Just €2.3m was collected from 13 individuals in 2015 for the domicile levy, a tax introduced at the height of the recession to target the wealthy — leading to calls for it to now be scrapped by some experts.
The domicile levy was brought in by the late Brian Lenihan, who was finance minister in 2010, to ensure the State received some form of payment from wealthy tax exiles and non-resident Irish people who had paid little income tax.
Individuals liable for the domicile levy are those whose worldwide income exceeds €1m, whose Irish property is greater in value than €5m and whose income tax in a year was less than €200,000.
The levy is imposed each year before October 31 and is done on a self-assessment basis. In 2012, the levy was amended to include non-Irish citizens.
Following parliamentary questions from Fianna Fáil finance spokesperson Michael McGrath and Labour finance spokesperson Joan Burton, former Finance Minister Michael Noonan revealed that so far in 2017, just €2.3m was collected from 13 returns for 2015.
The number of individuals paying has dropped since it was introduced in 2010. In the first year, 32 individuals paid a combined €3.43m.
But the amount has dropped every year to 2014 when just 12 people paid €1.99m. The returns for 2016 will not be calculated until after October 31. Overall, €15.75m has been collected from 134 individuals.
The low yield from the domicile levy has led to tax experts in recent years to query whether it has been effective and calling for it to be reformed.
Mr McGrath said: “I think it’s fair to say that the domicile levy has not had the impact that was anticipated when it was introduced back in 2010 and, in overall terms, there has been a steady fall off in the number of people caught by it for various reasons.
“I do believe it is appropriate that high net worth individuals who remain Irish domiciled but are not tax resident here should make a contribution of tax in this country within the boundaries of what is allowed in international tax law.”
Tax expert at PWC, Nicola Quinn said abandoning the tax should be considered. “The overall yield has been very low since 2010 and the people who have ended up paying more are not actually tax exiles. It has failed spectacularly.
“I suspect that the costs actually outweigh what has been collected if you factor in Revenue pursuing individuals. To try and tweak it would not be effective and it should be abandoned at this point,” she said.
A spokesperson for Revenue said compliance activity is ongoing in a number of cases.
“These cases have not been reflected in the €2.3m due to outstanding enquiries, appeals, etc. As such, the figures provided are likely to change over time as individual cases are resolved, and it could be a number of years before any one year is fully finalised.
“Revenue carries out a number of compliance interventions that aim to minimise the burden on the compliant taxpayer and tackle, in a thorough and effective way, the non-compliant taxpayer. This approach involves taking account of all of the risks that apply to a taxpayer across all taxes and duties,” she said.
For the tax years 2010 to 2015, 11 audits and 57 queries have been opened on the domicile levy.
Four audits have been closed and 35 queries have been closed.
© Irish Examiner Ltd. All rights reserved