Mr. Seamus Coffey:

I presume Deputy Doherty has read the 130 pages to get to the last line that contains this proposal. Yes, it is looking at intangible assets, of which there has been a substantial onshore return in recent years. It just looks at the tax treatment of the capital allowances and the depreciation of those in relation to the revenue that might flow from that. We could wait until companies have their full capital allowances exhausted and have the full amount of their profits subject to our 12.5% rate, but that takes quite a long time before the capital allowances are fully exhausted and there is a certain risk to that. To facilitate some tax smoothing, one can just reduce the amount of their profit which they can offset against this depreciation charge.

The proposal in the report is that the limit should be set at 80%. At present, there is a limit and it is 100% because these capital allowances are ring-fenced and one can only offset them against income from the use of the asset in respect of which the allowances are being claimed. One cannot generate a loss and use that loss elsewhere. The 100% cap is there and what is proposed is to change it to 80% for capital allowances.