Revenue aware of yacht tax claims

The Revenue Commissioners are "fully aware" of reports that an Irish-registered company claimed €25 million worth of tax allowances for the purchase and overhaul of a luxury yacht formerly owned by the late shipping magnate Aristotle Onassis, the Dáil was told.

The Minister of State for Finance, Mr Tom Parlon, said that the Exchequer "must and will" be protected against contrived schemes and arrangements which undermine the tax base, and that the Minister for Finance, Mr McCreevy, "will not hesitate" to tackle action against abuses or "objectionable arrangements" which undermine the tax base.

Mr Parlon stressed, however, he was not in a position to comment on the particular case raised by Labour's finance spokeswoman, Ms Joan Burton, involving the yacht Christina O.

It was "important to point out that it cannot be presumed that the matter reported in the media has had the outcome suggested", he added.

The principle of confidentiality applied to individual or corporate taxpayers' dealings with the Revenue Commissioners, but the Minister had no doubt the Revenue were aware of the case.

Ms Burton said according to a report in a national newspaper, a consortium of wealthy businessmen and professionals had bought the yacht for $50 million.

"Irish tax law, it seems, allows them to claim capital allowances for this purchase and for the yacht's refurbishment, and to set these costs against their Irish income for tax avoidance."

Tax avoidance by the very wealthy "is the dark side of the Irish economy". Undoubtedly it was a "successful business enterprise" for the investors in the yacht, but it was "surely absurd that such a venture attracts such significant tax breaks for those involved and that the tax code still has so many devices like this embedded in it".

The "tax-avoidance industry starves the health and educations services and creates a deeply divided society".

Mr Parlon, speaking for the Minister for Finance, said that tax incentives were to encourage investment that would otherwise not be made. However, the Minister had difficulty when such incentives were used "in highly artificial and packaged ways" which would greatly reduce effective tax rates on very high incomes.

Mr McCreevy had taken action on a number of occasions against tax-avoidance schemes and would not hesitate again.