Jim Daly (Cork South West, Fine Gael)
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Question 95: To ask the Minister for Finance the reason he will not permit local authorities to make payments to subcontractors under the RCT 35 return in the absence of a valid C2 certificate which is the law laid down by the Revenue Commissioner as a method of payment between all principle and subcontractors in the State; and if he will make a statement on the matter. [26309/11]

Michael Noonan (Limerick City, Fine Gael)
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Circular 43/2006 issued by my Department advised Government Departments and other public sector bodies concerned with awarding public sector contracts of the procedures relating to tax clearance.

In the case of sub-contractors on any public sector contract of a value of €10,000 (inclusive of VAT) or more, the contracting authority should, when advertising the main contract, state that it will be a condition for the award of the contract that all sub-contractors employed on the project must produce a tax reference number where payments exceed €650. Records of tax reference numbers must be kept by the contractor and be available for inspection where requested by the Revenue Commissioners.

Where payments exceed €2,600 in any 12 month period the sub-contractor will be required to produce either a current tax clearance certificate or a current C2 certificate. It should be made clear to sub-contractors that payments under a contract are at all times conditional on compliance with these requirements. It will be the responsibility of the relevant contractor to ensure that any sub-contractor employed by him complies with these requirements. In all cases contracting authorities must ensure that contractors have complied with these requirements.

It should be emphasised in the case of sub-contractors in the construction, forestry and meat processing industries that, in the absence of a C2 certificate, tax must continue to be deducted at source at the rate of 35 per cent in accordance with Section 531 of the Taxes Consolidation Act, 1997 as amended not withstanding the fact that a tax clearance certificate has been furnished under these arrangements.