Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I am pleased to address the House and I thank Senators for the opportunity to present this Bill.

As they will be aware, the Russian invasion of Ukraine in early 2022 led to exceptionally high energy prices. The Government is aware of the resulting financial strain on households and businesses in Ireland and has introduced numerous supports for homes and businesses to off set the increase. This includes a €2.4 billion package of supports introduced during 2022 and a package of once-off measures worth €2.5 billion, which were included in budget 2023.

The main purpose of the Bill is to provide for the temporary solidarity contribution, TSC, of Council Regulation 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices in accordance with the Government decisions on the implementation of this regulation. The Government is seeking to maximise the collection of the TSC while balancing concerns about energy security of supply and impacts on future energy investment. This Bill also provides robust powers to the Revenue Commissioners to ensure a timely and efficient collection of the TSC.

The TSC proceeds will be remitted to the Exchequer and the specific distribution of proceeds will be subject to a Government decision and agreed in the context of budget 2024 following consultation with the energy poverty steering group. A separate Bill, entitled the Energy (Windfall Gains in the Energy Sector) (Cap on Market Revenues) Bill 2023, which will be published in the coming weeks, will implement the cap on market revenues provided for in the Council Regulation.

I will provide a brief overview of the most important measures the Bill addresses before discussing them in more detail. The Bill provides for the TSC to be payable by companies with activities in the fossil fuel sector, including the production or refining of natural gas, coal, petroleum or the manufacture of coke oven products, carried on in the State for the fiscal years 2022 and 2023. The TSC is 75% of taxable profits, which are 20% above the average of taxable profits in a baseline period of 2018 to 2021. The Bill amends the Taxes Consolidation Act 1997, which I will call the Act of 1997, through the insertion of a new Part 24B, which provides for the definition of "taxable profits", the definition of "average taxable profits" for the purposes of the TSC and the deductibility of the TSC from corporation tax. These definitions of "taxable profits" and "average taxable profits" for the purposes of the TSC provide for a calculation of the TSC in the same manner as profits chargeable to corporation tax.

The Bill provides for certain exceptions that Senators should note. Losses prior to 1 January 2018 and after 31 December 2023 will not be deductible in calculating taxable profits for the purposes of the TSC. Additionally, group relief claimed in an accounting period falling wholly or partly in 2018 to 2023 will not be deductible in calculating taxable profits for the purposes of the TSC. Group relief surrendered in an accounting period falling wholly or partly in 2018 to 2023 will be disregarded and, therefore, deductible in calculating taxable profits for the purposes of the TSC. Capital expenditure on the acquisition or construction of allowable tangible assets will be deductible in addition to relevant capital allowances that may have been deducted in calculating taxable profits.

Senators should note that the TSC is not a tax, and as such, the Revenue Commissioners require powers for the TSC to be under its care and management. Provision is, therefore, made in the legislation for the Revenue Commissioners to administer, collect, undertake assessments of returns and enforce the TSC. The legislation also provides an appeal mechanism to the Tax Appeals Commission, TAC, for companies that are aggrieved by Revenue assessments. I now propose to give a more detailed overview of the Bill, which contains four Parts, 26 sections and one Schedule. Part 1 contains standard legislative provisions that cover the Short Title of the Bill, its commencement, definitions of terms used in the Bill and a standard provision enabling the expenses of the Minister to be paid out of moneys provided by the Oireachtas.

Part 2 provides for the calculation of the temporary solidarity contribution, TSC, for TSC to be under the care and management of the Revenue Commissioners, and for an appeal mechanism to the Appeal Commissioners. This Part also sets out the obligations of energy companies with respect to the TSC.

I wish to draw particular attention to the following provisions of Part 2. Section 4 provides for a levy to be known as “temporary solidarity contribution” on the taxable profits of each energy company in respect of each chargeable period. It also provides for the calculation of TSC, and for the TSC to be payable to the Revenue Commissioners on or before the specified date.

Section 5 provides for anti-avoidance measures in respect of the TSC. Section 6 provides for TSC to be under the care and management of the Revenue Commissioners. Sections 7, 8 and 16 provide for the obligations of an energy company with respect to TSC, including notifying the Revenue Commissioners by specified dates, the preparation and delivery of a return and the retention of records. Section 15 provides for an energy company to make an appeal to the Appeal Commissioners in respect of a Revenue assessment or amended assessment. It also provides that an appeal cannot be made against a surcharge under the Bill, a self-assessment or the amount of taxable profits specified therein.

Part 3 provides for enforcement measures for TSC to ensure a timely and efficient collection by the Revenue Commissioners. I wish to draw attention to the following provisions of Part 3. Section 17 provides for a percentage increase or surcharge on TSC returns that are not delivered by the specified date. In light of the short time between the potential enactment date of this Bill and the first payment date on 23 September 2023, it was considered fair not to impose a surcharge for the first three months. Provision is also made for caps on the amount of surcharge that can be added to a late return. Section 18 provides for the interest on overdue amounts, based on a formula set out in this Bill. Sections 19 to 21, inclusive, provide for a penalty where an energy company fails to deliver a return on or before a specified date, comply with a notice to make a particular item available for inspection or retain records in accordance with this Bill.

Section 21 provides for other penalties, including deliberately or carelessly making incorrect returns or failing to make certain returns. Section 22 provides that Chapter 4 of Part 47 of the Act of 1997 shall apply to the TSC. Part 4 amends the Act of 1997 through the insertion of a new Part 24B and sections 697R, 697S, 697T and 697U. I wish to draw attention to the following provisions of Part 4. Section 23 inserts the new section 697S into the Act of 1997, which will provide for the calculation of taxable profits for purposes of TSC. This section also sets out the conditions which are not to be taken in account in calculating taxable profits for purposes of TSC.

Provision is made for the treatment of losses in the calculation of taxable profits, and for the calculation of taxable profits where the accounting period of an energy company does not align with a calendar year. In addition, section 23 inserts new section 697T into the Act of 1997, which will provide for the calculation of average taxable profits in a baseline period, for partial trading years and non-operating trading years in the baseline period. This section also provides that where the average taxable profits are less than zero, then the average taxable profits shall be zero for the calculation of TSC. The Schedule to this Bill provides for consequential amendments to the Act of 1997, to the Ministers and Secretaries (Amendment) Act 2011 and to the Finance (Tax Appeals) Act 2015.

I have outlined the main provisions of the Bill and provided additional detail on the sections. I hope this will be of assistance to Senators. I look forward to an informed and meaningful debate and to working constructively with Senators on both sides of the House.