Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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260. To ask the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from section 28 of the Finance Bill 2021 that inserts a new section 25A into the Taxes Consolidation Act 1997 with provisions relating to attribution of profits to a branch; and if he will make a statement on the matter. [54677/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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Section 28 of the Finance Bill 2021 provides for the application of an OECD-developed mechanism known as the “authorised OECD approach” or "AOA" for the attribution of income to a branch of a non-resident company operating in the State. This delivers on the commitment in the Update to Ireland’s Corporation Tax Roadmap which was published in January of this year.

The section provides that trading and certain other income of a branch is to be attributed by reference to transfer pricing principles and, for these purposes, the OECD’s guidance on the authorised OECD approach will apply.

The adoption of the authorised OECD approach brings our tax rules in line with international best practice. I held a public consultation earlier this year to outline the proposed adoption of the authorised OECD approach in the Irish tax code and received valuable stakeholder input.

In terms of costing it is anticipated that the introduction of this measure will be cost neutral. The new legislation will provide additional clarity and certainty to taxpayers in relation to the attribution of income to branches but is not expected to result in an additional exchequer yield. It was apparent from stakeholder engagement that many groups already use this approach when allocating profits to Irish branches.

It is anticipated that the authorised OECD approach, for the attribution of profits to a branch, will apply to accounting periods commencing on or after 1 January 2022.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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261. To ask the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from the provisions of section 481 of Taxes Consolidation Act 1997 relief for investment in films; and if he will make a statement on the matter. [54678/21]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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262. To ask the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from the provisions of section 32 of the Finance Bill 2021 that amends the definition of eligible expenditure in section 481 to confirm that payments made directly by a qualifying company to an individual involved in the provision of labour-only services for the purposes of the production of a qualifying film, qualify as eligible expenditure; and if he will make a statement on the matter. [54679/21]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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263. To ask the Minister for Finance the measures he is planning to put in place to ensure that section 32 of the Finance Bill does not contribute to bogus self-employment in the film industry; and if he will make a statement on the matter. [54680/21]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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264. To ask the Minister for Finance the details of the revenue foregone over the past five years from section 481 of Taxes Consolidation Act 1997 relief for investment in films by year; and if he will make a statement on the matter. [54681/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 261 to 264, inclusive, together.

The section 481 tax credit provides a 32% payable credit for eligible expenditure on film production in Ireland. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.

In relation to PQ 54680, section 32 of Finance Bill 2021 amends the definition of “eligible expenditure” in section 481 to confirm that payments made directly by a qualifying company, to an individual involved in the provision of labour-only services for the purposes of the production of a qualifying film, may qualify as eligible expenditure.

This amendment has arisen as a result of the move to a self-assessment basis through Finance Act 2018. This required a substantial rewriting of section 481 legislation and it was subsequently identified that the amended definition of ‘eligible expenditure’ excluded expenditure on individuals providing a labour only service. Payments in respect of such individuals, which could include actors, directors and crew, had always qualified for section 481 relief, and this treatment was expressly stated in previous Revenue guidance. The Finance Bill 2021 amendment therefore provides confirmation of the existing standard industry practice that expenditure on individuals providing a labour only service on the production of a qualifying film may be qualifying expenditure, subject to the other terms and conditions of the credit. It is not intended that such an amendment would encourage a particular form of employment status.

In regard to PQ 54679, there is no expected Exchequer cost of the amendment. It is expected to be cost neutral on the basis that there is no change in existing policy or practice

It is essential that there is compliance with all applicable employment obligations including legislative obligations and policies, not only in the audiovisual industry, but all industries. To grow the audiovisual sector in Ireland, the sector needs to provide quality and sustained employment and training opportunities. This is reflected in the requirement for an undertaking of quality employment introduced in Finance Act 2018. The undertaking commits applicants to compliance with all relevant employment legislation. These conditions apply not only to the producer company but also to the qualifying company. Should a producer company or qualifying company fail to adhere to a condition or obligation specified in a certificate, the Culture certificate may be rendered invalid and any credit claimed may be subject to recoupment by Revenue.

Revenue also engages regularly with the Department of Social Protection (DSP) and the Workplace Relations Commission (WRC), across a range of industries, to address any misclassification of individuals as ‘self-employed’ when ‘employee’ status would have been more appropriate. Together with the DSP and the WRC, they have updated the Code of Practice for Determining Employment Status which was published in July 2021. The Code aims to be of benefit to employers, employees, independent contractors and legal, financial and HR professionals. It is also aimed at investigators, decision-makers and adjudicators in the DSP, Revenue, the WRC, their respective appeals bodies, and the courts. Its purpose is to provide a clear understanding of employment status, taking into account current labour market practices and developments in legislation and caselaw. The Code highlights that there is no single clear legal definition of ‘employment’ or ‘self-employment’ under EU or Irish law and also emphasises that “the reality behind the contract” is what determines employment status.

In addition, there has been positive progress in relation to negotiations between employer and worker representatives in the sector in the past year. A modernised Crew Agreement was introduced in January 2021 which promotes good practice, regularises evolving work practices and provides for an industry pension scheme operating under the Construction Workers Pension Scheme (CWPS). This Agreement includes a monitoring structure to oversee the operation of the agreement, and a commitment to developing the first Work/Life Balance policy for the film and television industry. The Agreement acts as a framework for the industry covering all crew grades except film construction.

I understand that a Construction Crew Agreement is also under active negotiation, and my officials will continue to monitor progress in this regard.

It should be noted that the monitoring of compliance with employment rights legislation is primarily a matter for the Department of Enterprise, Trade and Employment through the Workplace Relations Committee (WRC).

In relation to PQ 54678, as the level of future investment in the film industry is unknown, there is no basis available from tax returns or other data available to Revenue to accurately project the potential cost of the measure in 2022. However, and referring also the Deputy's question PQ 54681, I would note that the value of tax relief provided under the provisions of section 481 of the Taxes Consolidation Act for Investments in Films for the years 2015 to 2019 is available in the Costs of Tax Expenditures table published at www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/costs-tax-expenditures.pdf.