Kevin Humphreys (Dublin South East, Labour)
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Question 65: To ask the Minister for Finance the taxation that applies to patent royalties; the specific changes that have occurred on an annual basis since 2009; the yield from tax on patent royalties from 2009 to 2011 and the expected yield in 2012 in tabular form; and if he will make a statement on the matter. [8947/12]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that income from patent royalties is normally received in the form of a license fee from licensing out the patent and that, for companies, such income is generally taxed at the higher corporation tax rate of 25%, while resident individual taxpayers are liable to tax at their marginal rate of tax in respect of such income. However, it is possible to have royalty income treated as trading income in respect of which a company is taxable at the 121⁄2 % rate of corporation tax. To qualify for the 121⁄2 % rate there must be a high degree of activity associated with the licensing out of the patent from which the royalty income is derived. Section 234 Taxes Consolidation Act 1997 (TCA) provided for a tax exemption for income received by an individual or company from a qualifying patent subject to an annual limit of €5 million on aggregate patent income in any one year. An exemption was also provided, under section 141, for dividends or other distributions paid by companies from tax-exempt patent income. A qualifying patent is a patent in relation to which the research, planning and development work leading to the patented invention was carried out in the State or in another country which is part of the European Economic Area. The exemption for patent royalty income was subject to the restriction, introduced in the Finance Act 2006, on the use of tax reliefs by high-income individuals and to the further restrictions in this regard introduced in Finance Act 2010.

The tax exemption for patent royalty income and related distributions was abolished in Budget 2011 with effect from 24 November 2010 following consideration of a recommendation to this effect in the Report of the Commission on Taxation. The Commission on Taxation was of the view that the exemption was not an effective measure in incentivising companies to engage in research and development activities in Ireland and that it had been used as a tax-efficient means of remunerating employees and directors.

I am also advised that there is an obligation to deduct tax at the standard rate of income tax on patent royalty payments under Section 238 of the TCA, but this does not apply in the case of royalties paid by a company to associated companies resident in other EU States or royalties paid by a company in the course of a trade to a company resident in a country with which Ireland has agreed a tax treaty. Revenue is also prepared to waive the requirement to deduct tax in circumstances where the royalties are paid to non-residents who would otherwise be entitled to repayment of the tax deducted.

In relation to tax yield from patent royalty income, I am informed by the Revenue Commissioners that, based on information provided in annual tax returns, the total tax yield in respect of such income was negligible for the years 2009 and 2010. Estimates of tax yield from such income are not available for 2011 and 2012. However, the abolition of the exemption for patent royalty income in Budget 2011 was estimated to provide a full year yield of €50 million.

Kevin Humphreys (Dublin South East, Labour)
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Question 66: To ask the Minister for Finance his plans to publish an annual tax expenditure report as recommended in the Commission on Taxation report 2009; if he will consider including such a proposal in the Finance Bill 2012 on Committee Stage; and if he will make a statement on the matter. [8948/12]

Michael Noonan (Limerick City, Fine Gael)
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The Office of the Revenue Commissioners is the main source of statistics and data on tax incentives and expenditure. They provide costs of tax credits, allowances and reliefs in their Annual Statistical Reports. The most recent figures related to tax expenditures appear in the 2009 report, which sets out the total identifiable costs to the Exchequer of all income tax and corporation tax allowances, reliefs, exemptions and tax credits available for 2007 and 2008, the most recent year for which information is available. The work of updating cost details for the following year is well advanced and Revenue hope to be in a position to publish them in the near future. All tax expenditures are kept under review and as a matter of course form part of the Tax Strategy Group's (TSG) discussions in advance of the Budget. The TSG papers are subsequently published on the Department of Finance's tax policy website (www.taxpolicy.gov.ie).

For these reasons I do not consider it appropriate to include the proposal suggested by the Deputy in the Finance Bill.

Kevin Humphreys (Dublin South East, Labour)
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Question 67: To ask the Minister for Finance the taxes applied to sulphur dioxide, SO2, and nitrogen oxides, NOx, emissions; if there are none, if he will consider implementing such a charge as applies in Denmark and Sweden; and if he will make a statement on the matter. [8949/12]

Michael Noonan (Limerick City, Fine Gael)
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There is currently no tax based on sulphur dioxide or nitrogen oxide emissions. The Deputy may wish to note that a carbon tax was introduced in respect of fossil fuels and was increased from €15 per tonne to €20 per tonne with effect from 7 December 2011 in respect of auto-fuels and from 1 May 2012 in respect of non-auto mineral oils and natural gas. The carbon tax in respect of solid fuels is subject to a Ministerial Commencement order.