Article 5 of the anti-tax avoidance directive? Is that not a reasonable debate to have? Why has the Government landed on a rate of 12.5%? Can we not have a debate about that? I know the Minister has been lobbied for this measure but it is a matter that should be debated in a democratic way in the finance Bill, not passed by fiat. I cannot amend the rate the Minister has set in the Financial Resolution. Nobody from the Opposition benches can amend it.

In 40 minutes, it is proposed to significantly change the taxation of intellectual assets in this country. That is not the way we should do our business. If we have learned anything from the way we have done business in the past, it is that this is not the way to do it. The Minister has given me no reason it has to be done by midnight. He says that no money will accrue from this measure and very few transactions will be subject to it. In that case, why not wait the ten days or so for the finance Bill to be published and debated properly?

Jonathan O'Brien (Cork North Central, Sinn Fein)
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As Deputy Howlin stated, the Minister has not yet given us a reason for settling a rate of 12.5%. We know there was extensive lobbying of the Department to set it at 12.5%. I still do not understand why we are trying to push this measure through before midnight tonight in a 40-minute debate. It will have a profound impact, albeit not immediately because no income will accrue from it according to the Minister's estimates. However, we do not know what will happen next year, the year after or the year after that. The House is to push the measure through in 40 minutes on the basis that there is very little activity in this area. The estimates suggest it will be revenue neutral and will not generate income. That is the position as of now. We need a more in-depth and detailed explanation from the Minister. We have received no supporting papers from the Department, bar a couple of paragraphs about the base erosion and profit shifting, BEPS, report published in October 2015, and the need to transpose the relevant directive before 1 January 2020. There is very little detail.

It is a mistake to rush this measure. Once the Financial Resolution is passed, there is nothing we can do. The amendment which has been put forward calls for a report. If such a report were to find that we should have kept the rate at 33%, there will be nothing any of us can do because the Financial Resolution will have been passed. It would be more prudent to draw up the report before the finance Bill. If we are given that information, we can make an informed decision during the passage of the finance Bill. We seem to be doing it the wrong way around. We are making the decision and then we might have a look at a report. If the report indicates that we should leave the rate at 33% or set it at 25%, the horse will have bolted.

Richard Bruton (Dublin Bay North, Fine Gael)
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This is a new tax. It is the first time there will be a tax of this general nature applying to people who decide to move intellectual property but not realise those gains. This is a tax on exit, not a capital gains tax on a disposal. If a company exits, it has not realised the gain. It does not have disposal proceeds from which to pay a 33% rate. That is the reason it was thought reasonable to apply the corporation tax rate of 12.5%. We do not tax people on unrealised gains in our tax code. That is not the way in which capital gains tax applies. CGT applies when a disposal has been made and proceeds have been generated and tax is collected from those proceeds. In this case, what is being proposed is an exit tax on a company opting to move intellectual property out of the jurisdiction. It is being introduced as a new tax measure that is believed to be in accordance with the provisions of base erosion and profit sharing reports intended to help combat that sort of behaviour. It is an anti-avoidance measure.

Allow me to put this in another way. Suppose we did what the Deputies suggested and, having signalled the introduction of this tax, waited for several weeks and allowed companies to reorganise their affairs and not pay the exit tax. Would the Deputies not subsequently argue that it is a crazy approach to introduce an exit tax designed to change behaviour and the way companies move intellectual property around and then flag it and wait for people to decide whether to avoid the implications of this tax?

What the Minister is proposing here is prudent. The measure, which would be effective from tonight, will give certainty. It will not lead to gaming of the regime by people seeking to artificially move assets ahead of an anticipated rate. It is being set in a way that is reasonable, given that these are companies not realising cash from which to pay. This is an exit tax and it is being levied at the same rate as corporate tax. Other countries that have applied this exit tax are using their corporate tax rate as well.

This is a correct measure. It is part of the approach which has been outlined in Ireland's corporation tax roadmap, whereby we are progressively dealing with elements of our tax code that have been subject to aggressive tax planning by companies. Deputies are aware of the changes that have been made in respect of the double Irish, non-resident companies and so on. We are prudently and properly moving to ensure that our tax code continues to be robust, defensible and correct in the way it is applied. We do not want any suggestions that harmful tax competition is involved. This is a legitimate tax. We are taking steps in a timely way, rather than leaving it to the last moment. We are doing it in a way that is fair and reasonable and taking the precaution of moving and agreeing it tonight in order that we are not exposed to potential aggressive tax planning on this particular measure.

Brendan Howlin (Wexford, Labour)
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The Minister made a presentation as if this was all new. He referred to the Minister for Finance's publication, Ireland's corporation tax roadmap, a copy of which I have with me. The roadmap, which was published on 5 September, states this would be done by 2020. What happened in the past few weeks that requires this to be done tonight? There is no indication in this document that this must be done by way of a Financial Resolution.

We talk about having a more transparent way of budgeting. We are all for making the House more responsible for budgeting but this is not the way to do it. The Minister referenced discussions at European Union level. I was involved in discussions on the BEPS process at EU level. Discussions on anti-tax avoidance measures at that level were not limited to the BEPS reports.

