Michael McGrath (Cork South Central, Fianna Fail)
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84. To ask the Minister for Finance the position in relation to the carry back for tax purposes of losses incurred by businesses; his plans to make changes in this area to support the cashflow of businesses; and if he will make a statement on the matter. [10375/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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Loss relief for corporation tax is a long standing feature of the Irish corporate tax system and is a standard feature of corporation tax systems in all OECD countries. I am advised by Revenue that, under existing legislation, a company can make a claim to carry back trading losses incurred in an accounting period against profits of its immediately preceding accounting period. The trading losses may be used to offset trading profits in the preceding accounting period on a euro for euro basis and, where the losses relate to a trade the profits from which would be chargeable at the 12.5% tax rate, they may be used to offset non-trading profits chargeable at the 25% tax rate in a manner that ensures the loss has a maximum tax value of 12.5%. An individual carrying on a trade can, where the trade is discontinued, carry back trading losses incurred in the final year of trading against the person’s trading profits in the three years preceding the final year.

As the Deputy will be aware, and as outlined in my written responses of 20 May 2020 (6682/20) and 27 May 2020 (8008/20), Revenue has worked with my Department to introduce a series of measures and supports to help businesses deal with the impacts of the COVID-19 pandemic, including the suspension of debt collection and interest charges in relation to certain VAT and PAYE (employer) liabilities. The tax debt warehousing scheme, which is being administered by Revenue, is also a substantial cashflow support for businesses impacted by the COVID-19 pandemic. Consideration of all options to support the cashflow of businesses remains ongoing and the Deputy’s input in this regard is welcome.