Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

I thank the Minister and everyone who has attended. I will focus on the use by vulture funds of section 110 companies and the Minister's proposed amendment. My calculations suggest that if we shut this down and stop the vulture funds avoiding capital gains and very significant profits on interest payments, we could double the fiscal space for next year. There could be €10 billion to €20 billion available in future lost taxes. Just for next year, we could bring the fiscal space from the current agreed assumption of €1 billion to €2 billion and possibly higher. The Minister has drafted an amendment to the Finance Act, which is very welcome, and has stated that he is very open to feedback from the Oireachtas on it. He is probably aware that the day after the amendment was put forward, the big accountancy firms were sending bulletins to their clients stating that they feel they can comfortably get around most, if not all, of it. As such, I wanted to get the Minister's thoughts on his openness to closing it down.

I do not have the resources of the Revenue Commissioners and the Department of Finance to draft amendments. Obviously, they must be highly technical to avoid the lawyers and accountants getting around them straight away. There are three ways that the accountancy firms have raised themselves to indicate how these companies are going to continue to pay virtually no tax. One is that the proposed amendment allows the assets to be marked to current market value, which obviously would erase any taxes on capital gains from the purchase to today. As we all know, there have been significant increases in asset values since then. The second is to continue the use of these loan notes. While they have to be at arm's length, if one can get a big four accountancy firm to state that a 20% interest rate is reasonable given the risk, one can still do that. The third is that it only applies to property.

I give the example of Cerberus, having gone through the 2014 accounts. While a great deal of attention has been paid to the €190 million difference of opinion between NAMA and the Comptroller and Auditor General, conservative calculations suggest that over the next ten years Cerberus will walk away on Project Eagle with approximately £2 billion in gains. Because it is using section 110, it will pay essentially no tax on that. The Irish people have already covered over €3 billion in the fall in value of the assets which NAMA bought and sold. Is the Minister open to a conversation? Does he agree with Cerberus that, as the amendment is currently structured, it already has approximately €1 billion in capital gains. That is broadly accepted. It would wipe out any taxation on that €1 billion in capital gains. Going on its 2014 accounts and marking them for ten years, it looks like there will be an additional £900 million in gains on the interest payments. If Cerberus can convince an accounting firm to structure an arm's length loan and say that 18% is a reasonable yield, that will erase all taxable profits. As the amendment currently stands, Cerberus would walk out of this country having made approximately £2 billion, or €2.8 billion, in gains while paying virtually no tax.

Cerberus would have paid virtually no tax. Is the Minister open to shutting that option down? Does he believe Cerberus should pay capital gains tax, corporation tax and dividend withholding tax? I will finish with my next comment. It is worth-----