2004 Finance Bill Published In Ireland

by Robin Pilgrim, LawAndTax-News.com, London

06 February 2004

Published on Wednesday, the Irish 2004 Finance Bill (which implements the tax measures announced in the Budget) contained no big surprises.

Emphasising the importance of maintaining the Republic's competitive tax regime, Finance Minister, Charlie McCreevy confirmed that a research and development (R&D) tax credit for incremental R&D expenditure by companies would be introduced.

He also provided detail on the exemption of transfers of intellectual property from stamp duty, and confirmed the previously announced exemption from capital gains tax (CGT) for Irish resident companies on the disposal of shareholdings in domestic and overseas subsidiaries.

Changes to the tax treatment in Ireland's double taxation agreements of foreign dividend income paid to parent companies resident in the RoI were additionally discussed.

Coinciding with the release of a report from the Revenue Powers Group, the 2004 Finance Bill also contained a significant extension to the powers held by the Revenue Commissioners.

According to Mr McCreevy:

"Subject to certain conditions Revenue has the power to apply to the High Court for an order requiring a financial institution to make records available for inspection or to furnish information relevant to tax liability of a taxpayer including a group or class of person whose individual identities are not known to Revenue. It is proposed to extend this power so that it can apply in respect of information and records held by certain foreign financial entities which are under the control of a domestic financial institution."

"The Bill will also correct a technical defect in the powers of the Revenue Commissioners to apply to the courts for access to certain banking information when investigating a revenue criminal offence. This defect arose from an inadvertent deletion in an earlier Finance Act."

Currently, the law obliges financial institutions to provide such information to the tax authority if assets were transferred offshore via an Irish-based bank, but not if they were deposited directly offshore.

Separately, the Revenue Powers Group's report suggested that tax inspectors should be permitted to question those in police custody, and that they should be able to access the phone records of suspected tax evaders.

However, the Group also urged some restrictions on the powers currently held by the tax authority, arguing that the power to search premises without a warrant should be revoked, and that warrants should distinguish between business and private premises.

It additionally suggested that tax defaulters should only be named if they breach a EUR50,000 threshold (currently EUR12,700), and that a distinction should be made between searches in relation to specific tax liabilities, and searches during tax evasion investigations with a view to prosecution.

The full text of the Irish Finance Bill, 2004 can be found in the Tax News Resources section

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