Joan Burton (Dublin West, Labour)
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30. To ask the Minister for Finance the tax losses built up in respect of financial banking and construction firms arising from the crash; if profitable companies such as a bank (details supplied) will enjoy tax write-offs for years to come; his plans for a minimum effective corporation tax rate; and if he will make a statement on the matter. [31463/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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Loss relief for corporation tax is a standard measure available through the Irish Corporate Tax system. It allows for losses incurred in the course of business to be accounted for when calculating a business’ tax liabilities. In effect, this recognises that business cycles run over a longer period than a year, and that a business can have substantial profits one year and substantial losses in the next. Therefore, it would be inequitable to tax business profits without allowing losses to be accounted for also. This mechanism is a standard worldwide feature of corporate tax systems in all OECD countries.

The Revenue commissioners have recently published ‘An Analysis of 2015 Corporation Tax Returns and 2016 Payments’. This report noted that the value of trading losses carried forward by all companies fell by 3% in 2015, from €215 billion to €209 billion. 

Of the €209 billion of losses available, €120 billion relates to companies operating in the financial and insurance sectors and €9 billion relates to construction companies.  It is important to note that around €40 billion of these losses are claims by companies that are in liquidation or are otherwise unlikely to be in a position to ever use these losses.  The bulk of such losses are recorded by companies in the financial sector.

I acknowledge that firms in these sectors attained significant losses during the economic recession which presently impact upon their taxable liabilities. However, as I have noted already, the utilisation of such losses is a standard measure which is available to all firms liable to corporate tax in Ireland.

Nonetheless, 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.