Terence Flanagan (Dublin North East, Independent)
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60. To ask the Minister for Finance his views on correspondence (details supplied) regarding tax compliance; and if he will make a statement on the matter. [39143/14]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by Revenue that it monitors the tax compliance status of both resident and non-resident contractors through a number of different programmes including the administration of tax clearance and the operation of electronic Relevant Contracts Tax (eRCT).

Revenue administers the general scheme of tax clearance certification in accordance with Section 1095 of the Taxes Consolidation Act 1997. Section 1095 (3) provides that Revenue will issue a tax clearance certificate where a person or business is in compliance with all obligations to pay taxes, interest and penalties that are due to the State under the Acts and to file any tax returns that are required to be made.

The purpose of the tax clearance scheme is to ensure that businesses (residents and non-residents) that derive an economic benefit from the State are in compliance with their tax obligations to the State. Such tax clearance certification is required for Public Sector Contracts, Grant Payments and certain Licence Applications (Section 1094 of the Act).

While the awarding of a State contract is a matter for the relevant State authority, a condition is that the tenderer must have a current tax clearance certificate in respect of Irish tax. Where Revenue issues such a tax clearance certificate it is in respect of Irish tax rather than the tax status of the applicant in its country of residence. However, as part of the validation process for non-resident applicants (including those from Northern Ireland), routine checks are carried out to authenticate the identity of the business/person.

In regard to eRCT, Revenue has advised me that the system operates on a 'deduction at source' basis and applies to payments made under contracts in the construction, meat processing and forestry sectors (including Public Sector construction contracts). The system was introduced in 2012 (replacing the previous paper based system) to bring more control and oversight to construction sector contracts. As part of the process, businesses in receipt of payments made under a contract are, depending on their tax compliance record, assigned a tax deduction rate of 0%, 20% or 35%. For non-resident contractors to qualify for the 0% rate the business must have complied with all of the comparable obligations imposed by the laws of the tax jurisdiction in which the business is tax resident as apply to Irish resident contractors. Where proof of compliance is not received then the business may be assigned to the higher 20% or 35% automatic deduction rates (normally 35% in such circumstances).

I am satisfied that between the administration of tax clearance certification and the operation of eRCT, Revenue has good systems in place to mitigate the potential for tax non-compliance among non-resident businesses operating in the State. However, if the Deputy or the person in question has any knowledge in regard to non-compliance by individual non-resident contractors then that information should be immediately made available to Revenue.