Imelda Munster (Louth, Sinn Fein)
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400. To ask the Minister for Finance the estimated cost of extending the tax warehousing scheme by one year for the tourism and hospitality industry. [17620/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the current tax warehousing schemes allow for the deferral of collection of certain tax liabilities relating to “Period 1”, the “Covid-19 restricted trading period”. The tax liabilities that may be deferred or “warehoused” are VAT, PAYE (Employer) liabilities, excess Temporary Wage Subsidy Scheme (TWSS) payments due to be refunded to Revenue by employers, and certain self-assessed income tax liabilities.

To be eligible for income tax warehousing, taxpayers have to declare that they estimated their total income for 2020 would be at least 25% less than their total income for 2019 and where applicable, that their total income for 2021 will be at least 25% less than their total income for 2019.

In the case of VAT, PAYE (Employer) and excess TWSS liabilities, Period 1 refers to the period when a business has been unable to trade due to the Covid-19 related restrictions and includes the first full two monthly VAT period after the business resumes trading.

Revenue has confirmed that where a business re-opened but has had to close again due to the re-imposition of restrictions, the trade is deemed to be still subject to the restrictions provided for in the regulations under sections 5 and 31A Health Act 1947 until it has re-opened again. This means that VAT, PAYE (Employer) and excess TWSS liabilities for such businesses can continue to be warehoused in respect of the extended restricted period.

The end date for Period 1, and consequently the period for which liabilities can be warehoused, will vary from business to business depending on the restrictions affecting that business. However, in all cases, Period 1 will include the duration for which a business is subject to trading restrictions plus the first full VAT period after the restrictions have been lifted and the business resumes trading.

It is not possible for Revenue to forecast the future cost of this scheme due to the uncertainty surrounding future restrictions.

Imelda Munster (Louth, Sinn Fein)
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401. To ask the Minister for Finance if he has plans to introduce a further six month moratorium on bank term loans to assist the tourism and hospitality industry in terms of cash flow; the estimated cost to the State of such a measure; and if he will make a statement on the matter. [17621/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, on 18 March 2020, the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers, including those in the tourism and hospitality sectors, who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. The implementation of this voluntary moratorium by the banking industry was a flexible response to the emerging Covid-19 crisis and ensured that a large volume of affected customers could benefit quickly during a fast moving and evolving public health crisis.

Borrowers whose payment break has ended are been given an option to return to full repayments based on the same term of the loan or to extend the term of the loan or to engage further with their bank on suitable arrangements. The BPFI reported, that as of 31 December 2020, approximately 49% of SMEs returned to repaying on the existing term whilst 46% returned to repaying on extended term basis and just over 5% were receiving other supports from lenders.

As Minister for Finance I have no function in the commercial decisions made by banks, as such there are no direct cost implications for the State arising from universal payment brakes. The Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. The BPFI has also reiterated that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their situation. The priority of the State is to ensure that SMEs and the wider business community has sufficient liquidity and cash flow supports through the continuance of the EWSS, CRSS and tax warehousing as well as the range of grants and loans schemes introduced by Government to help support businesses and jobs.

SME borrowers have regulatory protections via the Central Bank's SME lending regulations. The SME Regulations set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security or collateral, credit refusals and withdrawals, handling complaints, managing arrears and having in place policies for engaging with SMEs in financial difficulty. The options could include additional flexibility, and this could be a short-term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements. The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers.

In addition, Credit Review was established to assist those SMEs and farm borrowers that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the internal appeals process in the participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.

I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.

Imelda Munster (Louth, Sinn Fein)
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402. To ask the Minister for Finance his plans for mortgage moratoriums for workers in the tourism and hospitality sector for 2021; and if he will make a statement on the matter. [17622/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I appreciate the stress and uncertainty that many borrowers who are working in the tourism and hospitality sectors are still facing at this difficult time and I recognise that many of these borrowers will continue to need assistance and support from their lenders. In this regard it is the clear expectation of both the Government and the Central Bank that lenders engage effectively and sympathetically with distressed borrowers – in line with the Code of Conduct on Mortgage Arrears and the Consumer Protection Code – to deliver appropriate and sustainable payment arrangements to borrowers who are affected by COVID-19.

In this regard I note that the Banking and Payments Federation of Ireland (BPFI) has stated that its members are continuing to commit significant resources to support customers impacted by COVID-19, and in particular those who are affected by the latest restrictions. Borrowers have a suite of regulatory protections, and lenders have specific obligations to support and work with borrowers who are continuing to experience loan difficulty because of COVID-19. The options could include additional flexibility, and this could be a short term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements. In this context the Central Bank has made it clear that there is no regulatory impediment to lenders offering payment breaks to borrowers at this time, providing they are appropriate for the individual borrower circumstance. The BPFI has also stated that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to borrowers upon assessment.

I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.