Mary Upton (Dublin South Central, Labour)
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Question 103: To ask the Minister for Finance if he will review the decision of the Revenue Commissioners to require a person (details supplied) in County Galway to discharge the tax liability of their overseas landlord in circumstances in which this person is a recipient of rent supplement; and if he will make a statement on the matter. [47582/08]

Mary Upton (Dublin South Central, Labour)
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Question 104: To ask the Minister for Finance his plans to reform the practice of the Revenue Commissioners in situations in which a tenant is paying rent to an overseas landlord, in order that there is direct contact from the Revenue Commissioners with the landlord and that the tenant is not penalised for failing to discharge the landlord's tax obligations; and if he will make a statement on the matter. [47583/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 103 and 104 together.

The operation and impact of tax law as it applies to the legal obligation on a tenant, who pays rent to a non-resident landlord, to deduct income tax from the rental payments is monitored and reviewed on an ongoing basis as part of the normal work of my Department and the Revenue Commissioners.

I am informed by the Revenue Commissioners that the withholding of tax on rental income by tenants of non-resident landlords acts to promote greater compliance and deter evasion in this area, having regard to the obvious risk factors associated with non-resident taxpayers. The provision also ensures that a minimum tax payment is made by such landlords which might not be the case if the provision were removed.

The Revenue Commissioners accept that this provision might not be well known to some tenants and as a consequence could give rise to some practical difficulties. In recognition of this, where a tenant acts in good faith and is genuinely unaware of the obligation to deduct tax or of the residence status of the landlord, Revenue will only seek to apply the legislation from a current date. There is no question of such tenants being penalised for past failures to withhold tax from rental payments. This practical approach is reflected in Revenue's operational instructions in this area. In this context Revenue are prepared to review the specific case outlined by the Deputy. If the person forwards details of the assessment to Gerard Moyles, Customer Services, Galway County District, he will be pleased to assist. He can be contacted at 091535952 or by email at gmoyles@revenue.ie.

On the general issue raised by the Deputy there are a number of factors that need careful consideration, not least to protect the Exchequer from loss of revenue through tax evasion. The removal of the obligation to withhold tax would create a situation where it would be easy for non-resident landlords to evade tax. Revenue would have no way of recovering the tax due as Revenue would not be in a position to force such non-residents to make a tax return and to declare their income.

I have to ensure that Irish income tax is capable of being collected and, having consulted with the Revenue Commissioners and considered the matter, I am of the view that the current position, whereby tenants operate a withholding tax on such rental payments coupled with the Revenue practice of accepting the good faith of tenants who were genuinely unaware of their responsibilities or of the residency status of their landlords, remains the most effective approach in this area. An alternative arrangement that would avoid opening up opportunities for tax evasion simply does not present itself at present.