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Home > Dail Eireann debate. Written answer 117 - Black economy [Tobacco] [40459/12]

[Oireachtas] Dail Eireann debate. Written answer 117 - Black economy [Tobacco] [40459/12]. (25 Sep 2012)

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117. Deputy Thomas P. Broughan asked the Minister for Finance in view of the ongoing concerns regarding unfair competition for small and medium enterprises from the black economy; if he will consider further measures to ensure that small companies are not undercut by alleged unfair operations by persons in the black economy; and if he will make a statement on the matter. [40459/12] 

Minister for Finance (Deputy Michael Noonan): I am advised by the Revenue Commissioners that their tax compliance programmes are under constant review to ensure that they are focussed on the areas of greatest risk, including risks from the shadow economy. There is no doubt that shadow/hidden economy activity creates distortions in the economy and competitive disadvantages for compliant businesses. For these reasons, Revenue focuses on deterring shadow/hidden economy activity and non-compliance through its audit and investigation programmes based on risk analysis, use of Revenue powers and their intelligence and information systems. Revenue tackles the problem of the shadow economy through its range of compliance and audit interventions including through targeted special projects. Case interventions are undertaken based on Revenue’s assessment of compliance risks, the level of those risks and other relevant information available. Revenue is using a wide range of methodologies to identify those operating in the shadow economy and is deploying the full range of compliance interventions. Activities can include covert surveillance, cold calls to businesses and venues as well as pre arranged aspect queries on specific items. This work is continuing.


The Revenue Commissioner’s approach to the shadow economy is underpinned by close consultation and cooperation with the Department of Social Protection. The primary objective of these activities is to uncover either non-declarationor under declaration of income and/or fraudulent DSP claims.


The Deputy will be aware of the continuing strengthening of legislation to provide for a robust framework within which the Revenue Commissioners may tackle tax and duty evasion, including recent provisions relating to:


-The making of returns of transactions by merchant acquirers, and other payment settlement entities, to the Revenue Commissioners.

-The more effective investigation of white-collar crime.

Further provisions included a comprehensive package of measures in relation to Excise (Oils) including, requirement for separate licences for auto-fuel traders and marked fuel traders, requirement to have a separate licence for every premises or place at which the fuel concerned is dealt in, and a requirement that a licence must be clearly displayed at the premises or place.

Revenue’s tobacco strategy, “Strategy On Combating the Illicit Tobacco Trade (2011- 2013)” was published on the Revenue website in June 2011. This three-year strategy is underpinned by annual action plans.

The strategic level plans include taking steps to ensure that the legitimate trade remains compliant, delivering more effective and visible interventions through enhanced capability and better deployment of Revenue resources. The strategy also include further development of cooperation and intelligence sharing at national and international level, together with a commitment to prosecute all serious cases of tobacco tax evasion and a focus, in partnership with other Government agencies, on reducing the demand for contraband tobacco.

During 2011 Revenue’s Customs Service seized a total of 109 million cigarettes in 10,581 seizures. Commercial quantities in maritime freight traffic accounted for 76.4 million cigarettes. Revenue also seized 11,158 kg of tobacco in 2011. In six particular operations, over 19 million cigarettes, 1,344 kg tobacco and 49 vehicles were seized.

Regulations were also introduced in 2011 requiring Government Departments and State Bodies to supply details of payments made to the Revenue Commissioners. I am advised by the Revenue Commissioners that this data is matched to the Revenue records of the various recipients, and is used to profile risk. Similar matching is also carried out using other third party data received by the Revenue Commissioners.

Revenue has a prioritised focus on those sectors that traditionally have been susceptible to shadow activity such as cash businesses. All possible sources of information, including following up on services advertised on TV, radio, local newspapers, Internet, special interest publications are used by Revenue.

The Revenue Commissioners have advised me that in order to inform the approaches they are taking, and help determine where resources may best be deployed, they continue to engage in meetings with trade and representative bodies. The Hidden Economy Monitoring Group provides a forum for the exchange of views on the effectiveness of measures introduced in combating the hidden economy. This group, which is chaired by Revenue, includes representatives from employer and business organisations, trade unions and other Government Departments and agencies. Regional hidden economy liaison groups have been established to facilitate greater local interaction and more immediate responses to insights and issues that may be highlighted.

Revenue investigations have detected the use of computer programmes or electronic devices to alter or conceal sales records. To counteract these risks, legislation was enacted in 2011 providing penalties for the possession, use or supply of automated sales suppression devices known as "zappers" for the purpose of evading tax.

Streetscape programmes, in which every cash business in an area is visited, without prior announcement, have been carried out. While the main focus of real time activity is on businesses that use cash registers, all sectors that have cash receipts are monitored. This includes professionals such as doctors, veterinary surgeons, etc. These operations have also resulted in the registration of previously unregistered persons. 803 such registrations were recorded in the period from January to the end of April 2012.

The results from all the various projects are reflected in the general audit and compliance results from audits, assurance checks, site visits etc. which are published in the Revenue Annual Report.
Dáil Éireann Debate
Tuesday, 25 September 2012

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