Tax breaks revised for multinational managers and Irish film investors

THE GOVERNMENT plans to revive a controversial measure allowing multinational firms to pay workers outside the State and avoid the Republic's tax net.

The Finance Bill, which gives effect to the Budget, includes a revised version of the so-called "remittance basis of taxation", which was dropped three years ago amid a controversy over the treatment of foreign workers.

The new system will only apply to people earning over €100,000 a year, and those in question will have to be from outside the EU and European trading partners such as Norway and Switzerland to qualify. The old approach applied universally.

In 2005, it emerged that civil engineering contractor Gama was using the old system to pay Turkish workers on projects in the Republic. Part of their salaries was paid into accounts in a Netherlands bank.

The practice sparked a row over the treatment of those and other overseas workers, prompting the then finance minister, Brian Cowen, to axe it in Budget 2006.

His successor, Brian Lenihan, introduced the proposed new version as an amendment to the Finance Bill at the legislation's committee stage. Business lobby groups objected to the original decision to drop the provision altogether, warning that the move would hit inward investment.

Institute of Chartered Accountants in Ireland (ICAI) director of taxation, Brian Keegan, said yesterday that the new version appears to be structured so that it will only apply to executives, managers and other key personnel. He said the system made the Republic an attractive location for such executives to work in for a period.

This factor, he added, would help influence further investment in Ireland, as executives would be familiar with the territory. He said the revised version would mean that those who avail of it will still get attractive tax breaks.

Another amendment raises the threshold for film production tax breaks for individual investors under section 481 to €50,000 from €31,750, and boosts tax cuts available for such schemes.

The Irish Film Board said the move would leave the Republic in a position to offer an "extremely attractive package to international producers who choose Ireland as a location, comparing favourably with international competitors".

Recent award-winning films made by Irish producers have included Once and Kisses.

In 2005, the Revenue Commissioners warned an Oireachtas committee that film tax breaks were being abused.