Dáil Éireann Debate, Thursday - 21 September 2017
68. Deputy Joan Burton asked the Minister for Finance the estimated yield in 2018 from restricting the use of losses for banks that received official bailout assistance from the State to 50%; and if he will make a statement on the matter. [39990/17]
View answerI assume the Deputy is referring to the decision taken in Finance Bill 2013 in relation to Deferred Tax Assets (DTAs). As the Deputy is aware the NAMA Act 2009 introduced Section 396C of the Taxes Consolidation Act (TCA 1997). The purpose of the section was to restrict NAMA.
Participating institutions in offsetting their losses against a maximum of 50% of their taxable profits in a given year. At the time, the Government had a limited role in the banking system. However, by the introduction of the second Finance Bill in 2013, this measure was considered to have outlasted its initial purpose. As the State then had substantial holdings in the banking sector, constituting 99.8% of AIB shares and 15% of Bank of Ireland shares, Section 396C TCA 1997 was deemed to be acting against the State’s interests.
Hence section 396C TCA 1997 was repealed to support the value of the banks' deferred tax assets and hence their capital ratios and by extension support the value of the State’s banking investments.
It is important to highlight that the provision to allow the carry-forward of tax losses for set-off against future trading profits is available not only for banks but for all Irish corporates. Accordingly, the removal of Section 396C TCA 1997 put the "covered banks" in the same position as other corporates including other banks operating in Ireland.
The Department does not have the information required to calculate the figure requested but I would note that the net impact on tax receipts is a timing measure largely and should not impact on the State’s total Corporation Tax take over time.
To recognise the part that the banks played in the financial crisis, in 2013, the Government also decided that the banking sector should make an annual contribution of approximately €150 million to the Exchequer for the period from 2014 to 2016. In Budget 2016, the payment of this levy was extended until 2021. The bank levy is expected to raise €750 million over five years.
