Revenue gets new powers over off-shore accounts

The Revenue Commissioners are to be granted new powers to investigate offshore bank accounts, the Minister for Finance, Mr McCreevy…

The Revenue Commissioners are to be granted new powers to investigate offshore bank accounts, the Minister for Finance, Mr McCreevy, announced today.

The move will give the Revenue the power to obtain documentation about a non-resident account held by an person living in Ireland.

Announcing the move as he published the Finance Bill 2004, Mr McCreevy said he was adopting the measure because of the current Revenue initiative in relation to offshore accounts.

The Revenue will now have the power to investigate the records of financial transactions conducted through offshore subsidiaries banks with a headquarters in the State.

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The Finance Bill, which runs to 91 sections, brings into law all the tax changes and provisions contained within Budget 2004.

The Bill includes VAT and excise duty changes and extensions to tax relief schemes.

It also includes a number of measures not included in the Budget. These include capital gains tax exemptions for investment of certain types of court-awarded compensation.

Mr McCreevy said: "The Bill puts in place measures to support our ability to sustain and expand employment." He stressed that Ireland "is no longer a low-cost country".

He said low direct taxes were important to sustain Ireland's ability to create and protect employment. Due to the low corporate and income tax regime in Ireland "the tax base itself must be spread wider", he added.

He said employee credit provisions within the Finance Bill means that no tax is payable on up to 90 per cent of the minimum wage.

But Mr McCreevy warned that there was little scope for further tax concessions in the near future.

Measures within the Finance Bill made provisions for Irish industry to move up value chain encouraging sustainable high-quality employment, he said.

To encourage new research and development, a new incentive allows for a 20 per cent tax credit on incremental R&D spending based on a base year, usually three years earlier.

A second strand of incentives will provide capital gains tax exemptions for businesses selling subsidiary companies. This provision is aimed at encouraging the establishment of corporate holding companies in the State.

Also set out in the Bill to boost R&D is the exemption from stamp duty of intellectual property transfers.

Today's Finance Bill also gives effect to the multi-annual capital funding envelopes which had been sought by the Minister for Transport, Mr Brennan.

This allows the staggering of major capital investment over a period of years and aims to avoid stop-start development and curb inflation in the construction sector.

Extensions to a number of schemes and reliefs were also enacted today although the Minister indicated that the current extensions would mark the end of these schemes.

The Minister said he was not against focused tax incentive schemes but added "there comes a time when you have to say its done its job and it is time to move on".

Under the Bill, film relief is extended to the end of 2008 while the amount that can be raised. The Business Expansion Scheme and Seed Capital Scheme have also been extended and both will now run until the end of 2006 with the company limit increased to €1 million.

Activation of these measures is subject to clarification from the European Union that they do breach State-aid rules.

Allowing the Revenue to investigate offshore accounts is only one of a number of recommendations to extend the powers of the tax-collection agency. It is the only measure that is being introduced immediately.

The proposals are contained in the Revenue Powers Group report drawn up under the chairmanship of Mr Justice Francis Murphy, and published by the Minister for Finance today.

Other recommendations include allowing Revenue officials access to people in Garda custody if they are being held in relation to a Revenue offence.

It also suggests raising the limit for the public naming of a person who has made a tax settlement from the current limit of €12,700 to €50,000.

The recommendations will provide the basis for a period of consultation between the Department of Finance and the Revenue.

David Labanyi

David Labanyi

David Labanyi is the Head of Audience with The Irish Times