Tuesday, 24 September 2019

Questions (88)

Richard Boyd Barrett


88. Deputy Richard Boyd Barrett asked the Minister for Finance the amount forgone due to historic losses being used as tax deductions and exemptions for banks and insurance companies. [38523/19]

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Written answers (Question to Finance)

Corporation Tax Loss Relief is provided for by Section 396 of the Taxes Consolidation Act (TCA) 1997. It allows for losses incurred in the course of business to be accounted for when calculating a business’ tax liabilities. Loss relief is a long standing feature of the Irish Corporate Tax system and is a standard feature of Corporation Tax systems in all OECD countries. Loss relief is not specific to any one business sector. It recognises the fact that a business cycle runs over several years and that it would be unbalanced to tax profits earned in one year and not allow relief for losses incurred in another. I am informed by Revenue that a research paper on Corporation Tax, including the most recent information in respect of losses forward, is published on its website at: https://www.revenue.ie/en/corporate/documents/research/ct-analysis-2019.pdf. As shown in Figure 5 of the publication, the amount of losses forward used for all companies in the financial and insurance sector is €3.2 billion for 2017 with an estimated tax cost of €400 million. The Deputy may also be aware that in 2018 my officials produced a report for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the potential consequences of changes to the corporation tax loss relief, including in particular relief for losses carried forward for banks. This report, which contains further information on the rationale for loss relief and the technical considerations relevant to the operation of the relief, is published on my Department’s website.