I am accompanied by Ms Jeanette Doonan and Mr. Liam Gallagher.
I thank the committee for the opportunity to make an opening statement. I am obliged to remind the committee that I am prevented by law, and specifically by section 851A of the Taxes Consolidation Act 1997, from discussing the tax affairs of any taxpayer.
I welcome this opportunity to speak to the committee about Revenue's ongoing investigations into offshore matters. I will use the time available to provide a short briefing in the context of the recent media reports and allegations associated with what are known as the Paradise Papers.
Identifying and confronting non-compliance is a core element of Revenue's work. Tackling tax evasion is always high on our agenda. Revenue recognises the serious risk to the Exchequer arising from the use of offshore accounts and structures to evade tax. Among tax authorities worldwide we have been at the forefront in tackling this risk.
Over the years, Revenue has carried out a range of investigations targeting various offshore arrangements and structures used to hide undeclared income.
These investigations have encompassed offshore bank accounts and a wide range of financial and investment products, trusts and offshore structures, bogus non-resident accounts and life assurance products. The aggregate yield from this work is close to €2.9 billion.
Revenue's approach to tackling offshore evasion is recognised by the OECD as best practice and has been adopted by other tax authorities. Revenue was among the first to address offshore evasion in a structured and systematic way. In 2001, we set up a specific branch, the offshore assets group, that was dedicated to tackling offshore evasion. In 2003, a major investigation was launched into the use of offshore bank accounts and other financial products to evade tax resulting in the recovery of more than €1 billion. A separate investigation into the use of trusts and offshore structures is now substantially complete and has yielded more than €100 million.
In recent years, the international environment has changed very significantly and tax authorities worldwide now co-operate very closely in targeting those who seek to hide their profits or gains offshore. We are adapting and refocusing our compliance framework in response to these developments, in particular, the automatic exchange of information between jurisdictions under arrangements such as the Foreign Account Tax Compliance Act, FATCA, which is an intergovernmental agreement to share financial account information with the United States of America, the DAC, which refers to a number of EU directives on administrative co-operation, and the OECD's common reporting standard, CRS, which provides tax authorities with greater visibility as regards the offshore assets and income of their residents.
With more information becoming available to Revenue through the new information exchange mechanisms, and against a background of closer co-operation between tax authorities worldwide, it became clear that it was no longer appropriate to allow tax defaulters whose default related to offshore matters to avail of the benefits of the voluntary disclosure regime. Significant changes were introduced in the 2016 Finance Act. Since May 2017, tax defaulters who use offshore facilities to hide undeclared income, accounts or other assets can no longer make a qualifying disclosure. This means that such defaulters face penalties of up to 100% of the tax evaded, publication in the quarterly list of tax defaulters and, potentially, criminal prosecution.
In advance of the May deadline, Revenue received 2,734 disclosures with a value of almost €84 million. These are now being analysed, cases profiled and interventions conducted, as appropriate. On 17 November, Revenue confirmed that following the deadline, a new inquiry is under way to identify and pursue taxpayers engaged in offshore tax evasion and avoidance.
It is fundamental to Revenue's way of doing business that we make the best use of all the data at our disposal to identify and tackle tax evasion. In keeping with this approach, we will home in on all of the data now becoming available to us under information exchange agreements to identify and pursue those who have attempted to use offshore accounts, structures or assets to evade or avoid their tax obligations. Data analytics is key to this work. We will use proprietary software to match the new data against Revenue's taxpayer records and then cross-check against the taxpayer's prior returns to determine whether all relevant income and assets have been fully and properly declared. The new data will also be used in Revenue's social network analysis and anomaly detection tools to identify risky cases from a compliance standpoint. Where issues are identified, they will be followed up with the appropriation Revenue intervention.
I can provide the committee with some of the guiding principles of Revenue's approach to tackling tax evasion and tax avoidance. Revenue will examine and investigate any case of suspected tax evasion. Where tax evasion is uncovered, Revenue will apply the maximum sanctions and deterrents, including penalties, publication in the quarterly list of tax defaulters and, potentially, criminal prosecution. Should it emerge that an Irish-based financial institution has facilitated tax evasion, Revenue will investigate whether such an institution has failed to disclose information to Revenue that should have been disclosed. If there is evidence of aggressive tax avoidance contrary to Irish legislation, Revenue will investigate thoroughly and will seek to recover the tax avoided, together with interest and avoidance surcharges. Where appropriate, Revenue will share information with other relevant tax administrations under existing legal frameworks.
