Tuesday 22 October 2019

Samantha McCaughren: 'Lights, cameras but little action on film tax breaks in Ireland'

Taoiseach Leo Varadkar with actress Ruth Negga during his trip to Los Angeles
Taoiseach Leo Varadkar with actress Ruth Negga during his trip to Los Angeles
Samantha McCaughren

Samantha McCaughren

Taoiseach Leo Varadkar was being very Hollywood on Friday, putting on a showbiz smile and talking the talk about the Irish film industry. He attended an event in Los Angeles hosted by Screen Ireland, celebrating the movie business. Varadkar rubbed shoulders with some of Ireland's best and brightest film and TV stars, such as Ruth Negga, Allen Leech, Aisling Bea and Jared Harris.

Varadkar told those gathered he wanted Ireland to be a "centre of excellence" for film and TV production.

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Back home, meanwhile, the industry continues to be frustrated with changes made to its tax incentive scheme, Section 481, and attempts to get Revenue to produce a workable set of guidelines to sit along those changes.

Admittedly, there have been some problems with the scheme in the past. Last year, a memo prepared for Revenue chairman Niall Cody warned that some film-makers were being creative with their budgets in order to get the most out of the tax breaks.

"There is an element of 'catch me if you can' with no possible downside to inflating budgets and spend," said the memo.

Another problem has been that Revenue staff are overloaded, leading to delays for production companies claiming tax credits, even when they are wholly legitimate.

A solution from Revenue and the Department of Finance is a newly introduced self-assessment model.

But it is causing consternation at present, as no guidelines have been issued to allow production companies to judge what expenses are and are not covered by the scheme. International productions do not want to risk being non-compliant and so won't spend money here without clear guidelines.

The industry has decided to keep quiet about the issue for now, while discussions with Revenue on a set of guidelines are settled. But these talks have been very heated at times and draft guidelines published by Revenue five months ago only intensified concerns among many film-makers.

Earlier this year, Brown Bag Films co-founder Cathal Gaffney spoke out to say getting the latest iteration of the tax scheme could have a material effect on the industry. The discussions with Revenue are still getting bogged down and more meetings are scheduled, I hear.

Varadkar's LA tour provided some great photo ops and his comments about doubling Ireland's audiovisual sector were box office, making headlines across Irish media. But in a highly competitive international business, getting the tax breaks fixed should be his first priority.

Executive pay debate rumbles on

Large investors have become increasingly uncomfortable with big pay packets. The most obvious one is Michael O'Leary's bumper deal which could see him earn €100m over five years. As he explained, the targets are high, but shareholders were less keen, with just under half of them voting against the mega bonus scheme.

Some light has been shed on some far smaller payments and bonuses recently. Firstly, it emerged that Gary McGann, chairman of betting giant Flutter, has lost an appeal against the tax treatment of two payments totalling €2.3m, which he claimed were a gift from Smurfit Kappa's shareholders during his time as the group's chief executive. The Tax Appeals Commission ruled they were not a gift and must be taxed as income.

And last week, the Irish Times reported that Cathal Magee, who was interim CEO of Eircom for six months, was to be paid a consultancy fee of €150,000 a year for several years as part of his exit package from the telco in early 2010.

According to the paper, €150,000 for the first year of his consultancy arrangement would be paid out in August 2010, before he officially took up the role of HSE CEO a month later. The rest of the payments due to him under the exit deal were to be deferred until after he finished his HSE contract. There is now a legal dispute over the payments.

Regardless of what happens with the case, both McGann's and Magee's financial payments give an insight into how generously senior executives in Irish corporates are remunerated.

It will do little to enamour big business with ordinary people or, indeed, many shareholders.

Sunday Indo Business

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