Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that page 20 of Revenue’s Ready Reckoner can be used to estimate the yield from changes to the rate of Stamp Duty on shares. The current rate of Stamp Duty on the transfer of shares is 1% and the estimated yield from the proposed increases can be derived on a pro rata basis from the table.

The Ready Reckoner is available at this link: www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf

I am further advised by Revenue that, as Stamp Duty liabilities in respect of the transfer of shares are not returned separately by place of incorporation, information specifically in relation to Irish incorporated companies is not available.

Paschal Donohoe (Dublin Central, Fine Gael)
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The current annual interest charge on deferral of Local Property Tax is 3%. I am advised by Revenue that the cost of changes to this rate will depend on the time period of deferral. However, based on current deferrals, the annual cost of the reduction outlined by the Deputy is estimated by Revenue to be in the region of €0.1 million.

The rate of interest was examined in the context of the LPT 2019 Review which recommended retaining the previous rate of 4%. The reduced rate of interest recognises that the circumstances in which a person defers the tax charge are very different from those where the property owner simply fails to pay the tax. A review of the interest rate also took place in 2021, in advance of the LPT revaluation. The review took account of the Covid initiative on the warehousing of tax debts, in respect of which a reduced interest rate of 3% applies for late payment of outstanding liabilities. In the interests of consistency and fairness, the Government decided to reduce the LPT deferral rate to 3% and this was provided for in the Finance (Local Property Tax) (Amendment) Act 2021. The 3% rate applies to any LPT that is deferred on or after 1 January 2022.

Paschal Donohoe (Dublin Central, Fine Gael)
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An Irish Real Estate Fund (IREF) is an investment undertaking where 25% or more of the value of that undertaking is made up of Irish real estate assets. Generally IREFs must deduct a 20% withholding tax on distributions to non-resident investors, and further taxation is a matter for their country of residence. Certain categories of investors such as pension funds, life assurance companies and other collective investment undertakings are generally exempt from having IREF withholding tax applied provided the appropriate declarations are in place. Non-resident investors from treaty resident countries may be able to reclaim some part of IREF withholding tax if the relevant tax treaty allows for this. Irish resident investors are not subject to the IREF withholding tax as they are already subject to 41% exit tax on income/gains from funds.

A Real Estate Investment Trust (REIT) is a quoted company, used as a collective investment vehicle to hold rental property. The function of the REIT framework is not to provide an overall tax exemption but rather to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply on property investment via a corporate vehicle. REITs are publicly listed companies - therefore distributions are dividends within the scope of Dividend Withholding Tax (DWT), which applies at a rate of 25%. REITs are obliged to distribute at least 85% of profits annually. Irish resident investors are liable to tax at their marginal rates on dividends received, with a credit for the DWT deducted. Non-Irish resident investors are subject to DWT at 25%. Those resident in treaty-partner countries may be able to reclaim some of this DWT under the relevant tax treaty.

The Deputy should note that, as outlined above, IREFs are not required to operate DWT in the same manner as REITs. The IREF withholding tax is charged at 20% and operates separately to DWT.

I am advised by Revenue that the yield from changes in the rates of withholding taxes on REITs and IREFs would be dependent on the level of future distributions by these entities. There is no basis available to provide an accurate estimate of these future distributions. Furthermore, as set out above, investors resident in treaty-partner countries may be able to reclaim some of the REIT DWT or IREF withholding tax deducted, by reference to an agreed distribution rate in the relevant bi-lateral treaty. In such cases, there would be no net Exchequer yield from an increase in the withholding tax rates as treaty relief would reduce the net tax back to the existing agreed rate.

However, the Deputy may be interested to note the information published on IREFs in the Revenue statistical report titled Corporation Tax – 2021 Payments and 2020 Returns which is available at the following link:www.revenue.ie/en/corporate/documents/research/ct-analysis-2022.pdf.

Table 18 in the report provides information in respect of IREFs based on returns filed with Revenue. Due to the low number of REITs operating in Ireland and Revenue’s obligation to observe confidentiality, I am advised by Revenue that equivalent information in respect of REITs cannot be provided.

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that, as tax liability is calculated based on the combination of all incomes, reliefs, credits and deductions, it is not possible to provide an exact tax cost for each individual item of allowable expenses. However, in order to estimate tentative costs, it is possible to identify the amounts claimed under each item and apply an average marginal rate of tax. The average marginal rate of tax is the average rate across all taxpayer types and is not confined to those with a rental income.

2018 is the latest year for which complete fully analysed data are available. The table below sets out the estimated 2018 tax cost of the allowable expenses against rental income, separated into each individual item as declared on tax returns and further separated into residential and non-residential properties.

These costs are based on the amounts claimed regardless of the rental income. If the rental income was lower than the expenses declared, then the full cost of each item would not accrue. The costs outlined in the table can be taken as broadly indicative of an estimated yield for a given year should these claims be excluded.

I am further advised by Revenue that equivalent information for 2019 will be published on its website in the coming weeks.

Paschal Donohoe (Dublin Central, Fine Gael)
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At the outset, it is important to note there are various levies and contributions in existence on insurance premiums. These serve different, defined purposes with some having been in place for a number of years. I should also state that there are no plans to discontinue them at this time. These are briefly detailed below.

