Paul Murphy (Dublin South West, Socialist Party)
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90. To ask the Minister for Finance his views on providing the Revenue Commissioners with powers to tackle transfer pricing that artificially boosts the profits of the Irish subsidiaries of multinational corporations; and if he will make a statement on the matter. [24163/15]

Michael Noonan (Limerick City, Fine Gael)
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Specific transfer pricing legislation was enacted in Ireland in the Finance Act 2010 and there is an increasing focus by the Revenue Commissioners, as for tax authorities in other countries, on ensuring that multinational profits are not understated.  

Transfer pricing law and practice across countries seeks to ensure that the profits of multinational companies are not understated in each of the countries concerned, and this may result in upward adjustments to profits for tax purposes. Where a country makes an upward adjustment to a multinational company's profits then the relevant treaty partner country will typically make a matching downward adjustment to the multinational company's profits, to the extent that it accepts that the upward adjustment made by the other country was in accordance with the arm's length principle.  

This bilateral, tax treaty-based, interaction addresses overstatements of profits by multinationals in one country as a corollary of examinations to identify and quantify understatements of profits in another country a multinational's profits will only be reduced in one country where they have been increased in another country. Transfer pricing law and practice does not provide for, or result in, unilateral downward adjustments to company profits, separate from matching adjustments under tax treaties, and it would be inappropriate to provide powers to unilaterally reduce the taxable profits of multinational companies.

Michael Healy-Rae (Kerry South, Independent)
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91. To ask the Minister for Finance his views on a matter (details supplied) regarding inheritance tax; and if he will make a statement on the matter. [24177/15]

Michael Noonan (Limerick City, Fine Gael)
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Capital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.

For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.

There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer.

The Group A tax free threshold of €225,000, applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.

The Group B tax free threshold of €30,150, applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.

The Group C tax free threshold €15,075, applies in all other cases.

Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold.In recent years these thresholds were reduced and the rate has been increased in order to maintain the yield from capital taxes in the face of falling asset prices and as part of our fiscal consolidation efforts. In addition, taxes on certain capital are less harmful from an economic perspective than taxes on employment.

I am aware that property values have increased, with developments which had been restricted to the Dublin area now manifesting in other areas of the country, though not to the same extent in terms of price rises. I recognise that this has a bearing on taxation of the inheritance and gifting of property with respect to CAT thresholds. In this light, I will be keeping Capital Acquisitions Tax thresholds, rates and other aspects of the tax under review, particularly in the context of preparations for Budget 2016 and the consequent Finance Bill.