Seanad debates

Wednesday, 6 December 2017

Finance Bill 2017: Committee Stage

 

10:30 am

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael) | Oireachtas source

The State does not implement policy based on how much we contribute to the EU. It flows subsequently based on GNI. In this year's budget, it was proposed to limit the deduction for capital allowance for intangible assets, and any related expense, to 80% of the relevant income arising from the asset in that period. The measure was recommended by Mr. Séamus Coffey in his review of Ireland's corporation tax code in order to ensure that there was a smoothing of corporation tax receipts over time.

Section 25 amends section 291 of the Tax Consolidation Act 1997 to provide for the 80% cap. This amendment applies in respect of capital expenditure incurred on intangible assets on or after 11 October 2017. The 80% cap will affect the timing of relief in the form of capital allowances and related interest and expenses for intangible assets but will not affect the overall quantum of relief. This is because any amount restricted in one accounting period as a result of a cap will be available to be carried forward and used in subsequent accounting periods subsequent to the application of the cap in that period. Section 25 also makes a minor technical amendment to section 291(a) to clarify the scheme of relief applies where companies whole trading activities consist of relevant activities. Section 291(a) currently makes reference to relevant activities carried on as part of a trade. This amendment is deemed to have applied in respect to capital expenditure incurred on intangible assets on or after 8 May 2009, being the date that section 291 first took effect.

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