The 2 per cent Insurance Compensation Fund (ICF) levy is the only pure "levy" charged on insurance premiums. This is charged to fund the ICF, which covers the cost of claims in this State where an insurer goes into liquidation. This levy was in place from 1984 to 1992 and was reintroduced in January 2012. It currently applies at a rate of 2 per cent of premiums received on all non-life insurance policies and its purpose is primarily to repay the Exchequer for funding the administration of Quinn Insurance. As there is still a significant amount owing to the State, the levy is likely to be applied for most of the remainder of this decade.

Separately, while there is not a 1 per cent insurance levy, the Deputy may be referring to the stamp duty charged on life insurance premiums, which is occasionally described as a levy. However, this is recorded to the Exchequer as a tax receipt jointly with a separate 3 per cent stamp duty charged on certain non-life premiums. As such, it is not possible to differentiate both distinctly. Information on Stamp Duty yields, which includes these Life Assurance and Non-Life Insurance Levy components from 2010 onwards, can be found on the Revenue website statistics page: www.revenue.ie/en/corporate/documents/statistics/receipts/stamp-duty-receipts.pdf. However, since 2010 the total amount collected under these specific stamp duties has totaled c.€1.8 billion.

Finally, the Deputy may wish to note the Motor Insurers Insolvency Compensation Fund (MIIC Fund) is a contribution equivalent to 2 per cent of gross motor premiums, which is provided by motor insurers. This is not considered a levy as the decision rests with the insurance companies as to how this is financed i.e. either through absorbing it or passing it onto consumers. This ensures the compensation levels payable from the ICF for third party motor insurance claims as a result of a motor insurer insolvency is now aligned with that where a motorist is in a collision with an unidentified or uninsured driver.

The contribution rate is subject to an annual review by me in my role as Minister of Finance. Currently, it is expected to continue for a number of years.

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that employers who pay employees’ removal and relocation expenses are required to keep relevant records for a period of at least 6 years. However, as there is no reporting requirement in relation to this provision, there are no data available on which to estimate the tax foregone.

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that, as information on income is not required on Local Property Tax returns, it is not possible to provide an accurate estimate of the impact of an additional charge on second or more properties linked to income. The Deputy may wish to note that the yield in respect of second and multiple properties is published at:

www.revenue.ie/en/corporate/information-about-revenue/statistics/ready-reckoner/index.aspx.

Paschal Donohoe (Dublin Central, Fine Gael)
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Following clarification with the Deputy's office, I understand the question relates to the estimated additional revenue that would be raised from introducing a non-principal private residence charge.

I am advised by Revenue that the estimated additional revenue which would be raised from an annual contribution charge of €200 or €500 respectively per non-principal private residence, is €46m and €115 respectively.

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 182 and 183 together.

Ireland’s corporate tax regime has been built on certainty and predictability, and the 12.5% corporation tax rate on trading income has been a cornerstone of that regime for almost 20 years. This stability has enabled companies to plan long-term investments in Ireland, generating employment and increasing economic activity.

The Deputy will be aware that Ireland signed up to the OECD Two Pillar agreement in October 2021, including the agreement of a global minimum effective rate of 15% for in-scope entities. Before joining the OECD Two Pillar agreement in 2021, I ensured that Ireland would continue to be able to offer a 12.5% rate for businesses out of scope of the agreement, i.e. businesses with revenues less than €750m. This means that over 95% of companies operating in Ireland are outside of the scope of the global minimum effective tax rate of 15% and they will continue to be taxed at the 12.5% rate.

On a straightforward, mathematical basis there would be a large theoretical yield from increasing the 12.5% trading rate of corporation tax (with a smaller theoretical yield for the non-trading 25% rate). However, as has been demonstrated in research published by my Department and the ESRI, it is likely that such changes would lead to lower levels of economic activity, behavioural changes in the locational decisions of multinational companies and employment in the multinational sector. In turn, this would be expected to result in reductions in tax revenues across a number of tax heads. Therefore, it is not possible to accurately or robustly estimate the potential yield from rate increases of this nature.

With regard to effective rates of tax, analysis undertaken by the Department of Finance (co-authored by an independent academic), a separate report undertaken by the Comptroller and Auditor General and Revenue’s annual analyses of corporation tax payments and returns, all using the most appropriate methodology, confirm that the overall effective rate of corporation tax paid by corporations in Ireland is between 10% and 11%. While this percentage is lower than the 12.5% headline rate, this can be attributed to the availability of a small number of targeted tax measures that may lower the effective rate of corporation tax paid in Ireland.

As signatories to the OECD Two Pillar agreement, Ireland is now working towards the introduction of the 15% global minimum effective rate by end 2023. While this will increase the tax rate for in-scope companies, it is important to recognise that this is only one element of the Two Pillar agreement. Any projected changes to corporation tax yields following implementation must therefore also take into account Pillar One, which provides for a reallocation of certain profits to market jurisdictions. Ireland signed up to the OECD Two Pillar agreement in October 2021 in the knowledge that there would be a net cost in terms of reduced tax revenues. However, the agreement will have broader benefits in that implementation is expected to bring much needed stability to the international tax framework after the turbulence and uncertainty in recent years, allowing companies the certainty to plan investments and focus on core business activities.

My Department’s current estimate of the cost of joining this agreement is in the region of €2 billion annually, albeit that it remains very difficult to accurately estimate the impact at this stage.

The decision to join the global agreement was not taken lightly but I firmly believe this agreement brings a unique opportunity to reframe the international taxation architecture which has largely remained in place for almost a century