Seymour Crawford (Cavan-Monaghan, Fine Gael)
Link to this: Individually | In context

Question 177: To ask the Minister for Finance his views on whether there is a need to reduce the vehicle registration tax rates on motor vehicles as a result of the EU proposals calling on the abolition of the vehicle registration tax; his further views on whether it is a very unfair tax and needs to be phased out over a number of years in order to minimise damage to the second-hand vehicle market; if he also accepts that there is a need to reduce excise duty on fuel to compensate for the increased VAT take on rising fuels; and if he will make a statement on the matter. [32910/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

VRT provides significant revenue to the Exchequer —€946 million in 2004 — which is used to fund vital public services. The European Commission has published a proposal for a directive in relation to car taxes which supports the gradual abolition of registration taxes which would be replaced by circulation taxes which would have a CO2 element. However, discussion on this proposal is at the early stages. I should also point out that we regard VRT as a national tax that falls within the national competence. Quite simply, the mix of taxes, their levels and rates are a matter for EU member states based on legitimate choices.

Excise changes are a matter for the budget and, as the Deputy is aware, it is a longstanding practice of the Minister for Finance not to comment in advance of the budget on possible budget decisions

Mary Upton (Dublin South Central, Labour)
Link to this: Individually | In context

Question 178: To ask the Minister for Finance when the practice known as participation privilege, which allowed companies to repatriate from offshore companies without being subject to tax, was discontinued; the number of companies that availed of this procedure; the amounts repatriated in this way; and if he will make a statement on the matter. [33052/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

It has been a basic feature of our corporation tax code that resident companies are chargeable to tax on their worldwide income and capital gains, with credit for tax paid in countries with which we have a double taxation agreement given against Irish tax payable. Unilateral credit relief may also be available in respect of tax paid in a country with which Ireland does not have such an agreement. While several other countries also apply a credit system, some countries choose to relieve double taxation by providing a full exemption to resident companies in respect of their foreign-sourced income and capital gains. This latter system, under which such companies are exempt from further taxation in respect of repatriated dividends of overseas subsidiaries and profits of overseas branches, is known as participation privilege.

Limited forms of participation privilege were introduced in Ireland in 1988 for dividends repatriated from foreign subsidiaries — section 222 of the Taxes Consolidation Act 1997 — and in 1995 for companies with foreign branch profits — section 847 of Taxes Consolidation Act 1997. These reliefs were terminated with effect from 15 February 2001 in order to conform with the EU code of conduct on harmful tax practices. Both measures required ministerial certification which had to have been issued before 15 February 2001.

Section 222 of the Taxes Consolidation Act 1997 provided an exemption from corporation tax where dividends repatriated from subsidiaries located in countries with which Ireland has a double taxation agreement were applied towards the creation or maintenance of employment in the State. A certificate had to be given by the Minister for Finance specifying the amount of the dividends qualifying for exemption on the basis of an investment plan for the creation and maintenance of employment in trading operations carried on in Ireland. Such a certificate must have been given before 15 February 2001. In total 12 certificates have been granted to Irish companies although in a number of cases the investment plans were not implemented and so no tax relief was claimed. All the investments made on the basis of approved plans were executed before the end of 1999. Almost €287 million was repatriated for investment here under this relief.

Section 847 of the Taxes Consolidation Act 1997 provides for an exemption from corporation tax and capital gains tax in respect of the income and gains of a foreign branch of an Irish company that creates substantial new employment in Ireland resulting from a substantial new investment of permanent capital in the State. The exemption is granted to a company to which the Minister for Finance has given a certificate before 15 February 2001 where the Minister is satisfied that an investment plan submitted to him will result in the creation of substantial new employment in the State and that the maintenance of that employment is dependent on the carrying on of trading operations by the company through a foreign branch or branches. The investment plan must be framed in accordance with published guidelines. The exemption cannot be claimed after 31 December 2010. Three certificates have been granted but in two cases relief had never been claimed. As only one taxpayer claimed the relief, it is not appropriate to give details of the amount involved.