Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

Our amendment proposing that the section 110 tax break be done away with, full stop, was ruled out of order. I would like a simple answer from the Minister as to why that should not be the case. It is very technical and one's head would be fried, frankly, with this stuff, which, I suppose, is half the point. These flipping tax lawyers are so far ahead of us, the Government and Revenue in finding and exploiting these loopholes that one would have to spend one's whole life chasing them round the new corners and loopholes they create. I was just reading something from Matheson, which is one of the crowd of tax advisers. It relates to the Irish aviation sector. I presume the clampdown the Minister is talking about to somewhat address the abuse we saw in section 110 is limited to the area of property. Aviation is an area to which it should be extended or, if not, one has to ask why we have section 110 at all. What is going on with this tax break? Matheson states on aircraft leasing and section 110:

It is critical to ensure that aircraft finance can be raised in a tax efficient way [I love these euphemisms]. In structured finance and securitisation transactions, an Irish section 110 company is commonly used to raise that debt financing to acquire assets on a tax neutral basis.

In effect, one acquires a load of assets and does not pay any tax. This is the advice. Matheson states an Irish section 110 company is a standard Irish special purpose company that satisfies the conditions of section 110 of the Taxes Consolidation Act.

An Irish section 110 company is generally entitled to claim a tax deduction on all of its financing expenses, including, subject to some conditions, its profit linked financing expenses. Therefore, it is generally possible to ensure an Irish section 110 company can acquire assets using debt financing on a tax neutral basis by ensuring it pays all of its return on those assets as tax deductible interest payments to lenders and investors. In other words, Matheson is explaining how one can get away with paying no tax in the case of people who want to avoid paying tax and make a lot of money in the area of aircraft leasing. It is telling companies to come into the sector because under section 110 in the area of aircraft leasing one can make a fortune and pay no tax. It is a major sector; I understand Ireland has the largest aircraft leasing sector for commercial airlines in the world. There is tax abuse. To be honest, I do not fully understand it, but I fully understand Matheson is telling investors that section 110 can be used to make enormous profits for people who want to invest in the area and avoid paying tax. To me, that begs the question as to why section 110 is in place. It is not just about withholding tax on property.

I do not know if I can return to an issue I raised on Committee Stage. I refer to companies rolling up profits and using the money to acquire more assets. If that is done for a long enough period - I understand for five or seven years - they will not pay any tax on the capital gains. This stinks to high heaven, but perhaps the Minister might enlighten me as to why we should allow this to happen. I ask him to explain why instead of putting a little sticking plaster on a particular area, we do not close this tax loophole.

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