Joan Burton (Dublin West, Labour)
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135. To ask the Minister for Finance the steps his Department has taken with the Revenue Commissioners to investigate the use of section 110 tax relief by firms since the introduction of the Finance Bill 2017; and if he will make a statement on the matter. [32371/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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Revenue is statutorily independent in the exercise of its functions in implementing taxation legislation. Accordingly, my Department has no role in investigating compliance with tax legislation. However, Revenue also has a role in providing me and my Department with advice and data on the operation of the taxation system and I am informed by Revenue that, if any policy issues arise in connection with the practical implementation of the legislation on “section 110” companies introduced in Finance Act 2016, they will provide me with all relevant information necessary for policy purposes, subject to their legal requirements to observe taxpayer confidentiality.

By way of background. section 110 of the Taxes Consolidation Act 1997 sets out a regime for the taxation of special purpose companies set up to securitise assets. The tax provisions are intended to create a tax neutral regime for securitisation and structured finance purposes.

The section 110 regime was designed to improve Ireland’s offering as a location for the conduct of financial services. It has achieved that broad goal and the financial services industry now makes use of these vehicles as a support to financial intermediation.

Section 22 Finance Act 2016 restricts the use of the section 110 regime to minimise Irish tax liabilities on Irish property or distressed debt transactions. The core effect of the amendment removes the possibility for section 110 companies to use what are known as 'profit participating notes' to sweep Irish property or distressed debt profits out of the company in a way that ensures little or no Irish tax liability arises.

I am informed by Revenue that the amendments made in Finance Act 2016 came into effect for accounting periods commencing on or after 6 September 2016. The corporation tax returns due for accounting periods ending 31 December 2016 do not fall due until the end of September 2017. These returns will only reflect the impact of the change in “section 110” legislation for the period from 6 September 2016 to 31 December 2016.

All “section 110” companies are assigned to, and managed by, the Financial Services (Banking) District in Revenue’s Large Cases Division. Taxpayers are selected by the District for compliance interventions based on the presence of various risk indicators and interventions are conducted in accordance with the “Code of Practice for Revenue Audit and other Compliance Interventions.” The impact of the 2016 legislative amendment will be reviewed by that District in due course and compliance interventions undertaken where necessary when the relevant tax returns and associated financial statements are reviewed and examined.