Dáil Éireann Debate, Tuesday - 17 January 2017
54. Deputy Thomas P. Broughan asked the Minister for Finance when he and his Department first became aware of potential tax losses to the Exchequer from the application of section 110 of the Finance Acts by so-called vulture funds; the reason the loophole was not closed in the Finance Act 2014 at the latest; and if he will make a statement on the matter. [1491/17]
View answerThere is a time delay between an activity taking place and the filing of the corporation tax return covering that entity. A company which commenced trading in 2014 with a year end of 31 December 2014, for example, would not be required to file its first tax return until 23 September 2015. As 2014 saw the first bulk sales of distressed Irish debt, the first corporation tax returns and financial accounting information in relation to companies set up specifically to acquire large volumes of Irish distressed debt were therefore only filed with Revenue in late 2015. Commencing in November 2015 Revenue began examining the use of section 110 companies to acquire distressed debt secured on Irish property. They began to liaise with officials from the Department of Finance in relation to this issue in early 2016.
Although officials from the Department and Revenue acted swiftly to address the issues, careful examination of the legislation and the market was needed prior to proposing an amendment in respect of this highly-complex regime. It was necessary to find a balance, giving due consideration to companies who are using the section 110 legislation for legitimate securitisation purposes and the structured finance vehicles which are being used to hold Irish distressed debt. The amendment put forward in Finance Act 2016 achieves this aim.
