Pearse Doherty (Donegal, Sinn Fein)
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33. To ask the Minister for Finance his plans to amend his proposal to cap the write-off of intangible assets to 80% to include all assets which claim annual write downs; and his views on whether his proposal as structured could allow large multinationals to pay minimal or no corporation tax. [44716/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The recent ‘Review of Ireland’s Corporation Tax Code’, recommended that in order to ensure some smoothing of corporation tax revenues over time, that the limitation on the quantum of relevant income against which capital allowances for intangible assets and any related interest expense may be deducted in a tax year be reduced to 80%. 

Therefore, on foot of this recommendation, I introduced the cap in Budget 2018, effective from midnight, 11thOctober.

Notwithstanding that this is essentially a timing matter, this measure is expected to raise an additional €150 million next year.  

There are also a number of provisions in relation to the use of capital allowances for intangible assets to ensure that the scheme operates as intended and is only used for bona fide purposes:

- Relief is only available where a company is carrying on bona-fide trading activities in relation to managing, developing or exploiting intangible assets.

- Relief is not available in respect of any expenditure incurred as part of a tax avoidance arrangement.

- Under the scheme, allowances can only be offset against income of the relevant trade in which the intangible assets are used and not against any other profits.

- Allowances and deductions for interest may not exceed 80% of income in any period, leaving a minimum 20% of income within the charge to tax.

- Relief under the scheme cannot therefore be used to generate a loss.

- An arm’s length rule applies ensuring that the correct amount of income and expenditure is attributed to the relevant trade and to prevent excessive relief being claimed.

- Provision is made for Revenue to engage an expert to assist in the determination of arm’s length values, where necessary.