Experts warn that 'exile levy' could threaten investment
Finance Minister Brian Lenihan was warned last night to be careful not to put off investment in this country with his new €200,000 levy on tax exiles.
Mr Lenihan will today outline how he plans to implement the exile levy when he publishes the Finance Bill. The bill, which details taxation announced in the Budget, will also be watched closely to see what tax incentives are offered for companies to create jobs. And Mr Lenihan will also increase the fines courts can impose for customs and excise offences.
Wealthy Irish citizens, who own assets worth more than €5m here, earn more than €1m anywhere in the world, but pay less than €200,000 in tax in this country, will be subject to the new exile levy.
After announcing the 'domicile levy' in Budget 2010, Mr Lenihan will tease out how the tax authorities will enforce it and if the charge can be offset against liabilities.
Chartered Accountants Ireland director of taxation Brian Keegan said the issue of 'domicile' was a medieval notion and questioned how the Revenue would police it. Mr Keegan said the €5m in assets should not include productive assets and warned against discouraging job creation and investment. "It shouldn't put people off from reinvesting in their home country. It is already hard enough to get direct investment," he said.
However, government sources say the intention of the levy is to draw high earners into the tax net. The expansion of tax breaks for start-up companies is also anticipated. The current incentive for start-ups effectively grants a tax credit of €40,000, allowing the company to earn about €333,000 without paying tax for three years.