asked the Minister for Finance if he is aware that financial institutions are making arrangements with manufacturing firms who enjoy export profits tax relief to lease equipment and machinery to them, often at negative or very low interest rates, in order that the financial institutions can avail of the capital allowances that would otherwise go unused to reduce their taxable profits; the amount of tax revenue foregone by this procedure; if it is considered that this is a legitimate way of using capital allowances and the plans, if any, to close this tax loophole.
Ceisteanna—Questions. Oral Answers. - Capital Allowances.
29.
Our tax incentives for industry have been generous for many years, for reasons which need no elaboration. They have included the possibility of arrangements of the type mentioned. The availability to firms of very favourable leasing terms can, of course, be of significant benefit in facilitating industrial expansion.
I have no plans of the kind indicated in the question. Taxation arrangements generally are, of course, kept under regular review and, if need arises, the aspect now in question can be examined in detail.
Statistics are not available to show the amount of tax revenue foregone by the procedure outlined in the question. However, it is estimated that the cost to the Exchequer of the grant of capital allowances to persons carrying on the trade of leasing is of the order of some £10 million a year.
Is the Minister saying that he and the Revenue Commissioners, basically, do not consider this situation a serious problem from the tax evasion point of view?
That would be substantially correct in so far as it relates to this arrangement being used as part of the incentives offered to industry to set up here. In so far as other aspects of the matter may be concerned, that is a different question and the consequences of what is happening there are being very closely monitored at the moment.