New measures are to be taken by the Revenue Commissioners to ensure that wealthy Irish tax exiles are obeying regulations that oblige them to live outside the State for six months each year.
The move emerged yesterday after the Revenue admitted that the number of tax exiles, such as millionaire businessmen Mr Denis O'Brien, Dr A.J.F. O'Reilly and Mr Dermot Desmond, is a mystery.
In a Dáil reply to Labour TD Ms Joan Burton, the Minister for Finance, Mr McCreevy, said it was not possible, at present, to identify the number of people claiming to be non-resident for tax purposes.
Currently, tax exiles can spend 183 days a year in the Republic of Ireland, though a day does not count for tax purposes if the individual is out of the country, Cinderella-style, by midnight.
"Clearly this is the reason why so many well-known 'celebrities' and visitors to race courses can be technically off-shore for tax purposes but attend every race meeting and social occasion that they choose," said Deputy Burton.
"Not only may they spend up to 280 days and nights in Ireland over two years, but if they come to Ireland for the day on an executive jet, provided they have left by midnight it doesn't affect their non-residency status."
She said the tax exile rules were "extraordinarily generous" and were costing the Exchequer "tens of millions of euro" annually.
Mr Denis O'Brien went to live in Portugal, which had a zero rate for capital gains tax compared to the Republic's 20 per cent level, shortly before the sale of Esat to British Telecom, she said.
"It's not good enough that an individual can make a profit of hundreds of millions on the sale of assets and then go off-shore and avoid tax by the simple devices set out above," said Ms Burton.
The Revenue Commissioners are trying to negotiate changes with the Portuguese authorities to the double taxation agreement between the two countries.
A first round of talks took place last May and a second is scheduled before the end of the year, though dates for the meetings have not been arranged.
Under Section 69 of the Finance Act 2003, tax exiles will be liable for 20 per cent capital gains tax for any assets sold during their absence abroad, if they return to the Republic within five years.