Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

This is an interpretation of the language. Amendment 96, which is proposed by Deputy Donnelly, has much the same effect as the text which is already included within section 21 of the Bill but with one particular aspect it is slightly easier to meet the test than that which is already included.

The test in section 21 is that the interest which may be deductible is no more than the reasonable commercial return for the use of the principal. This is the same as the Deputy’s proposal to limit the interest to the return a regulated commercial bank would earn. However, by ensuring that the rate of return is tied to a quantitative test, that is the amount a bank would receive, it precludes a qualitative analysis of the interest payable being made and any consideration of the risk associated with the investment. This could mean that in certain situations companies could be able to claim a higher rate than was appropriate.

Both texts will involve an analysis of the commercial lending taking place, if any, at the time the loans were advanced in order to determine how much interest is deductible. Both texts provide that no deduction is available for any interest which is in any way dependent upon the results of the company.

The concerns raised by the Deputy are covered by the Minister, Deputy Noonan’s, amendment and it is therefore not necessary to amend the text and the recommendation is not to accept the amendment.