Figures released by Ireland’s Department of Finance show that the country’s economy and tax revenues are still reeling from last year’s financial crisis, though the situation is experiencing marginal improvements. According to the Exchequer Statement released on January 5th, tax collections for the 12 month ending in December were 3.9 percent lower than the Department’s targets, and down by 19 percent compared to 2008. Although the Exchequer deficit for the year was lower than expected, at €24.6 billion.

In 2009 only Corporate Tax and Excise duty collections exceeded government projections, rising by 4.3 and 1.4 percent, respectively, though in comparison to 2008 the figures dropped by 23 and 13.6 percent. Net government expenditure reached €47 billion, 50 basis points below expectations.

Value Added Taxes (VAT) experienced the largest difference between projections and collections, with a €750 million disparity, and a €2,760 million fall compared to 2008. Income Taxes were €640 million below the Department of Finance’s targets and €1,342 million below 2008 collections

Brian Lenihan, Ireland’s Minister for Finance, interpreting the figures in a generally positive light, said “…given the small improvement in the actual deficit over that anticipated in the December Budget we face into this year’s task with a greater sense of confidence. The challenges we face are great but the Government is committed to the targets set out in the recent Budget”. He went onto claim that economic growth will return to Ireland in 2010 and that this will lead to improved tax collections.

Photo by Darragh Sherwin

The London G20 Summit, held on the 2nd of April this year, heralded an unprecedented wave of Tax Information Exchange Agreement (TIEA). In what was described as “revolutionary” by Angel Gurría, OECD Secretary-General, the number of completed TIEAs has almost doubled since their inception in late 2000.
Since the G20 summit, and subsequent global push for greater tax transparency and compliance, the following 53 agreements have been signed.

United States – Monaco (8 September 2009)
Denmark – Turks & Caicos Islands (7 September 2009)
Netherlands – Antigua & Barbuda (2 September 2009)
Denmark – Gibraltar (2 September 2009)
Denmark – Anguilla (2 September 2009)
Germany – Liechtenstein (2 September 2009)
Netherlands – St Vincent & the Grenadines (1 September 2009)
Denmark – St Vincent & Grenadines (1 September 2009)
Denmark – St Kitts & Nevis (1 September 2009)
Netherlands – St Kitts & Nevis (1 September 2009)
Canada – Netherlands Antilles (29 August 2009)
United Kingdom – Gibraltar (27 August 2009)
Australia – Gibraltar (25 August 2009)
New Zealand – British Virgin Islands (14 August 2009)
New Zealand – Cayman Islands (14 August 2009)
New Zealand – Gibraltar (13 August 2009)
Germany – Gibraltar (13 August 2009)
United Kingdom – Liechtenstein (11 August 2009)
Monaco – San Marino (29 July 2009)
Bermuda – Ireland (28 July 2009)
New Zealand – Isle of Man (27 July 2009)
New Zealand – Jersey (27 July 2009)
United Kingdom – Turks & Caicos (23 July 2009)
Netherlands – Turks & Caicos (22 July 2009)
Netherlands – Anguilla (22 July 2009)
Ireland – Turks & Caicos (22 July 2009)
Ireland – Anguilla (22 July 2009)
New Zealand – Guernsey (21 July 2009)
UK – Anguilla (20 July 2009)
Belgium – Monaco (15 July 2009)
New Zealand – Cook Islands (9 July 2009)
Netherlands – Cayman Islands (8 July 2009)
Germany – Bermuda (3 July 2009)
Ireland – Gibraltar (24 June 2009)
Ireland – Cayman Islands (23 June 2009)
France – British Virgin Islands (17 June 09)
Australia – Jersey (10 June 2009)
The Netherlands – Bermuda (8 June 2009)
Denmark – British Virgin Islands (19 May 2009)
Faroes – British Virgin Islands (19 May 2009)
Finland – British Virgin Islands (19 May 2009)
Greenland – British Virgin Islands (19 May 2009)
Iceland – British Virgin Islands (19 May 2009)
Norway – British Virgin Islands (19 May 2009)
Sweden – British Virgin Islands (19 May 2009)
New Zealand – Bermuda (17 April 2009)
Denmark – Bermuda (16 April 2009)
Faroes – Bermuda (16 April 2009)
Finland – Bermuda (16 April 2009)
Greenland – Bermuda (16 April 2009)
Iceland – Bermuda (16 April 2009)
Norway – Bermuda (16 April 2009)
Sweden – Bermuda (16 April 2009)

