Results 13,341-13,360 of 27,945 for speaker:Michael McGrath

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: The cost in 2017 of the 2% DIRT reduction is €9 million. The Minister of State indicated that the cost in a full year will be €14 million. What would have been the extra cost of extending that reduction to the products to which I am referring?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: That would be the additional cost on a full-year basis on top of the €14 million?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: Is the Minister of State saying that the estimate of €50 million relates to the measures in both sections 21 and 22? The budget day documentation contained the estimate of €50 million relating to section 110. It states "and funds changes" but at the time the only draft amendment we had was the one published in September and we did not have the Irish real estate fund, IREF,...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: I welcome the changes proposed in section 21 and the amendments put forward by the Minister of State. Section 110 has been in existence, in some form or another, since 1991 and can be traced back to the establishment of the IFSC. It has been rewritten several times since and has grown significantly in terms of application, with more than 3,000 companies with total assets of some €700...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: I know that Revenue has been looking at this issue since November 2015 and I would hope that nobody was waiting for the media and political commentary on it. The report references November 2015 as the date Revenue began to look at the use of section 110 by property related funds. Is that the case?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: For what accounting periods will this apply?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: It applies to any profits booked after 5 September.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: Is there any scope for changing year ends or accounting periods? Have the amendments been designed to deal with any potential for avoidance in this regard?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: The profit participating note is the key thing. This was the mechanism that was being used to sweep profits out of a company and the pillar on which this lawful tax avoidance was built. If the profits are now to be left there and to be properly taxable in accordance with Irish law, what tax rate will apply? There are three types of gains: the interest received by the fund, the capital gain...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: It is 25% tax.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: Is that on the profits from interest received or the capital repayments in excess of the amount they paid for the loan?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: Are capital gains on the disposal of a portfolio regarded as profits or chargeable gains?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: All profits of section 110 companies, from whatever source, are taxable at 25% because it is non-trading in nature.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: The amendment is the section.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: On the issue of ICAV, I make the point, though it is rarely a popular one, that we should aim for an investment environment that is somewhat stable. We should have had this provision in place before all the funds were invested in Ireland. Whether it was in 2011 or whenever, we should have had the foresight to have it in place. The ICAV legislation was signed into law as recently as early...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: Okay. So as long as the profits remain within the fund and are undistributed, the withholding tax will apply. It will apply to any distribution out of the fund. Is that correct?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: Okay, I understand that. Is the withholding tax of 20% a full and final settlement or is there a set-off paid against another tax liability? Is that the end-point of the taxation?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: Do the other taxation provisions which exempt the funds from tax generally continue to apply? The withholding tax of 20% is how they would now be taxed. That is the limit of it. Is that correct?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: Okay. So it is not like other withholding taxes that apply whereby the funds are held in reserve and offset against the ultimate tax liability that is computed. It does not operate like that, does it?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (15 Nov 2016)

Michael McGrath: No, I think the position is clear. It applies to distribution. As long as income such as rental income and so on remains within the fund, there is no tax. It is the distribution or the sale that triggers the actual event. When the Minister of State was discussing the 25% threshold with Deputy Pearse Doherty earlier, he made the point that it is principally designed to capture the 96...