They were expanded to include the introduction of exit taxes for all member states. The anti-tax avoidance exit tax regime is designed to ensure that where a taxpayer moves assets or migrates his or her tax residence out of a state, that state taxes the value of any latent capital gain accrued during the period of residence in that state. That is the point I make to the Minister. We are taxing the latent capital gain accrued during the period of residence in Ireland if people move their intellectual property out of Ireland even though that gain has not yet been realised at the time or point of exit. That is what is included in the discussions at EU level. We have to have some debate about the tax regime that should be applied. The notion the Government has decided it should be 12.5% and announced it tonight without any discussion or debate at the finance committee and without any grounding documentation or any chance for others to look at what is happening elsewhere and what is the tax applying in analogous EU countries is not the way to do it. It is wrong. The financial resolution should be withdrawn and the debate should be allowed to proceed in the discussions on the Finance Bill in the normal way.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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It is a bit disingenuous of the Minister to say we have to do it tonight before-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I am sorry but I cannot hear the Deputy.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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I will shout if the Ceann Comhairle wants me to.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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No. I wonder whether the Deputy's microphone is working.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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It is a bit disingenuous of the Minister to say the reason we have to do this tonight is because companies may reorganise their tax affairs. Companies know this is happening. They know a directive has been set down and that all EU member states must introduce an exit tax. They all know it has to be done by 1 January 2020. It is not coming as a huge surprise to companies. There is no reason we could not have had a debate, looked at the reports and all of the options available to us and then come down in favour of a particular rate. I believe 12.5% is too low. There has been no discussion about it. No supporting documentation has been given by the Department on why we are settling on 12.5%. I do not know why it is not being kept at 33%. What I do know is we are not doing business correctly here tonight by trying to force it through within the next ten minutes. It is irresponsible and I support the call from the Labour Party to withdraw the financial resolution tonight because if the Government does not do so we cannot support it, even though we are in favour of an exit tax.

Brendan Howlin (Wexford, Labour)
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Of course.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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It needs to be put on the record that we are in favour of this particular measure but we cannot support it being rushed through tonight with a rate being set at 12.5%. It would not be responsible on our behalf and it is very irresponsible on the Minister's behalf. He needs to reflect on this.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I am conscious of the fact we have an order to conclude by midnight and that the next resolution may require-----

Brendan Howlin (Wexford, Labour)
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We have 40 minutes for this resolution.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Yes, but the next resolution may require some consideration also. I ask the Minister to address the concerns the Deputies have raised.

Richard Bruton (Dublin Bay North, Fine Gael)
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The Deputies are presenting this as if we are taking a capital gains regime of 33% and cutting it to 12.5%. This is not the case. The old regime the Deputies have spoken about was designed to stop certain abusive behaviours. It was defined narrowly and it stopped those behaviours.

Brendan Howlin (Wexford, Labour)
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The Minister is changing that now, even that narrow -----

Richard Bruton (Dublin Bay North, Fine Gael)
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This is now a broad-based tax. Deputy Howlin explained why it is being levied at 12.5% and not 33%. He explained very clearly that this is a tax not based on the realisation of a capital gain but simply an exit and movement of the intellectual property to somewhere else. This is not a realised gain that generates cash that can be used to deploy. The principle being applied here is that the same regime-----

Brendan Howlin (Wexford, Labour)
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"Latent capital gain accrued" is what I said.

Richard Bruton (Dublin Bay North, Fine Gael)
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The same tax regime is being applied as if it continued to remain in Ireland, which is using the corporate tax rate that would have applied had its contribution to generating an income stream remained in Ireland. The income stream that would have been generated by that intellectual property if the company had stayed in Ireland would have been at 12.5%. This is the principle on which the 12.5% is being raised. It is the way in which the flow of income from the asset would have been taxed had it remained in Ireland. It is not realising a cash sum from which the company can pay out the money.

The Deputy is saying he is in favour of an exit tax but he wants to signal that an exit tax will arrive. The Oireachtas will not------

Jonathan O'Brien (Cork North Central, Sinn Fein)
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Companies know that already.

Brendan Howlin (Wexford, Labour)
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The Minister is saying it will accrue no money.

Richard Bruton (Dublin Bay North, Fine Gael)
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-----knowing that it is imminent, allow companies time to avoid paying their dues.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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Companies know it is imminent.

Richard Bruton (Dublin Bay North, Fine Gael)
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As the Finance Bill passes through the House this can be fully discussed with the Minister.

Brendan Howlin (Wexford, Labour)
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After 2020.

Richard Bruton (Dublin Bay North, Fine Gael)
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To withdraw this now would be to clearly signal to companies that we are giving an open invitation-----

Jonathan O'Brien (Cork North Central, Sinn Fein)
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It should never have been tabled in the first place.

Richard Bruton (Dublin Bay North, Fine Gael)
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-----to make arrangements to avoid the impact of this exit tax. That is what we would be doing. There will be opportunities for Deputies to seek to change the Finance Bill in due course. It is always open to the Oireachtas to reconsider its position but it would be highly imprudent for us to decide here, having signalled we will introduce it this evening, to withdraw it and give people the chance to plan their arrangements in such a way that they avoid the very thing everyone says they are in favour of.

Brendan Howlin (Wexford, Labour)
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You are saying they will accrue no money for doing it.

Richard Bruton (Dublin Bay North, Fine Gael)
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The reason we are not predicting a revenue stream on which we would set out spending proposals is that Revenue has advised it would not be prudent.

Brendan Howlin (Wexford, Labour)
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So nobody is going to move.

Richard Bruton (Dublin Bay North, Fine Gael)
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That is the case. Deputy Sherlock understands that many pharmaceutical companies are on patent incomes that decline and do not rise in value. Much of what we have on the basis of intellectual properties here is not something on which Revenue would make an assertion of a planned revenue stream that we would use and dispose of in other areas. What we are doing here is correct. There will be opportunities for it to be discussed as the Finance Bill passes through the House but it would be highly imprudent for us not to proceed with implementing this measure by way of financial resolution and leave ourselves exposed to people removing assets in a way that would be unfair.

Pat Gallagher (Donegal, Fianna Fail)
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I advise the House that we have 40 minutes remaining. There are no time restrictions on Members but I suggest that they think of colleagues when they contribute.