Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

The third point that accounting firms and lawyers are very excited about is the exemption in the amendments - as the Minister of State has already referenced - covering the residential backed mortgage securities, commercial backed mortgage securities and collateralised loan obligations. This means that if one owns a bunch of debt such as those loans owned by the vulture funds, for example 10,000 mortgages or commercial loans, one packages the up into a security which then can be sold as a bond. We have just had the conversation about reasonable commercial returns and arm's length loans being the way the Government is proposing to shut down the tax avoidance. I think that is correct and the right way to go, but there is still quite a bit of latitude there. The amendment goes on to say that this new provision will not apply to securities. The vulture funds are now being advised that if they take their loans and turn them into securities - it takes about two weeks and €50,000 in fees to turn a loan book into a listed security and the fees make some people very happy - the amendment exempts the securities from the new provisions.

The advice the vulture funds are receiving is that they use these security products all over the world and that they are familiar with them, and their approach is "Let's turn all our loans into securities". The legislation states that they are now exempt and can continue to avoid tax. My proposal is that the exemption be removed. I cannot find a reason to include it. It seems to be a serious loophole.