Written Answers Nos. 1-60
41. Deputy Paul Murphy asked the Minister for Finance his views on recent reports (details supplied) of so-called vulture funds being able to pay a small amount of tax; the measures he will take to close tax loopholes; if he will consider an increase in tax or new taxes on these funds; and if he will make a statement on the matter. [1747/17]
Amharc ar fhreagra72. Deputy Eamon Ryan asked the Minister for Finance if his attention has been drawn to a recent documentary on vulture funds (details supplied); and his plans to address the issues raised. [1721/17]
Amharc ar fhreagraI propose to take Questions Nos. 41 and 72 together.
The Finance Act 2016 has introduced provisions to deal with the issues concerning the use of the section 110 regime by international investors for Irish property transactions.
The amendments made in the Finance Act 2016 will ensure that tax will be payable by section 110 companies on their profits from Irish property transactions from 6 September 2016 onwards. The measure has the effect that for the purposes of section 110 TCA 1997 the use of profit participating loans will be restricted where they are used by qualifying companies relating to Irish property transactions.
The final proposal does not permit the section 110 companies to 'mark to market' or revalue their assets on 5 September 2016. This ensures that unrealised gains will be captured in the charge to tax.
In early 2016, officials from the Revenue Commissioners made my Department aware of the use of the regime by international investors to reduce their Irish tax liabilities on Irish property backed transactions. Although officials acted swiftly to investigate the issues, careful examination of the legislation and the market was needed prior to proposing an amendment. 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 recent media coverage has not revealed anything new in relation to the use of the section 110 regime by international investors. The amendment that I proposed and that was passed as part of the Finance Act ensures that section 110 companies will no longer be able to be used to minimise Irish tax in relation to Irish property transactions.
43. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the staffing levels at the Central Bank; his views on the level of vacancies; if he is satisfied that the Central Bank is adequately prepared for the financial services firms that could potentially come to Ireland in view of Brexit; and if he will make a statement on the matter. [1724/17]
Amharc ar fhreagraThe independence of the Central Bank is enshrined in the Treaties of the European Union and by the Statute of the European System of Central Banks and in that context the Central Bank Commission is responsible for the Bank's overall staffing levels and the allocation of those staff across the Bank.
I am informed by the Central Bank that throughout 2016 there was a focus on growing capability and capacity in the context of Brexit related developments, with 66 new people joining across the financial regulation teams in the second half of the year.
At the end of last year, the Central Bank had about 1,600 employees with planned expansion to 1,800 by end 2017. The 2017 expansion includes dedicated resources of an additional 28 staff to address specific Brexit-related new business needs. The Bank also plans to assess on a regular basis the need for contingency-based extra Brexit-related hiring in response to additional business volumes.
Furthermore, the Governor has previously indicated to me that where further resources are necessary due to an expanded universe of regulated and supervised firms, the Bank has the ability to effectively re-prioritise where it needs to meet the increased level of demand and also to increase staff numbers as necessary.
That independent commitment by the Central Bank to address the opportunities and challenges posed by Brexit will be articulated in the IFS 2020 Action Plan which is to be published shortly underscoring the commitment of the Central Bank to providing a high quality, fair and transparent authorisation process for all applicants.
I am satisfied that the Central Bank is resourced to meet the current level of demand and inquiries that are being presented and that the Bank has the ability to effectively re-prioritise in the short-term where necessary to meet any increased level of demand and complexity. The Central Bank has the capacity to confront any challenges posed by Brexit and it has the resources to deal with any upsurge in applications that may come its way.
44. Deputy Pearse Doherty asked the Minister for Finance if he will propose an amendment to the NAMA legislation to allow NAMA to play a greater role in the provision of social housing and housing in general; and if he will direct NAMA to carry out an audit of all its properties to ascertain which assets might be suitable for housing. [1735/17]
Amharc ar fhreagraSuch a direction or legislative change is not necessary as NAMA already plays a significant role in the provision of social housing and housing in general and continuously reviews the assets of every NAMA debtor to establish if properties securing their loans could be utilised for residential development or social housing.
NAMA has an established policy of identifying to Local Authorities, properties which may be suitable for their purposes. NAMA has facilitated the sale or lease by its debtors and receivers of properties, at market value, to public bodies for a wide-range of purposes, including social housing, schools, healthcare facilities and urban economic, environmental and cultural regeneration. This engagement has resulted in almost 2,400 units being acquired by Local Authorities from NAMA debtors through commercial sales or leases, with a further 370 units in the pipeline.
