Martin Heydon (Kildare South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

53. To ask the Minister for Finance the status of the working of the Tax Strategy Group in 2017, with particular reference to a review of the current system of betting tax; and if he will make a statement on the matter. [1656/17]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy will be aware that the Tax Strategy Group (TSG) is in place since the early 1990's and is chaired by the Department of Finance with membership comprising senior officials and political advisers from a number of Civil Service Departments and Offices. Papers on various options for tax policy changes are prepared annually for the Group by Department of Finance officials.  Papers relating to PRSI and social welfare issues are also prepared for the Group by the Department of Social Protection.

In line with the Government's commitment to Budgetary reform including greater engagement with the Oireachtas, the Tax Strategy Group papers relating to Budget 2017 were published in July 2016. This was well in advance of Budget Day and helped to facilitate informed discussion. Decisions in relation to the TSG for Budget 2018 have yet to be finalised but I am satisfied that the approach adopted last year worked well and I do not expect to change it significantly.

It is important to note that the Tax Strategy Group is not a decision-making body and the papers produced are a list of options and issues.  They are only one part of an overall Budgetary and Finance Bill process which now includes the National Economic Dialogue, the Budget Oversight Committee and the provision of pre-Budget submissions and engagement with specific groups and individuals.

As regards betting duty, during the Finance Bill Committee Stage Debates in both the Dáil and the Seanad, my colleague, Minister of State Eoghan Murphy TD, gave a commitment that betting duty would be examined as part of the Tax Strategy Group process in 2017.  I can inform you that officials in my Department are in the early stages of examining the area with a view to completing a review for inclusion in the Excise TSG Paper 2017.

Tommy Broughan (Dublin Bay North, Independent)
Link to this: Individually | In context | Oireachtas source

54. To ask the Minister for Finance when he and his Department first became aware of potential tax losses to the Exchequer from the application of section 110 of the Finance Acts by so-called vulture funds; the reason the loophole was not closed in the Finance Act 2014 at the latest; and if he will make a statement on the matter. [1491/17]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

There is a time delay between an activity taking place and the filing of the corporation tax return covering that entity.  A company which commenced trading in 2014 with a year end of 31 December 2014, for example, would not be required to file its first tax return until 23 September 2015.  As 2014 saw the first bulk sales of distressed Irish debt, the first corporation tax returns and financial accounting information in relation to companies set up specifically to acquire large volumes of Irish distressed debt were therefore only filed with Revenue in late 2015.  Commencing in November 2015 Revenue began examining the use of section 110 companies to acquire distressed debt secured on Irish property.  They began to liaise with officials from the Department of Finance in relation to this issue in early 2016.  

Although officials from the Department and Revenue acted swiftly to address the issues, careful examination of the legislation and the market was needed prior to proposing an amendment in respect of this highly-complex regime.  It was necessary to find a balance, giving due consideration to companies who are using the section 110 legislation for legitimate securitisation purposes and the structured finance vehicles which are being used to hold Irish distressed debt.  The amendment put forward in Finance Act 2016 achieves this aim.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

55. To ask the Minister for Finance his views on whether significant mistakes have been made by the Government in relation to vulture funds in terms of the scale of acquisitions of property and property-related assets and in terms of the taxes forgone as a result of tax loopholes benefitting these funds; if he proposes any further policy or legislative action in relation to these funds; and if he will make a statement on the matter. [1610/17]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Section 110 regime in its current form was inserted by Finance Act 2003.  It was introduced to facilitate structured financial products, including the securitisation of loan books by banks and was designed to provide a tax neutral structured finance vehicle. 

An effective securitisation regime is vital to the efficient working of the financial service industry.  It enables banks and other financial companies to raise money from the capital markets more economically and also frees up capital for further lending by those institutions.  The section 110 regime was also designed to improve Ireland's offering as a location for the conduct of financial services. 

However, a concern arose about the use of the regime by international investors to reduce their Irish tax liabilities on Irish property backed transactions.  Section 22 of the Finance Act 2016 (an amendment of section 110 Taxes Consolidation Act 1997 (TCA 1997)) was thus introduced to address the concerns about the use of the section 110 regime by international investors for the distressed debt that they had purchased from financial institutions.  

The amendments made in Finance Act 2016 will ensure that tax will be payable by section 110 companies on their profits from Irish property transactions from 6 September 2016 onwards. 

The measure has the effect that for the purposes of section 110 TCA 1997 the use of profit participating loans will be restricted where they are used by qualifying companies relating to Irish property transactions.  The final proposal does not permit the section 110 companies to 'mark to market' or revalue their assets on 5 September 2016 ensuring that unrealised gains will be captured in the charge to tax.   

The final legislation as passed meets the original policy objective of the protection of the Irish tax base whilst not encroaching on bona fide securitisations.