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Written Answers 26 September 2019 Written Answers. The following are questions tabled by Members for written response and the ministerial replies as received on the day from the Departments [unrevised]. Questions Nos. 1 to 13, inclusive, answered orally. 26/09/2019WRA00400Tax Collection 26/09/2019WRA0050014. Deputy Pearse Doherty asked the Minister for Finance if he is satisfied that REITs and IREFs are paying a fair share of tax; and if he will make a statement on the matter. [39082/19] 26/09/2019WRA00600Minister for Finance (Deputy Paschal Donohoe): Institutional investors represent one aspect of the property market and have an important role in increasing supply. Notwithstanding this, the Government monitors the actions of investors in the market and has taken action when abuses have been identified. In 2016, changes were introduced to address concerns regarding the use of collective investment vehicles by foreign investors to take profits derived from Irish real estate without paying Irish tax. This resulted in the introduction of the IREF (Irish Real Estate Fund) framework in 2016. IREFs are investment undertakings, excluding UCITS, where at least 25% of the value of that undertaking is made up of Irish real estate assets. Where an IREF makes an actual dis- tribution or on the redemption of units in the IREF, non-resident investors will be subject to a withholding tax of 20%. Certain investors such as pension funds, life assurance companies, charities and credit unions are exempt from the withholding tax as this is the norm for such bodies across the tax acts. The Real Estate Investment Trust (REIT) framework was introduced in 2013, to facilitate long-term, risk-diversified, collective investment in rental property. In order to be a REIT, a company must be listed on the main market of an EU stock exchange within three years of forming, and it must be widely held. Income and gains from Irish property are not taxed within the REIT but are instead taxed in the hands of the investor when distributed. Dividend withholding tax at 20% must be applied to all distributions from REITs, other than distributions to certain limited classes of investors such as pension funds and charities as they are more generally exempt from tax. Given the important implications which developments in the property market can have for the economy, my Department actively monitors developments in this sector on an ongo- ing basis. As part of the 2018 Finance Act process I committed to produce a report on REITs, IREFs and section 110 companies as they invest in the Irish property market. This report was prepared by officials in my Department and was presented to the Tax Strategy Group in July. This paper provides a basis for policy discussions in relation to institutional investment in the 1 Questions - Written Answers Irish property market. 26/09/2019WRA00700Tax Reliefs Eligibility 26/09/2019WRA0080015. Deputy Richard Boyd Barrett asked the Minister for Finance the way in which the condition for receiving section 481 tax relief, which requires the recipients to provide quality employment and training, can be met by the producer companies that apply for and receive the relief when those same producer companies are denying responsibility for employment and training on film productions but rather claiming that a designated activity company, which ex- ists only for a time limited specific financial purpose, is the entity responsible for employment and training; and if he will make a statement on the matter. [38988/19] 26/09/2019WRA0090016. Deputy Bríd Smith asked the Minister for Finance if the condition for receiving section 481 tax relief is being met by the producer companies in the film industry that apply for and receive the relief; and the way in which this is monitored by his Department. [39094/19] 26/09/2019WRA01000Minister for Finance (Deputy Paschal Donohoe): I propose to take Questions Nos. 15 and 16 together. The Deputies will be aware that a number of amendments were made to Section 481 of the Taxes Consolidation Act 1997 as part of Finance Act 2018. I legislated to split the certification process between Revenue and the Department of Cul- ture, Heritage and the Gaeltacht (DCHG). Production companies are now required to apply to the DCHG before commencement of Irish production to have the film certified as a qualifying film. As part of the application process, applicants must provide a skills development plan and, if the amount of eligible expenditure is over €2m, that plan must be agreed with Screen Ireland. Additionally, a post project skills development report is required for each project. In terms of quality employment, the monitoring of compliance with employment rights legislation is primarily a matter for the Department of Business, Enterprise and Innovation, through the Workplace Relations Commission. However, as