To streamline delivery under this initiative, NAMA established National Asset Residential Property Services Limited, "NARPS", to purchase suitable properties from NAMA debtors for onward leasing to local authorities or approved housing bodies on the basis of long-term, commercial arrangements. NARPS is both consistent with NAMA's commercial remit and also reduces the upfront capital required by local authorities to secure social housing units.
In addition 11,219 (88%) of the 12,781 residential units which had served as collateral for NAMA loans were sold individually on the open market by NAMA debtors and receivers to individual house buyers.
The remaining 1,562 units were sold on the open market by NAMA debtors and receivers as part of a larger group or portfolio of sales. NAMA advise that these units were typically already tenanted and vacant possession was not sought prior to their sale, avoiding the displacement of existing tenants.
The Deputy will also be aware that, following a detailed review of all sites securing its loans to ascertain which are suitable for housing development, NAMA plans to facilitate the delivery of up to 20,000 residential units in the period to end 2020, assuming commercial viability.
I am also advised that NAMA, as secured lender, has exposure to only 173 vacant residential properties. These are frictional vacancies, for example relating to units between tenancies, the number of which will fluctuate over time.
NAMA's 2016 year end review, available on the NAMA website, highlights NAMA's progress to date, in facilitating the delivery of social and private housing.
Finally, as the Deputy is aware, NAMA does not own property. NAMA owns loans. As a lender, NAMA cannot force a borrower to take action which would reduce his/her repayment capacity, such as providing a property for social or private housing where that is not economically optimal. To do so would compromise a borrower's capacity to repay his or her debts to NAMA and would constitute a direct breach of the borrower's property rights, protected under Article 43 of the Constitution. I am advised that a direction running counter to these obligations is not one lawfully open to me in all the current circumstances.
45. Deputy Pat Buckley asked the Minister for Finance if he will put in place a mechanism within his Department to track house price inflation and assess whether such inflation is being caused by the help-to-buy scheme; and if he will provide a commitment that if evidence emerges, he will suspend the scheme pending a full review. [35458/16]
Amharc ar fhreagraAs the Deputy will be aware, the 'Help to Buy' incentive was initially announced on 19 July 2016 as part of 'Rebuilding Ireland: Action Plan for Housing and Homelessness'. This plan contains a significant volume of responses to the current housing crisis, of which the Help to Buy incentive is one. This comprehensive Action Plan takes a holistic approach in addressing the many interacting structural constraints affecting the housing market in areas such as planning and land use, as well as regulation and skills deficits in the construction sector. While the primary focus of the Action Plan is to tackle structural constraints, fiscal supports can play a supporting and time-bound role in addressing the current problems in the housing sector.
It is in this context that the Help-to-Buy scheme should be considered. Its role is to complement the other measures in the Action Plan. The extent to which the scheme could lead to an increase in residential property prices will very much depend on the speed and efficiency with which structural supply constraints are eliminated and residential building activity increases. Therefore, the impact of the Help-to-Buy incentive on property prices cannot be considered in isolation from the impact of other measures contained in the Action Plan, which are primarily designed to increase supply.
I wish to assure the Deputy that my Department continues to monitor developments in the property market including property prices on an ongoing basis. However, the Help to Buy incentive, which came into effect at the start of this month, has been introduced for two reasons - to assist first time buyers in putting together the requisite deposit to buy a home, and to encourage the construction of new homes. As such, I am not willing to suspend the Help to Buy incentive so soon after implementing it as this would not create the conditions to encourage the construction of new homes.
I have already committed to commissioning an independent economic impact assessment of the Help to Buy incentive which will look at, among other issues, the impact on property prices. However, it should be remembered that the high rates of house price increases reflect the supply constrained nature of the Irish residential market, and were an issue over the past number of years rather than since the start of the Help to Buy incentive.
46. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which adequate controls exist to ensure unregulated third parties purchasing loan books from financial institutions are not allowed to ignore the individual family circumstances in the course of the pursuit of mortgage arrears, with particular reference to the likelihood of an exacerbation of an already serious housing crisis, in view of the fact there is no obligation for such venture capitalists to disclose their profits in individual cases; and if he will make a statement on the matter. [41582/16]
Amharc ar fhreagra338. Deputy Bernard J. Durkan asked the Minister for Finance if he and his Department continue to monitor the activities of unregulated third parties that have purchased distressed loans, with a view to ensuring such institutions treat borrowers with due consideration for their circumstances and that the option of repossession is restricted whereby the borrowers continue to meet payments to the best of their ability and in line with their circumstances, thereby avoiding an exacerbation of the homeless situation; and if he will make a statement on the matter. [1960/17]
Amharc ar fhreagra340. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which unregulated third parties continue to accommodate borrowers whose loans have been sold off by the original lender; and if he will make a statement on the matter. [1962/17]
Amharc ar fhreagraI propose to take Questions Nos. 46, 338 and 340 together.
The Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. It introduced a regulatory regime for a new type of entity called a 'credit servicing firm' and such firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'.
Under the Act, purchasers of loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank. Relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the Consumer Protection Code and the Code of Conduct on Mortgage Arrears (the CCMA) issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which came into operation on 1 July 2016. The CCMA already provides protections to borrowers in difficulties. Lenders may only commence legal proceedings for repossession of the borrower's primary residence after it follows a number of steps. The steps include:
- Making every reasonable effort under the CCMA to agree an alternative restructure arrangement (ARA) with the borrower;
- time bound requirements to inform the borrower the regulated entity is not willing to offer an ARA and of his/her options;
- time bound requirements to inform a borrower, who is not willing to enter into an ARA, of his/her options; and
- a decision to classify the borrower as non-cooperating.
I am informed by the Central Bank that there is a broad range of available restructures offered and delivered by both bank and non-bank entities and there is strong evidence that both banks and non-banks look to exhaust available restructure options before moving to the legal process.
I expect that the Central Bank, as regulator of credit servicing firms, will be vigilant in this area and raise any specific instances where they have found consumers have not had their protections upheld or that their positions have been disadvantaged. My Department will also keep the situation under review to ensure that protections stay in place and that there are no gaps in protection.
47. Deputy Paul Murphy asked the Minister for Finance if he will report on meetings he and his officials have had with so-called vulture funds since 2011; his views on NAMA transferring loans to such funds; and if he will make a statement on the matter. [1748/17]
Amharc ar fhreagraIreland's national debt levels and dependence on international support at the time of the crisis, prohibited the State from directly investing in the distressed assets resulting from the crisis. Exposure to the banks, IBRC and NAMA each became exposures of the taxpayer net liabilities - that had to be reduced for the State to regain financial stability.
Interest from the capital markets led to much needed capital investment in our economy during periods of high risk and uncertainty. This investment allowed us to make important financial adjustments across our system, in particular deleveraging and addressing liquidity concerns of our financial services system, which includes the individual bank asset sales programmes, now largely complete, the liquidation of IBRC and the ongoing disposal of NAMA's assets. Without this investment Ireland would be experiencing a much more difficult recovery. Similarly, Ireland would not be recovering so strongly had NAMA not progressed its mandate in the manner it has. It has only been through the sale of these assets and the accompanying investment that these assets have recovered and are contributing to our broader recovery.
The timely sale and the accompanying investment in these assets are making a strong contribution towards our broader recovery. Think of the numerous renovated hotels, finished housing estates, commercial property developments, ongoing residential developments and the commerce and jobs this creates. All of this is a direct result of investment in Ireland, much of it by the acquirers of these loans.
A key objective in each of these deleveraging processes has been to achieve the best possible financial return for the State. With asset disposal processes occurring and set to continue in both Ireland and across Europe, Irish institutions have and will continue to face competition for investment capital as they seek to achieve the best possible financial return. Ireland is a small open economy and as such we do not discriminate between domestic and international investment capital.
It is a matter of public record that I and my officials have met with many parties over the past number of years with a view to encouraging investment in Ireland. These meetings included global investment funds that have purchased or may be interested in investing in Irish assets.
The Deputy will be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act seeks to create a consistent level of consumer protections for borrowers regardless of the owner of their loan.
Similarly, all tenants and landlords of residential rental properties across Ireland have the same rights and obligations regardless of who owns the property as set out in the Residential Tenancies Act, 2004 - as soon to be amended.
