Legislation that will legally require a landlord to first offer a home they are selling to the tenant in situ for purchase is under preparation but will “take a number of weeks”, Minister for Finance Michael McGrath has said.
Speaking on Sunday, he said he wouldn’t give a specific date as to when the measure would be introduced but added that the Attorney General and parliamentary legal counsel are “actively” working on legislation with the Department of Housing.
The minister also confirmed he was planning to bring a memo to Cabinet this week to introduce a new 15 per cent tax rate for large multinational companies operating in the State.
In addition, Mr McGrath told RTÉ Radio‘s This Week programme there would be a “meaningful package of measures” brought forward in the Budget in the autumn to ensure landlords remain in the rental sector, which would include a “taxation element”.
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The Fianna Fáil TD said legislation to establish the first purchase scheme was under preparation and would be ready in the coming weeks.
Mr McGrath said the “overwhelming majority” of landlords treat their tenants well and he had already come across cases where landlords were entering into arrangements to sell their property to a tenant on “a voluntary basis on market value terms”.
He said for people who “genuinely” feel they are at risk of homelessness to engage directly with their local authority and that the cost rental arrangement, which provides for the purchase of a property by a council for tenants in those circumstances was now available.
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Mr McGrath said he was already actively engaging with officials in his Department and had preliminary discussions with the Revenue Commissioners in relation to a “taxation element” in the next Budget to encourage landlords to stay in the rental market.
“Any taxation changes in respect of the property market have to be very carefully balanced and require considerable amount of attention to detail,” he said.
“We’re working through that ... but I can give a commitment that there will be measures there to underpin the long-term sustainability of the rental sector and to improve the attractiveness of it for people to invest in and those who have already invested, to remain in it because we do need a stable supply of rental accommodation into the future.”
In relation to a new 15 per cent tax rate for large multinational companies operating in the State, Mr McGrath said it had arisen from an International Organisation for Economic Co-operation and Development. (OECD) agreement that Ireland along with more than 130 countries had signed up to in October 2021.
He said there were two key elements of the agreement, with the move from 12.5 per cent to 15 per cent coming under “Pillar Two”.
“The option that we have now arrived at is that we will have what is called a qualified domestic minimum top up tax of 2.5 per cent, which will only apply to large corporates with a turnover of at least €750 million,” he said.
He said the “historic change” to the State’s corporate tax rate would take effect from next January.
Under “Pillar One” of the agreement, a proportion of profits booked by multinationals in Ireland would be reallocated thereby reducing Ireland’s corporate tax take.
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Mr McGrath said: “When my Department over the last couple of years looked at the impact of the two pillars in the round, it is Pillar One, the reallocation of taxing rights that ultimately will result in a negative impact on Ireland because of the small size, relatively, of the domestic market here in Ireland,” he said.
“Pillar One is less advanced than Pillar Two. It is still the subject of very detailed discussions and negotiations at OECD level. Ireland is at the table, we are very much involved and helping to shape the nature of those discussions and indeed the direction of the emerging conclusions.
“So it remains to be seen when there will be final agreement in respect of Pillar One. It could well be the case that Pillar Two comes into effect first, which is the increase in the rate and that would happen before the change in the reallocation of taxing rights.”
However, Mr McGrath added it remains his Department’s assessment that there would be an impact on tax receipts in Ireland due to the changes.
“It’s not that we will receive less receipts in the future but the increase in the receipts that we forecast will be of a lower magnitude when the full suite of Pillar One and Pillar Two measures are implemented in full over the years ahead,” he said.
