Question to the Minister for Finance (Mr. Michael Noonan, TD)
To ask the Minister for Finance his plans to reduce the rate of deposit interest retention tax; and if he will make a statement on the matter. – Jerry Buttimer
For WRITTEN ANSWER on 16, June, 2015.
As the Deputy will be aware, it is the standard practice for the Minister for Finance to review all tax expenditures and reliefs in the run up to annual Budgets. It is also a longstanding practice of the Minister for Finance not to comment on any tax matters that could be the subject of Budget decisions.
In recent years the DIRT rate has been increased to raise additional revenue. The Government decided to increase the rate of Deposit Interest Retention Tax (DIRT) (previously 33%) to 41% in Budget 2014. The higher rate of DIRT (previously 36%) for interest paid less frequently than annually was abolished, and all deposit interest is now liable to DIRT at the same rate (41%).
Up to 2009, individuals may have been taxable on other income at the higher rate of income tax but were only liable to pay tax on interest income at 20%. Previous DIRT rates were below the higher rate of income tax, and this, in effect, incentivised saving. The decision to raise the rate of DIRT was taken to encourage spending in the economy with a view to stimulating growth and employment.
Certain exemptions apply from DIRT, the main ones include –
– Individuals aged over 65 (subject to income limits)
– Permanently Incapacitated Individuals
– Companies, Pension Funds and Charities (Irish resident companies pay tax on investment income at 25%)
– Non-Resident Account Holders