RTÉ will have to pay corporation tax on its €170 million licence fee revenue for the first time under plans being drawn up by the Revenue Commissioners. Emmet Oliver reports.
For years, licence-fee revenue, paid by households to fund public service programming, has been immune from the 12.5 per cent corporation tax rate. But this exemption is coming to an end.
Over one million homes pay an annual licence fee of €155 for owning a TV set. About €21.2 million of taxation will now have to be paid by RTÉ based on a rate of 12.5 per cent a year.
The Revenue has refused to comment on why it has decided to pursue the payments at this time. A spokesman said its dealings with individual clients were confidential. RTÉ said it was aware the Revenue was studying the tax treatment of its licence fee income and a possible tax liability might arise.
In its 2005 accounts, RTÉ could write off the €21.2 million against its €16.4 million surplus, thereby leaving the broadcaster with no corporation tax charge at all. Licence fee revenue provides 45 per cent of RTÉ annual funding, with the remaining €199.8 million coming from commercial revenue. The station this week reported its annual results showing turnover rising almost 8 per cent to €369 million, the highest in recent memory.
The exemption from taxation for licence-fee revenue has enabled RTÉ not to pay any corporation tax for many years. Although, in recent years, the station has struggled financially and was not able to produce any surplus. As recently as 2001, the broadcaster had a deficit of €70.8 million.
Licence-fee revenue is collected from any home that has a TV set. An Post collects the money on behalf of the Department of Communications, which then receives a grant-in-aid.
This week, the RTÉ annual report showed that licence fee evasion may be as high as 16 per cent. The broadcaster said evasion had deteriorated over recent years and was now far higher than found in the UK. The puppets Podge and Rodge front a campaign against TV licence-fee evasion.
An Post has for the last two years indicated its desire to exit licence-fee collection because it is not a core business. Getting a replacement to take on the task could prove difficult. The explosive growth of apartment buildings in Dublin for instance has made the collection of the licence fee more challenging, with licence-fee inspectors often finding it hard to track down property owners. An Post is responsible for maintaining a database containing records of every premises which should have a TV licence.
RTÉ uses its licence-fee revenue in a variety of ways. Some activities are entirely funded by licence-fee revenue, some get a small portion, while other activities are completely commercial.