Minister for Finance, Jack Chambers TD, has published a second feedback statement on the development of a participation exemption for foreign dividends to the Irish corporate tax system.
Currently most EU and OECD member states adopt a predominantly territorial approach exempting foreign dividends from domestic tax, sometimes complemented by an exemption for foreign branch profits. Ireland differs by operating a worldwide corporate tax regime on all profits, both domestic and foreign source, of a resident entity with double taxation relief for foreign tax paid on foreign source profits.
Government committed to the introduction of the participation exemption in Budget 2024, to come into effect from 1 January 2025. Earlier this year the Institute, under the auspices of the CCAB-I, responded to the Department of Finance’s feedback statement on the Strawman proposal for a participation exemption for foreign dividends. This second feedback statement seeks to build on the feedback received from stakeholders. It contains potential draft approaches to key elements of the legislation as well as information on some consequential amendments that may be introduced in conjunction with the participation exemption for foreign dividends.
On publication of second feedback statement, Minister Chambers stated:
"The introduction of a participation exemption will deliver on the commitment to simplify the Irish corporate tax system. This demonstrates Ireland’s continued desire to promote a business environment that remains best in class. We are in a period of unprecedented change in the international taxation landscape, and enhancement of Ireland’s tax system will provide stakeholders with the certainty and simplicity needed to continue to prosper in Ireland.
The publication of the second feedback statement builds on the valuable insight received from stakeholders in response to the initial feedback statement which included a strawman proposal. I look forward to receiving additional stakeholder insight and bringing forward legislation to deliver on this commitment in Finance Bill 2024.”
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