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

I move amendment No. 40:

In page 145, between lines 32 and 33, to insert the following:"Withholding Tax on peer to peer lending

62. 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 Taxes Consolidation Act 1997 and on the appropriateness of section 246(2) of the Taxes Consolidation Act 1997 to the peer-to-peer lending and other crowd funding mechanisms.".

This amendment relates to the peer-to-peer lending sector. While we did discuss the issue on Committee Stage, I want to tease it out further. There is general acceptance that we need to reduce the level of dependence on lending from the banking sector and so the more non-bank sources of finance there are available to small and medium enterprises, in particular, the better. Peer-to-peer lending is an evolving sector, but it is growing. Earlier this year, the Revenue Commissioners paid attention to it and I understand that in May last they issued an e-brief requiring borrowers to deduct a 20% withholding tax from their repayments. This measure is to ensure tax compliance. I would like to know from the Minister if this measure arises out a concern on the part of the Revenue Commissioners in regard to non-compliance. Obviously, everybody involved in this sector, and every other sector, should be tax compliant. The Minister is moving with the Central Bank towards regulation of crowd funding generally but, in particular, peer-to-peer lending. My concern is that given the nature of how peer-to-peer lending works the imposition of a withholding tax will render it unworkable because each person contributing to the lending will be required to complete the R185 form and each loan in this sector can have over 200 different lenders involved in a transaction. If this requirement is to remain, it will stop in its tracks the further development of peer-to-peer lending.

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