48. Deputy Paul Murphy asked the Minister for Finance his views on reports in the media (details supplied) regarding the mass sale of properties in County Limerick to a vulture fund by NAMA; his views on reports in that article that he met vulture funds to encourage them to come to Ireland; and if he will make a statement on the matter. [1749/17]
Amharc ar fhreagraIn 2016, NAMA sold loans, the debtor for which I understand, owns the units in question in the Strand apartment buildings. As is NAMA's policy, in order to minimise disruption to tenants, the owner did not seek vacant possession of these apartments in advance of NAMA's sale of his loans. Furthermore, the sale of his loans by NAMA did not alter the lease terms or the statutory protections of the tenants. I want to make it clear that, as it does not own the property, NAMA has no role in the landlord - tenant relationship. Equally NAMA cannot impose conditions on a buyer of its loans nor on the owner of the underlying property following a loan sale.
Rather than demonising certain lenders or landlords, we must ensure that an appropriate level of protections, obligations and responsibilities apply consistently for all tenants and all landlords.
Landlord-tenant rights are governed by multiple pieces of legislation, mainly under the aegis of the Minister for Housing, Planning, Community and Local Government. This legislation attempts to balance and protect the rights of the tenant and the landlord and sets out the specific limited circumstances under which landlords are able to seek vacant possession of properties. These restrictions apply to all landlords regardless of who owns their loans.
Under Pillar 4 of Rebuilding Ireland, an amendment to the Residential Tenancies Act was brought through the Oireachtas in December 2016 as part of the Government's rental strategy. The effect of the provision is to require that tenancies are protected where a landlord or investor wishes to sell more than 10 properties in a single development.
I note that, on Friday 13th January, the Minister for Housing, Planning, Community and Local Government confirmed that the owners of the apartments referenced in the question are writing to the affected tenants to withdraw the previously issued termination notices and confirm that they will abide by the spirit of the amendment to Section 35A of the Residential Tenancies Act which is expected to come into effect this week.
The decision by the owners comes after contact from Minister Coveney in which he asked that the spirit of the amendment to Section 35A would be respected, in advance of coming into effect, to ensure that the existing tenancies are unaffected by a transfer of ownership. The owners replied formally to the Minister to confirm that it would respect the change and that it would write to tenants to confirm withdrawal of the original notices.
I am sure the Deputy, and residents of the complex, will welcome this announcement given there was no legal requirement for the property owners to take this approach. I commend the owners for respecting the will of the Government and the Oireachtas. This shows the value already of some of the measures contained in the Government's strategy for the rental sector and the importance of a partnership approach by all players: tenants, landlords, housing providers, local and national Government.
These measures are accompanied by a number of other actions to enhance the Residential Tenancies Board's enforcement and dispute resolution powers. These include faster processing of determination orders, the reduction in period for appeal to Tribunals, and the use of one person Tribunals. Tenants and landlords alike will therefore see a number of improvements as a result of these legislative changes.
Any tenant who believes that their legal rights are being compromised should bring their concerns to the Residential Tenancies Board which has the power to ensure their rights are upheld. This includes cases where a tenant believes that a termination notice has not been properly served.
49. Deputy Thomas P. Broughan asked the Minister for Finance his views on reports of possible rises in interest rates during 2017 in the eurozone, the US and the UK; the estimates that have been made for the impact on growth here in 2017 from these changing monetary conditions and from the winding down of quantitative easing by the ECB during 2017; and if he will make a statement on the matter. [1493/17]
Amharc ar fhreagraThe latest positions communicated by the relevant central banks are as follows:
- The Governing Council of the ECB decided in December 2016 to keep the key interest rates in the euro area unchanged and stated that it expects interest rates to remain at current or lower levels for an extended period of time, and well past the end of this year;
- In the US, the Federal Open Market Committee decided to raise the target range for the federal funds rate from 0.5 to 0.75 per cent, and the Committee expects only gradual increases in the federal funds rate over 2017; and
- In the UK, the Bank of England's Monetary Policy Committee, at its December meeting, decided to maintain the Bank's official interest rate at 0.25 per cent.
It is important to stress that these central banks could alter their respective positions, in either direction, in response to changes in the economic outlook.
