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Home > Dail Eireann debate. Written answer 37 - Black economy issues [16184/14] [Tobacco].

[Oireachtas] Dail Eireann debate. Written answer 37 - Black economy issues [16184/14] [Tobacco]. (08 Apr 2014)

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37. Deputy Thomas Pringle asked the Minister for Finance his plans to address the various forms of black economic activity, particularly the illicit tobacco trade; and if he will make a statement on the matter. [16184/14] 

Minister for Finance (Deputy Michael Noonan):  The shadow economy has a distorting effect on the business environment and can have a serious negative impact on the competitiveness and sustainability of legitimate businesses.
I am informed by the Revenue Commissioners that they are committed to tackling shadow economy activity, working in close co-operation as appropriate with other State agencies and international bodies. There is significant engagement with representatives of legitimate business, through the Hidden Economy Monitoring Group, which is chaired by the Revenue Commissioners.
Revenue's tax compliance programmes are under constant review to ensure that they are focussed on the areas of greatest risk, including risks from the shadow/hidden economy.  I am informed that Revenue tackles the problem of tax and duty evasion through their 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.  The Revenue Commissioners are assisted in the process of assessing risks and identifying suitable cases in which to intervene by using their Risk Evaluation Analysis and Profiling (REAP) system.  REAP integrates data from a range of sources, including internal Revenue information and external third party sources and risk rates taxpayers accordingly. 
Revenue deploys the full range of compliance interventions to tackle those risks and activities undertaken and these include covert surveillance, cold calls to businesses and venues as well as aspect queries on specific items.
For my part, I have it made clear that I am committed to introducing measures that will assist the Revenue Commissioners in their work to combat shadow economy activity, and that I will respond positively where a case is made for further powers or other statutory measures that would strengthen Revenue's hand in dealing with such activity.
In the specific case of the illicit tobacco trade, I am aware that combating this trade is, and will continue to be, a high priority for the Revenue Commissioners. Their work against this illegal activity includes a range of measures designed to identify and target those who are engaged in the supply or sale of illicit products, with a view to seizing the illicit products and prosecuting those responsible. This multi-faceted strategy includes ongoing analysis of the nature and extent of the problem, developing and sharing intelligence on a national, EU and international basis, the use of analytics and detection technologies and ensuring the optimum deployment of resources at points of importation and within the country. Revenue will continue to act against all stages of the supply chain for illicit tobacco products and will make every effort to ensure that those involved in the illicit trade are brought to account before the Courts for their criminal activities.
I have provided for a number of new measures in recent Finance Acts that are designed to assist the Revenue Commissioners in the work against the illicit tobacco trade. Provisions in the Finance Act 2013 will allow them to deal more effectively with the risk of the illicit manufacture of tobacco products, and include a new offence relating to illicit production of tobacco products, as well as provision for forfeiture of equipment or material used in illicit production. In addition, the Finance (No. 2) Act 2013 has made provision for a power of search of baggage and receptacles, where there is reasonable belief that a person is guilty of an offence of dealing illegally in unstamped tobacco products.
Action has been taken also against fuel fraud. Following on from initiatives that have strengthened the licensing of fuel traders and brought about enhanced control of the fuels supply chain, the Finance (no. 2) Act 2013 makes a supplier who is reckless in supplying rebated fuel liable for duty where that fuel is used for an illicit purpose. In addition, Revenue and Her Majesty's Revenue and Customs in the United Kingdom have worked together to identify a more effective marker for marked gas oil, for use in both jurisdictions. The new marker, which was announced on 13 February 2014, will be more resistant to laundering and will, therefore, be a key element of Revenue's overall strategy for dealing with that problem. The new marker will be introduced in consultation with the oil industry and is expected to be in place within 12 to 18 months.
I have also introduced specific Finance Bill measures to counteract shadow economy activity and fraudulent practices that undermine the VAT base.  One such provision seeks to deter possible collusion between a supplier and customer for the purpose of taking part in, or facilitating VAT fraud. A second measure provides that credit for VAT on goods and services purchased is disallowed where a business has not, within a six month period, fully or partly paid for them, and repayment of the VAT claimed on those purchases will be required. Thirdly, the Revenue Commissioners will be able to issue notices requiring businesses to provide specific information in circumstances where Revenue has reasonable grounds for believing that the information might assist in identifying shadow economy activity.
I should add that legitimate businesses can also assist in combating the shadow economy, by providing information on shadow economy activities to the Revenue Commissioners or other relevant State agencies, and I would encourage them to support the extensive work that is being carried out against illicit activities by doing so.  

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