part of the new certification pro- cess to be undertaken by DCHG, an applicant company is required to sign an undertaking of compliance with all relevant employment legislation. This undertaking is required to be signed and furnished with every section 481 application. These conditions shall be met not just by a producer company but also by the qualifying company. If a producer does not comply with the employment and skills development require- ments set out by the Minister for Culture, Heritage and the Gaeltacht they may not be eligible for the corporation tax credit. Any amount already claimed may be recoverable, with interest. I have further been advised by my officials that, following a joint request by the Irish Con- gress of Trade Unions (ICTU), the Services, Industry, Professional and Technical Union (SIP- TU), and Screen Producers Ireland, the WRC has agreed to undertake an audit of the Republic of Ireland Independent Film and Television Drama Production Sector with a view to examining industrial relations generally, employment practices and procedure, assessing issues arising (if any), and making recommendations for their improvement where appropriate. The WRC has published a Workplace Relations Notice on its website, inviting submissions from stakeholders on the above listed matters by 31 October 2019. 2 26 September 2019 26/09/2019WRA01100Credit Unions 26/09/2019WRA0120017. Deputy Fiona O’Loughlin asked the Minister for Finance if the proposed levy for credit unions will be scrapped; and if he will make a statement on the matter. [39035/19] 26/09/2019WRA01300Minister for Finance (Deputy Paschal Donohoe): As the Deputy is aware, credit unions are regulated and supervised by the Registrar of Credit Unions at the Central Bank who is the independent regulator for credit unions. Within his independent regulatory discretion, the Reg- istrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. Since 2004 the amount of the Industry Funding Levy payable by each credit union has been capped at a rate of 0.01% of total assets. Consultation Paper 95 “Joint Public Consultation Paper - Department of Finance and the Central Bank of Ireland - Funding the Cost of Financial Regulation” (CP95) was published in 2015 and set out proposals to move from partial industry funding of financial regulation to- wards full industry funding, noting the proposal set out in an earlier consultation conducted by the Central Bank (CP61 “Consultation on Impact Based Levies and Other Levy Related Mat- ters”) to move credit unions to fund 50% of the cost of regulating the credit union sector. The Central Bank indicated, in its Funding Strategy and 2018 Guide to the Industry Fund- ing Levy, that it intended to seek my approval to increase the proportion of financial regulation costs to be recovered from credit unions on a phased basis setting out an initial target of 50% to be reached by 2021. In response to the Central Bank’s request I recommended that credit union contributions should not increase beyond the 50% target until: 1. The levy trajectory has reached the planned 50% rate, at which time the impact on the viability of the sector will be better understood; and 2. A public consultation regarding increasing the levy rate for credit unions beyond 50% is undertaken, which would include a regulatory impact assessment of such a change on the sec- tor. In contrast to this, recovery rates in 2018 for all other industry categories ranged from 65% to 100%, and the Central Bank intends to increase all to 100% funding over the next number of years. The Deputy might also wish to note that the Department of Finance, in collaboration with the Central Bank, held a public consultation on potential changes to the Credit Institutions Res- olution Fund Levy, which is expected to reduce materially from 2020. The outcome, following the public consultation, will be published shortly. It is also important to note that as Minister for Finance I have reduced the Stabilisation Scheme Levy materially and that since 2017 no further levies have been charged by the Credit Union Restructuring Board (ReBo). I have previously committed to a further review of the Stabilisation Scheme in 2020. On 28th August last, I also held a meeting with the credit union representative bodies to discuss their views on the Industry Funding Levy and other credit union related matters. Question No. 18 answered with Question No. 12. 3 Questions - Written Answers 26/09/2019WRA01500Tax Code 26/09/2019WRA0160019. Deputy Thomas P. Broughan asked the Minister for Finance if consideration is being given to the introduction of a green tax and dividend approach to decarbonising society and the economy; and if he will make a statement on the matter. [38767/19] 26/09/2019WRA01700Minister for Finance (Deputy Paschal Donohoe): As the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
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