Michael Moynihan
Question:14. Deputy Michael Moynihan asked the Minister for Finance his plans to tighten existing revenue rules in relation to tax exiles; and if he will make a statement on the matter. [2026/13]
View answerThursday, 17 January 2013
Questions (14)
Written answers
The Programme for Government indicated that, as part of its fiscal policy, the Government will ensure that “tax exiles” make a fair contribution to the Exchequer. I have already removed the “citizenship” condition for the Domicile Levy to ensure that individuals can not avoid the levy by renouncing their citizenship. The first year for which the changes apply is tax year 2012; the levy payment for that year is not due until 31 October 2013.
The measures in recent budgets to increase the tax take from high earners will also have an impact on so-called “tax exiles”.
Apart from the Domicile Levy, the taxation of individuals in the State is broadly in line with the system prevailing in most other OECD jurisdictions, that is to say —
(a) individuals who are resident in the State for tax purposes are taxable here on their worldwide income; and
(b) individuals who are not resident for tax purposes pay tax here only on income arising in the State and on income derived from working here.
A public consultation on tax residence rules was undertaken in May of last year, as part of the Programme for Government commitment to prepare for possible further changes in this area in 2013.
This consultation process has now concluded. A total of eight submissions have been received and these have been published. There was some comment among some submissions regarding possible impact of changes to the residence rules. The present rules are considered clear and workable and the clarity, certainly and stability of our domestic tax regime enables us to compete effectively in the international economic context.
Significant concern was expressed regarding potential impact on Foreign Direct Investment, and that such changes could inhibit investment in Ireland, and result in a loss to the Exchequer rather than raise money. Concerns were similarly expressed about changing the rules with a view to dealing with a small number of cases, and that for a likely small additional yield generated a disproportionate effect could result on a larger proportion of non residents, and bring the Irish tax regime out of line with international standards.
The present rules are considered to be consistent with international practice and in particular with OECD standards. It is the view of the Government that our interests would be best served by operating our residence rules within the best practice guidelines of the OECD.
I am considering the comments made in the submissions in deciding whether to amend the residence rules at this time. As with all tax items, the matter is kept under review. The level and timeframe of any taxation changes in this area will be determined in the context of Budgets over the lifetime of the Government.