The State's financial services watchdog has rowed back on a plan to demand that anyone appointed as a director or a manager in the industry should produce a tax clearance certificate.
The plan was originally put forward last year as part of the Irish Financial Services Regulatory Authority's (IFSRA) proposals for ensuring that people appointed as directors and managers in the industry are fit to hold these posts.
Yesterday, the financial regulator issued a revised set of proposals and has invited submissions from the industry before it goes ahead and introduces the regime next June.
However, the new proposals do not include an idea contained in the original that all applicants for directorships and managerial posts would have to declare they were tax compliant and produce a clearance certificate from the Revenue Commissioners.
The regulator stated: "All senior officers and officials working within the financial services area should be, and should be seen to be, tax compliant.
"The Financial Regulator proposes in the future to ask all firms to secure from applicant directors and managers a declaration on their tax affairs and a tax clearance certificate."
Instead the regulator has decided that potential directors and managers be asked if they have been convicted on indictment (by a jury) of tax offences or aiding and abetting tax offences.
Where someone has been convicted on indictment of these offences, then the regulator states it will bar them from holding directorships or managerial posts in the industry.
It also states that where someone has paid tax penalties, and this has been published, they can hold directorships or managerial posts in financial services once the Revenue has not prosecuted them.
The financial services industry opposed the plan to introduce tax clearance certificates. In its submission on the regime initially proposed by the regulator, the Irish Bankers' Federation (IBF) said such certificates would only be of limited use. "A tax clearance certificate only provides assurance as to declared liabilities," the federation said.
"We believe IFSRA would also be interested in undeclared liabilities. In addition, it will not always be possible for foreign directors to obtain tax clearance certificates. We suggest, therefore, that the Individual Questionnaire should require applicants to certify that, to the best of their knowledge, their tax affairs are in order."
The paper issued yesterday makes it clear that the regulator took such criticisms on board.
It says that the majority of responses to the original document questioned the value of tax clearance certificates, and pointed out that there could be difficulties in obtaining them in some cases. "The objective in the case of regulation is to assure past and continuing appropriate conduct of tax affairs," it says.
"It is therefore proposed, that a condition of acceptance as an approved person would be a full commitment to a code of behaviour in the conduct of tax affairs on their own behalf and on behalf of customers," the regulator says.
