Dr. Jim Stewart:

As much as 85% of aircrafts that are leased in Ireland do not use section 110 tax status because they are 12.5% companies and they have all got very valuable tax incentives as 12.5% companies.

I have noticed, and I do not understand why this happens, that many aircraft leasing firms are owned through Bermuda or the Cayman Islands. Many branch companies that are aircraft leasing firms, which I have come across in Ireland, are branches of a parent company that is located in Bermuda or the Cayman Islands. Why do they locate there? That is not obvious. They are part of a group structure but what is the advantage? I can only surmise that it is because of a lack of transparency and tax reasons.

I think that there could be moves made to ensure that the parent of the subsidiaries in Ireland are not owned by a particular tax jurisdiction but that is very difficult to do. For example, the OECD has grappled with this issue and has failed to come up with a reasonable definition of a tax jurisdiction so Bermuda, the Cayman Islands and other jurisdictions are not regarded as tax havens. It is difficult to tackle these issues. One needs more of an EU-wide regulatory system to examine these issues, and let us remember that we must compete with Luxembourg and other financial centres. It is often the case that a tax change in Ireland is justified by the argument that it happens in Luxembourg or it helps us to compete with other tax centres such as Malta and Cyprus. We need more EU-wide initiatives to control this activity and examine the benefits that can be generated by these activities.