Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

If a regulated commercial bank was willing to give a mezzanine rate of 8%, for example, they might make two loans; one is senior debt which the bank would get back before anybody else is repaid and that could be loaned at 4% and the second loan could be the non-secured loan, which is a risker loan so the bank might lend that at a rate of 8%. I would deem interest deductibility against those two loans as absolutely legitimate as normal business practice. If, however, it is not anchored to regulated commercial banks then we are into the world of international corporate finance law where, for example, Deutsche Bank might give a rate of 8%. However, the fund managers do not want to use Deutsche Bank, it wants to use the Cayman funds, and they say, for example, "Actually it turns out that they lend at 25%, here are the last five loans they have given, and by the way we own the Cayman fund and we are the ones making the loans", and so on. If the rate is not anchored to regulated commercial banking - which allows absolute legitimate tax deductibility - then we are into the world of secret negotiations, which we as legislators would never get to see.