Curbs on dozens of Ireland's richest people living abroad, to stop them avoiding Irish tax, will be imposed next year, the Minister for Finance, Brian Lenihan has announced.
Under existing tax law, foreign-based Irish millionaires can avoid Irish tax if they spend less than 183 days in the country, or if they leave the country by midnight on a day when they are in the country – the so-called 'Cinderella" rule.
The list includes people such as top business people such as Denis O'Brien, JP McManus, Dermot Desmond and Michael Smurfit, it is understood.
Publishing the Finance Bill this afternoon, Mr Lenihan said there was no way of knowing how many top-earners could be affected by the change in the rules.
Tougher restrictions could not be put in place because Ireland has so many double taxation agreements with other countries, which would have to be reopened for negotiation.
Meanwhile, people earning over €250,000-a-year will pay an extra €60m in taxation next year, on top of increases imposed in the Budget, by the imposition of a 3 per cent levy on their incomes.
In the Budget, Mr Lenihan announced that a 1 per cent levy would be imposed on all wages below €100,000, and 2 per cent on those who earned over that sum.
However, he had to make changes to his original plan when it emerged that the 1 per cent levy would be imposed even on those earning the minimum wage.
The new 3 per cent levy on the highest earners will ensure that the sums raised for the Exchequer from the levy will remain the same, Mr Lenihan said, speaking in Government Buildings.
The legislation came "in the knowledge that we face the most challenging fiscal and economic conditions in a generation. The economic context has changed very dramatically and with great rapidity. Confronted with severe budgetary pressures and negative economic growth, we face difficult choices," he said.
People aged 65 and over on incomes of up to €20,000 per annum, and €40,000 for a married couple, will be exempt from the levy as will full medical card holders.
The Bill also gives effect to the €10 departure tax on airline passengers and a 22 per cent increase in the Capital Acquisitions Tax, which covers inheritance and gifts.
The legislation is expected to pass through the Dáil and Seanad before the Christmas recess.
Mr Lenihan said the Government was committed to protecting the economy from the worst effects of the current international downturn and to ensuring our international competitiveness is maintained and enhanced.
He said the Bill places "significant emphasis on supporting enterprise".
It confirms measures announced on Budget day such as an increase in the rate of tax credit for incremental expenditure undertaken by a company on qualifying research and development (R&D) from 20 per cent to 25 per cent.
It also extends the tax incentive providing for capital allowances of 100 per cent of expenditure incurred by companies that invest in certain energy-efficient equipment.
Mr Lenihan said he considered the mix of measures in the Bill struck "an appropriate balance between the need to protect those on low incomes and restore stability to the public finances, while at the same time providing targeted support to enterprise to assist in our economic recovery".
He said he looked forward to a constructive debate in the Oireachtas on the Bill and on the major policy issues surrounding the tax system.