Previous to these, 63 agreements had been signed, bringing the total at the 10th of September to 116.

Today, the Commission on Taxation handed its report with over 250 recommendations regarding Ireland’s financial taxation system to Brian Lenihan, Minister of Finance. Due to errors in its indices, the 600 page report will not be made available to the public until early to mid-September. The report was originally requested to be complete on the 20th of September but has been completed ahead of the initial schedule.

Among others, the main recommendations include the introduction of water tax and increased carbon taxes. The Carbon tax has been penned as being more severe but still revenue neutral, the proposed water tax will take the form of a charge above a certain usage level. Property tax, which will come to roughly €600 to €800 per household, totalling an estimated €1 billion for the Government, has also been recommended. Corporate taxes are scheduled to remain the same. Vehicle Registration Taxes have also been recommended for removal, to be replaced with congestion charges and increased petrol taxes.

In total, the Commission on Taxation has recommended that the total tax intake for Ireland not change, as any increase will be balanced out by reliefs in other areas. The idea of not increasing total taxation has caused concern with Brendan Hayes, the vice president of Siptu and a member of the commission, who has refused to sign his name to the report out of protest.

Ireland may soon see a restructuring of its taxation system, if suggestions by Ireland’s Commission on Taxation to the Government are accepted. The Commission, which was created in 2008 to examine Ireland’s taxation structure, is expected to release a report by the 28th of August with its recommended taxation changes.

The report will feature 250 recommendations to the Irish government. Key changes within the report include the introduction of new taxes under the proviso that they are accompanied by reduction or complete removal of other taxes, leaving the final taxation liability of a household the same as it was before.

The Commission on Taxation is expected to recommend the introduction of a property tax, which will be self-assessed until such a point when all properties are able to be officially valued. It is estimated that the average property will garner a €1,000 tax burden annually. Carbon Tax and Water charges will also be seen amongst the recommendations. The intention of the Commission on Taxation is to have these introduced taxes fund cuts in personal taxes. Measures for the easing of tax burdens on low income households have already been inserted into the Commission’s recommendations.

The Cayman Islands and New Zealand signed a Tax Information Exchange Agreement (TIEA) on the 13th of August. This agreement brings the total for the Cayman Islands to twelve, enough to be considered by Organization for Economic Co-Operation and Development to be part of the jurisdictions that have substantially implemented the internationally agreed tax standards, otherwise known as the “OECD White List”.

The announcement came on the same day as news of the British Virgin Islands also reaching white list status. Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration, welcoming the development said, “Today the British Virgin Islands and the Cayman Islands take their place alongside other countries that have substantially implemented the internationally agreed tax standard. Six jurisdictions have moved into this category since April. We look forward to working further with the British Virgin Islands and Cayman Islands as they extend their network of agreements and work to swiftly and effectively implement them.”

The Honourable McKeeva Bush, Leader of Government Business/Premier Designate for the Cayman Islands, stated “The Cayman Islands Government sees the OECD’s recognition as a natural outcome of the country’s substantial commitment to uphold an equally world-class international cooperation regime in the exchange of tax information.”

Prior to the signing, the Cayman Islands held TIEAs with Denmark, Faroe Islands, Finland, Greenland, Iceland, Ireland, Netherlands, Norway, Sweden, UK and US.