John Curran (Dublin Mid West, Fianna Fail)
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85. To ask the Minister for Finance if the cap introduced in 2009 which applied to banks that had transferred assets into NAMA restricting their use of deferred tax assets to 50% of their corporation tax and which was subsequently removed in 2014 will be reinstated; and if he will make a statement on the matter. [30536/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The NAMA Act 2009 introduced Section 396C of the Taxes Consolidation Act (TCA 1997).  The purpose of the section was to restrict NAMA participating institutions in offsetting their losses against a maximum of 50% of their taxable profits in a given year. At the time, the Government had a limited role in the banking system. However, by the introduction of the second Finance Bill in 2013, this measure was considered to have outlasted its initial purpose. As the State then had substantial holdings in the banking sector, constituting 99.8% of AIB shares and 15% of Bank of Ireland shares, Section 396C TCA 1997 was deemed to be acting against the State’s interests.

Section 396C TCA 1997 was repealed to:

1. Reduce the State’s role as a ‘backstop’ provider of capital; and

2. Improve the value of the State’s equity and debt investments.

It is important to highlight that the provision to allow the carry-forward of tax losses for set-off against future trading profits is available not only for banks but for all Irish corporates. Accordingly, the removal of Section 396C TCA 1997 put the covered banks in the same position as other corporates including other banks operating in Ireland.

I would further note that the net impact on tax receipts is a timing measure largely and should not impact on the State’s total Corporation Tax take over time.

However to recognise the part that the banks played in the financial crisis, in 2013, the Government also decided that the banking sector should make an annual contribution of approximately €150 million to the Exchequer for the period from 2014 to 2016.  In Budget 2016, the payment of this levy was extended until 2021.  The bank levy is expected to raise €750 million over five years.