Revenue has responded to previous media releases regarding bank accounts held with the HSBC Swiss and to documents leaked by the International Consortium of Investigative Journalists, ICIJ, in LuxLeaks and the Panama Papers, by identifying individuals and entities associated with Ireland, profiling cases, and making the appropriate intervention to determine whether there has been any evasion or avoidance of Irish tax. We will do likewise in terms of information associated with the Paradise Papers and, while our examination is at an early stage, I can confirm that Revenue has taken the following actions to date.
On 13 November 2017, Revenue wrote to both the director of the ICIJ and to the editor of The Irish Times, asking them to provide information from the leaked documents that may be relevant in Revenue's continuing work to tackle offshore tax evasion. On 15 November, The Irish Times responded. It advised that its coverage of this issue arises in the context of its involvement with the ICIJ, whose long-standing policy is not to provide material directly to investigating authorities. We have not, as yet, received a response from the ICIJ.
On 20 November 2017, Revenue wrote to a number of financial institutions. Revenue sought, among other things, disclosure of any information, particulars or records not already disclosed to Revenue on foot of High Court orders, which the institutions had access to or the ability to access, involving either the opening of an account or the depositing of funds by Irish persons in an offshore operation owned or partially owned by the institutions, including entities that have been liquidated. This request was for voluntary provision and was made in response to the spirit of comments stated to have been made by the institutions concerned in a recent Dáil debate. The request did not involve the use of any of the powers available to Revenue.
In line with the approach taken in dealing with previous such information releases, Revenue has already carried out an initial analysis of the available information. Our analysis indicated 71 entities that may have an association with Ireland as well as the 603 addresses and 802 individuals that the ICIJ has associated with Ireland. These entities are mainly incorporated in the Isle of Man, Bermuda and the Cayman Islands. The identified individuals and entities will be profiled using our own systems and open sources. In this, Revenue will also continue to collaborate on intelligence with tax authorities around the world and to share information under existing legal frameworks to identify beneficial owners and establish the role of intermediaries and institutions in facilitating offshore tax evasion.
The committee's letter of invitation stated that the committee wants to examine how revelations in the Paradise Papers impact on the future administration and collection of corporate tax receipts. Until Revenue has fully examined the available information, it is not possible to state whether there are any implications for corporation tax receipts having regard to existing legislation or any future legislation implementing the OECD's base erosion and profit sharing, BEPS, recommendations. In recent years, the issue of international tax avoidance by multinational enterprises has been the subject of considerable scrutiny internationally, particularly in the BEPS project but also in recent EU initiatives. These initiatives are borne out of a consensus that tackling aggressive tax planning arrangements by multinationals, including those designed to take advantage of mismatches in tax rules between two or more countries, requires international co-operation.
Revenue has been an active participant in discussions both at OECD level and EU level, where new initiatives and legislation designed to tackle corporate tax avoidance internationally have been agreed. Some of the agreed BEPS measures have been, or are in the process of being, reflected in Irish law. The implementation of the EU anti-tax avoidance directives to timelines set out in the directives will give a co-ordinated effect to specific BEPS actions across the EU. Mr. Seamus Coffey compiled a paper entitled Review of the Corporation Tax Code. In his review he made recommendations about the implementation of the remaining OECD recommendations. In the context of Budget 2018, the Minister for Finance published an update on Ireland's tax strategy and announced a consultation on the Coffey review. The consultation is open until 30 January 2018.
In summary, to the extent that the Paradise Papers identify any individual or entity associated with Ireland with possible Irish tax issues in respect of tax evasion or aggressive tax avoidance, Revenue will examine the cases and intervene as appropriate. Individuals or entities who have engaged in offshore evasion now face substantial penalties, publication in the quarterly list of tax defaulters and, potentially, criminal prosecution.
Revenue will also work in close co-operation with other tax administrations in the framework of the OECD's joint international task force on shared intelligence and co-operation, JITSIC, to address issues raised by the Paradise Papers. Revenue will, as appropriate, share information under existing legal frameworks. Revenue has a proven track record of significant achievement in acting against offshore evasion and avoidance. We are determined to take effective action to identify and bring to account tax defaulters who seek to hide undeclared accounts, income or assets offshore and to evade or avoid their tax responsibilities. I will answer any questions raised by the committee on these issues subject, of course, to taxpayer confidentiality constraints.
