Pat Breen (Clare, Fine Gael)
Link to this: Individually | In context

Question 132: To ask the Minister for Finance his views in relation to Section 31 of the Finance Bill 2008; the qualifying criteria in terms of the date of 14 October 2008 for companies who wish to apply for an exemption under the provision; if he has plans to alter the provision to allow companies whose first period of trading either commences or concludes within the 12 months to 31 December 2009; and if he will make a statement on the matter. [6450/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The provisions of section 31 of Finance (No 2) Act 2008 provide for relief from corporation tax for their first 3 years of operation for companies incorporated on and from 14 October 2008 that commence to carry on a new trade in 2009. The relief is granted by reducing the corporation tax on the profits of the new trade and on the gains from disposal of assets used for the purpose of the new trade to nil. Full relief is available where the corporation tax otherwise payable by the company in respect of any of its first 3 years is €40,000 or less. There is marginal relief where the corporation tax liability is between €40,000 and €60,000.

The intention is that this relief will comply with the EU de minimis Aid Regulations. These Regulations set the level of de minimis aid available, generally, at €200,000 over any three year period. In the case of the road transport sector, the figure is €100,000. Any tax relief under the provisions of section 31 of Finance (No 2) Act 2008 will affect the amount of further State aid that a company can receive. The requirement that the company be newly registered ensures that we are starting at the beginning as regards State aids. In addition, with the new company requirement, the new trade will be easily distinguishable from other businesses run by a promoter and/or other related companies which is important so as to ensure against any abuse of the measure.

For these reasons, I had to choose a date to define a 'new company' under the legislation and incorporation from the date of Budget 2009 is a reasonable approach. If the date was changed to facilitate some, it would still likely impact on someone else. While there may be some additional cost and inconvenience for a small number of individuals or companies, this has to weighed up against the significant benefits being provided under this incentive. I do not propose to amend this requirement of the legislation.

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

Question 133: To ask the Minister for Finance the amount of tax the VRT system provided to the Government for 2008; the amount he expects to receive from this tax structure for 2009; his views on whether there is a need to examine this system of taxation as together with the 6.5% VAT differential between north and south of the border it is causing difficulties for the motor trade; and if he will make a statement on the matter. [6466/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Exchequer yield from VRT in 2008 was €1.1bn. Given the sharp decline in car sales internationally and in the State, while it is difficult to estimate, a significant reduction in VRT yield is expected in 2009.

A revised VRT system was introduced with effect from 1 July 2008. The aim of the revised VRT system was to rebalance VRT so that consumers would be rewarded for choosing lower CO2 emission vehicles. I have no plans to change the VRT system at this time.

I am conscious of the difficulties being experienced by the motor industry. The condition of the industry is the subject of ongoing discussions between my Department and the Society of the Irish Motor Industry.

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

Question 134: To ask the Minister for Finance the reason VRT and VAT are charged on new cars coming into the State from elsewhere while the VAT differential is not charged on second hand cars; the further reason VRT is not refundable if a person is bringing their vehicle out of Ireland on a permanent basis or if a garage or an individual wants to sell a car out of the State; and if he will make a statement on the matter. [6467/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

As the Deputy may be aware the application of VAT in EU member States is governed by the VAT Directive which provides that VAT is chargeable on the acquisition of a new motor vehicle by a purchaser in Ireland. Under the Directive VAT is not chargeable on second hand vehicles acquired by an individual in Ireland from another member State. This is to avoid double imposition of VAT in the EU on the same vehicle. However, second hand cars coming from outside the EU are subject to VAT under customs valuation rules. VRT is applied to both new vehicles and second hand imports being registered in the State.

I have no plans to introduce a scheme whereby a person bringing their vehicle out of the State on a permanent basis or selling a vehicle outside the State will obtain a refund of VRT.