Last year, we went to much trouble to shut down tax avoidance by vulture funds. The then Minister, Deputy Michael Noonan, stated clearly that the funds were using the loophole called section 110 in a way that was not intended. Critically, they were using section 110 to avoid paying taxes on profits generated in the Irish economy. This week, we have new revelations that other investment funds are using section 110 to avoid paying taxes on Irish profits, that they are doing so with the full blessing of the Government, or at least the former Minister, Deputy Michael Noonan, when he was in situ, and that they are working directly with the State via the Ireland Strategic Investment Fund, ISIF. Not only is public money being used in a tax avoidance scheme, so too, potentially, is money from the European Investment Bank. In response to parliamentary questions by Deputy Michael McGrath, the Government has admitted that the Ireland Strategic Investment Fund is availing of four section 110 companies. The journalist, Mr. Jack Horgan-Jones, has obtained the accounts for two of these companies, and reported on the same in The Sunday Business Post. Earlier this week, we received copies of those accounts.
The first company is called WLR Cardinal Mezzanine Fund. "WLR" stands for Wilbur Ross, the current United States Secretary of Commerce. It is a new investment fund in Ireland, with €70 million in assets and its notes are listed on the stock exchange in the Cayman Islands, for obvious reasons. In 2015, it took in €3 million from its activities, and it paid €250 in tax. The second company is called BlueBay Ireland. BlueBay has €160 million loaned out. Between 2015 and 2016, it took in €36 million, and each year, it paid €250 in tax. Both of these funds make their profits from the domestic economy, including real estate, renewable energy, forestry, restaurants, televisions and so on. Both are able to get their profits out of the country completely tax free, other than a notional payment of €250. I am aware of no other country that allows investors to make money on the domestic economy and to then export those profits tax-free out of the country. My understanding from the work we did on the vulture funds was that this type of thing was going to be stamped out, and if one made profit on domestic activity, one would pay taxes here.
My questions are as follows. Is the Minister aware that no other European country tolerates tax avoidance of this kind? Does his Government stand over this practice? Does his Government stand over the State investing money from the European Investment Bank in this way? If not, will he, as a matter of urgency, initiate a full independent review of the use of section 110 companies in Ireland? Will he commit to this House that profits made in the domestic economy in Ireland will be taxed in Ireland?