O’Donoghue took action to save film tax relief scheme, records reveal
O’Donoghue had said they would “kill off” the movie industry in Ireland.
Last year, Revenue announced that it had uncovered evidence of abuse of the S481 scheme, amounting to between €17million-€22m, or over 6% of the total allocation. Department of Finance records obtained by the Irish Examiner under the Freedom of Information Act reveal that the minister opposed some far-reaching suggestions put forward by Revenue to prevent abuses.
In particular, Mr O’Donoghue objected to certification powers in relation to S481 being transferred from his department to Revenue.
He also opposed a change whereby relief would be delayed until after the film was screened.
In correspondence between the Department of Arts, Sports and Tourism, Revenue and the Department of Finance, Revenue set out its concerns about a small number of film companies artificially inflating their budgets to qualify for greater tax relief.
Revenue was concerned that if a budget was approved (by DAST) at the certification stage (which included inflated costs), it would not be able to challenge entitlement to the relief at a later date.
However, DAST replied that Mr O’Donoghue “cannot accept the proposal that certification of projects be transferred to Revenue”.
“We believe that this is a sector-specific function, which we are best placed to perform.”
A compromise was reached that Revenue would issue the certificate and examine the financial set-up after the minister had established the project satisfied the S481 requirements.
The minister also opposed the proposal to delay the granting of tax relief.
According to DAST correspondence: “The minister has expressed himself completely opposed to the proposed delaying of relief for investors.
“It is certain that such an arrangement would effectively kill the S481 scheme thereby negating the policy decision to extend the relief to 2008.”
