DIRT Report Recommends Banks Pay Up

Tax-news.com

19 December 1999

The DIRT Inquiry Report published last week in Ireland by the Public Accounts Committee has recommended that a re-examination take place of the money to be paid back by all Irish banks in relation to the bogus non-resident accounts scheme which the report concluded banks had used to help their customers evade tax from 1986. The report also recommended money in all remaining dormant accounts should be handed to the Government to be used for social initiatives.

The report concluded that abuse was widespread throughout the industry and called for the Government to conduct a review of the legal framework for the financial services sector, a view supported by the Irish Central Bank. But Prime Minister Mr Ahern was cautious on the matter saying he believed regulation should be voluntary as far as possible, and that Ireland was no longer a high-tax country so there was no justification for anyone trying to evade tax.

The other significant finding in the report was that AIB bank did not have a special deal with the Revenue Commissioners regarding the back payment of deposit interest retention tax (DIRT). It was the revelation that AIB had a potential DIRT liability of over £100 million from the thousands of bogus non-resident accounts it had provided that provided the spark for the establishment of the DIRT inquiry last year.

It is likely that the banks will be in line for a multi-million pound tax bill once the re-examination of their DIRT liability takes place.

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