Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 181:

In page 142, between lines 19 and 20, to insert the following:

“Withholding tax on peer to peer lending

60.The Minister shall within three months of the passing of this Act, prepare and lay before the Oireachtas a report on the requirement for companies availing of peer to peer loan finance to withhold tax at 20 per cent of interest paid as required under section 246(2) of the Tax Consolidation Act 1997 and on the appropriateness of section 246(2) of the Tax Consolidation Act 1997 to the peer to peer lending and other crowdfunding mechanisms.”.

I know the issue of withholding tax on peer-to-peer lending has been brought to the Minister's attention. I understand that Revenue issued an e-brief in May declaring that the requirement to withhold tax of 20% of interest applied to all peer-to-peer loans. As the Minister will appreciate, peer-to-peer lending provides vital access to capital for small and medium-sized enterprises, SMEs, and the implementation of this brief could have a very significant impact. My understanding is that a loan provided through peer-to-peer lending has an average of 245 lenders. Each SME under the Revenue's brief would have to manually fill in 245 R185 forms each year of the loan. We are not talking about rates, but about the method of tax collection. Given that this is an important source of funding for SMEs and that it is a form of non-bank funding, which is to be encouraged, I would be interested to hear the Minister's views on it.