Pearse Doherty (Donegal, Sinn Fein)
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182. To ask the Minister for Finance if, regarding his proposed amendment to section 110 of the Taxes Consolidation Acts, he will restrict the use of profit participating loans where they are used to finance business of section 110 companies related to Irish property transactions; if his attention has been drawn to the fact that this amendment will allow for a situation whereby all portfolios affected can be marked-to-market at 5 September 2016 and accordingly any unrealised gains of the section 110 company arising on specified property business up to 6 September 2016 will be unaffected by the amendment, leading to a massive loss in capital gains tax to the Exchequer given that the majority of uplift in value of the properties and loan books affected have already taken place; and if he will make a statement on the matter. [26889/16]

Pearse Doherty (Donegal, Sinn Fein)
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183. To ask the Minister for Finance if, regarding his proposed amendment to section 110 of the Taxes Consolidation Acts, his attention has been drawn to reports that Irish accountancy firms have been notifying clients affected by this amendment that their corporate finance departments can prepare reports uplifting the valuation of affected portfolios sufficiently to ensure that no other capital gains will accrue post 5 September 2016; the appropriate action that will be taken to ensure that such a scenario will not be facilitated; and if he will make a statement on the matter. [26890/16]

Pearse Doherty (Donegal, Sinn Fein)
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184. To ask the Minister for Finance if, regarding his proposed amendment to section 110 of the Taxes Consolidation Acts, as published, the amendment still allows interest deductibility at an arm's length rate on all loans related to Irish property transactions; his views on the fact that this could facilitate scenarios whereby the affected portfolio can be restructured to create internal high interest loans, for example, 15%, so long as the affected portfolio can have a report produced by an accountancy firm which shows that this is justified and reflects the market realities of this type on transaction or, alternatively, may be facilitated through an orphaned financing structure, resulting in the neutralising of much of the profit on income from the affected portfolio; if this is the case, the measures which will be taken to ensure that such a situation cannot occur; and if he will make a statement on the matter. [26891/16]

Pearse Doherty (Donegal, Sinn Fein)
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185. To ask the Minister for Finance if, regarding his proposed amendment to section 110 of the Taxes Consolidation Acts, his attention has been drawn to reports that Irish accountancy firms have been notifying clients affected by this amendment that they should wrap their current section 110 structure inside an Orphaned Super QIAIFs in order to prevent the media and the public from downloading their accounts and seeing which Irish taxes they are or are not paying, considering that all Irish companies, including section 110s, must publish their accounts on the CRO website, whereas QIAIFs do not file public accounts; and if he will make a statement on the matter. [26892/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 182 to 185, inclusive, together.

The proposed amendment to Section 110 of the Taxes Consolidation Act, published on 6 September, is the subject of ongoing review and discussion.  It is intended to address some perceived issues with the operation of section 110.  The amendment as published is not finalised and may be subject to further refinements to clarify certain aspects of the provision. 

The proposed amendment relates to the corporation tax that a section 110 company must pay, and not to any potential capital gains tax (CGT) liability.  This is an important distinction: corporation tax applies to profits arising during an accounting period whereas CGT is triggered by a disposal during a period.  A change in the CGT rate applies to any accrued gain crystallised by a disposal of the asset after the change in the rate.  However, it is incorrect to apply this logic to corporation tax because of the difference in the events which trigger the tax.

With regard to any attempts by accountancy firms or otherwise to circumvent the intention of the proposed amendment it should be noted that this is a proposed amendment. The rationale for publishing said proposal was to ensure appropriate feedback is received on a technical and complex section of the Taxes Acts.  My officials are currently in consultation with a broad range of stakeholders to clarify certain aspects of the provision and to ensure the proposal successfully carries out the intention for which it was created. This is an ongoing process and I would like to reiterate that we welcome input from all stakeholders, including Deputies, on the matter.

Regarding interest deductibility, it is a long standing part of tax law that a person is subject to income or corporation tax not on their gross income, but on their profits, having taken a deduction for the expenses wholly and exclusively incurred in earning those profits.   Where the interest expense of a section 110 company is calculated on an arm's length basis, and where it passes the wholly and exclusively test, then it would not be in keeping with the balance of the Irish tax system to restrict the deductibility of that interest.

In relation to section 110 companies being owned by QIAIFs,  this would not change the Company Registration Office (CRO) obligations re the filing of returns. If a section 110 company has a shareholder who is an AIF, they are still obliged to file their accounts and these accounts will be publicly available via the CRO website.