Financial Resolution No. 3: Intangible Assets

Tuesday, 10 October 2017

Dáil Éireann Debate
Vol. 960 No. 1
Unrevised

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Financial Resolution No. 3: Intangible Assets

Minister for Justice and Equality (Deputy Charles Flanagan): Information on Charles Flanagan Zoom on Charles Flanagan I move:

(1) THAT section 291A of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in subsection (6)(a) by substituting “exceed 80 per cent of” for “exceed”.

(2) THAT paragraph (1) of this Resolution applies to expenditure incurred by a company on or after 11 October 2017.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

In September this year, the Minister for Finance published the report of Mr. Seamus Coffey entitled, Review of Ireland's Corporation Tax Code. As part of his review, it was recommended that the increase in corporation tax receipts can be expected to be sustainable up to and including-----

(Interruptions).

Deputy Billy Kelleher: Information on Billy Kelleher Zoom on Billy Kelleher In fairness, we cannot hear the Minister.

Deputy Timmy Dooley: Information on Timmy Dooley Zoom on Timmy Dooley Would the Government Deputies not stay and listen to their own Minister?

An Leas-Cheann Comhairle: Information on Pat the Cope Gallagher Zoom on Pat the Cope Gallagher While there is a welcome on the Government side for Deputy Enda Kenny, we need to allow the Minister to be heard. Will Deputies Fitzpatrick, Madigan and Enda Kenny please allow the Minister to continue?

Deputy Paul Murphy: Information on Paul Murphy Zoom on Paul Murphy Throw him out.

(Interruptions).

Deputy Enda Kenny: Information on Enda Kenny Zoom on Enda Kenny I thought the Leas-Cheann Comhairle might allow me to speak to the good Deputies here.

An Leas-Cheann Comhairle: Information on Pat the Cope Gallagher Zoom on Pat the Cope Gallagher Deputy Enda Kenny will get an opportunity to speak if he so wishes.

  Allow the Minister to continue without interruption.

Deputy Charles Flanagan: Information on Charles Flanagan Zoom on Charles Flanagan I thank the Leas-Cheann Comhairle. His intervention and consequent deliberation was the first spark in budget evening. I congratulate him on that.

Deputy Billy Kelleher: Information on Billy Kelleher Zoom on Billy Kelleher And now the Deputy has extinguished it.

(Interruptions).

Deputy Charles Flanagan: Information on Charles Flanagan Zoom on Charles Flanagan Mr. Seamus Coffey's report stated the increase in corporation tax receipts can be expected to be sustainable up to and including 2020. However, to ensure some smoothing of the corporation tax revenues over time, it was also recommended the deduction for capital allowances for intangible assets and any related interest expense be reduced to 80% of the relevant income arising from the intangible asset in an accounting period. The Minister for Finance has taken on board this recommendation and is implementing it for claims made in respect of expenditure incurred by a company on intangible assets from midnight tonight.

The 80% cap will affect the timing of the relief in the form of capital allowances and related interest expenses for intangible assets. It will not affect the overall quantum of such relief. This is because any amounts restricted in one accounting period as a result of the cap will be available for carry-forward and use in a subsequent accounting period, subject to the application of the cap in the course of that period.

Notwithstanding that this is a timing issue, it is estimated the introduction of the 80% cap will raise an additional €150 million in 2018. To ensure fairness and that matters are clarified, it is not proposed there should be any period of uncertainty about this measure. That is why it is proposed to apply from midnight tonight. It is intended to put today's changes on a permanent statutory footing in the context of the forthcoming finance Bill.

I commend the resolution to the House.

Deputy Dara Calleary: Information on Dara Calleary Zoom on Dara Calleary Again, I will put the same question I put about stamp duty. There is €150 million allocated against this measure for next year. Is there absolute certainty with the forecasting model used by the Department that this amount will be raised?

The Coffey report was a welcome addition to our debate on corporation taxation. It is again important that on budget day we reiterate our commitment to maintaining that taxation rate in view of the various attacks being made on it. During the budgetary oversight process, Seamus Coffey, in his role as chairman of the Irish Fiscal Advisory Council, pointed out that potential changes to the common consolidated corporate tax base, CCCTB, are a bigger threat to our economy than even Brexit. It is important the backbone of the Government in standing up for our corporate tax rate is stiffened in the context of that assessment, as well as proposals made by the French President, Emmanuel Macron, and other European leaders around our corporate tax base.

Can the Minister stand over the projected €150 million figure? What are the Government's views of Seamus Coffey's remarks about the potential threat to our economy from changes to CCCTB?

Deputy Jonathan O'Brien: Information on Jonathan O'Brien Zoom on Jonathan O'Brien On the cap of the intellectual property that will be written off against profits at 80%, unfortunately, over the past several years, we have seen hundreds of billions of euro worth of intellectual property in the State onshored.


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