Pearse Doherty (Donegal, Sinn Fein)
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160. To ask the Minister for Finance the expected yield in 2017 and 2018 from proposed changes to section 110 of the Taxes Consolidation Act, which would restrict the use of profit participating loans where they are used to finance business of section 110 companies related to Irish property transactions; and if he will make a statement on the matter. [26587/16]

Róisín Shortall (Dublin North West, Social Democrats)
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191. To ask the Minister for Finance further to his announcement on 6 September 2016 regarding a proposed amendment to section 110 of the Taxes Consolidation Act 1997, the anticipated yield from this measure in each of the next five years. [26949/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 160 and 191 together.

I have recently published a proposed amendment to section 110 TCA 1997 which I intend to introduce in the Finance Bill.  I am informed by Revenue that it is not yet possible to accurately cost the measure.  This proposal was published on 6 September 2016, in draft form, in order to obtain constructive feedback and views from interested bodies.  

It should be noted that the tax returns and financial statements for 2015 are due to be filed from the end of next month, after which Revenue will have the opportunity to examine the activities for 2015 in full.  Until a larger number of accounts covering a number of years are fully examined it will be difficult to estimate the likely impact of the proposed amendment.  It is Revenue's intention to conduct a thorough investigation of companies availing of section 110 who have acquired Irish distressed debt.

The matters being reviewed concern complex transactions and the appropriate accounting treatment for such transactions. Where a company acquires a loan book there will be three possible sources of profits which are: the interest payments that are made by the borrowers; the capital repayments made by the borrowers that exceed the capital cost of the loan book to the lender; and any gain arising on the disposal of a loan or any property on which a loan is secured. 

In addition, to accurately estimate the full impact of the measure would require ex ante knowledge of any behavioural changes on the part of taxpayers as a consequence of the amendment. Revenue would not therefore be in a position to anticipate the extent and impact of any such behavioural changes or corresponding impact on the tax yield.  The proposed amendment is not finalised which also leads to difficulties predicting any potential yield.