In this context, the Risk and Sensitivity Analysis chapter in the Irish Stability Programme April 2016 Update - published by my Department - included an illustrative assessment of the impact of a 1 percentage point increase in interest rates. The analysis suggested that such a shock would decrease the level of Irish GDP by approximately 0.3 per cent relative to the expected baseline level in the first year following such a 'shock'.
In relation to non-standard monetary policies, following the meeting of the ECB Governing Council in December 2016 a decision was made to extend the end-date of the ECB's programme of Quantitative Easing (QE) until December 2017 at the earliest, or until a sustained adjustment to the path of inflation consistent with the ECB's stated aim of an inflation rate below, but close to, 2 per cent is observed. This is positive news for the Irish economy, which would be expected to benefit from both the reduction in borrowing costs and increased demand from key export markets, resulting from the extended QE programme throughout 2017.
50. Deputy Niall Collins asked the Minister for Finance if, following the recent change in approach to patronage share schemes, he will confirm that in the event of the Revenue Commissioners' position being upheld in a test case, he will change the legislation such that tax will not arise until the shares are sold, thus aligning it to the position now intended generally for share-based reward in an SME context; and if he will make a statement on the matter. [1733/17]
Amharc ar fhreagraThis question relates to the taxation treatment of patronage shares issued by Kerry Co-Op. I am advised by Revenue that there has been no change in policy in relation to this matter and the position adopted by Revenue is in accordance with long established taxation principles.
Deputies will be aware that Revenue has committed to facilitate the appeals process should a taxpayer raise an appeal to the independent Tax Appeal Commission in relation to a tax assessment relating to the patronage share issue.
In relation to share based remuneration schemes, in general, employees are subject to income tax on share issues where the employer issues such shares and charges the employee less than the market value for them. Income tax is due on the difference in the relevant values and is generally collected via the PAYE system, while income tax due on share options must be returned within 30 days of the exercise of such options. In certain cases the relevant shares may be subject to a clog, restricting the employee from selling such shares for a set period of time. However, notwithstanding this restriction on sale, any income tax due is payable at the time of the share award.
A more favourable treatment may apply under certain Revenue Approved share schemes, but such schemes are subject to a range of restrictions, and are used primarily by larger, quoted companies. Deputies will be aware that I announced my intention to introduce a new SME-focused, share-based remuneration incentive in Budget 2018. This is a complex undertaking, as a focused scheme of this nature will need to comply with State Aid regulations, and it is likely to require EU approval.
Therefore, in the years in which the patronage scheme was active, employees who received share-based remuneration in an SME company would in most cases have been subject to income tax on any value received. As such, there would not appear to be a policy rationale to legislate for different treatment specifically for patronage shares in those years. Furthermore, an amendment of the nature proposed by the Deputy would be retrospective, in that it would change the tax treatment of transactions occurring in the years 2011 to 2013. Retrospective changes undermine the certainty of the tax system for all taxpayers and can be subject to Constitutional challenge in the courts, and would not be appropriate in this instance.
51. Deputy Niall Collins asked the Minister for Finance if, following the recent change in approach to patronage share schemes, a tax yield impact analysis of such a change in tax policy, taking into account the average effective rate of income tax for affected farmers, has been undertaken, balanced against the adverse impact of CGT yield at 33% and increased VAT flat rate addition payable to farmers; and if he will make a statement on the matter. [1732/17]
Amharc ar fhreagraThe Deputy's question would appear to suggest that Revenue should, or indeed could, analyse a transaction and select a tax treatment based on the maximum potential yield for the Exchequer. This is most certainly not the case as the Oireachtas sets out in legislation the relevant tax treatment that should be applicable to various sources of income or gains.
The Revenue Commissioners, as I have said already, are a statutorily independent body, charged with collecting the taxes lawfully owing to the Exchequer, and they do so in accordance with the legislation enacted by these Houses of the Oireachtas. The Revenue Commissioners interpret the underpinning legislation and are charged with the application of that law equally to ensure fair treatment of all taxpayers.
I would again reiterate that I have been advised by Revenue that there has been no change in policy in relation to this matter and the position being adopted by Revenue is in accordance with long established taxation principles that consideration received that is directly related to produce sold, whether in the form of cash or shares, is subject to taxation as income.
As there has been no change in policy by the Revenue Commissioners, I do not see the benefit of providing a tax yield impact analysis as sought by the Deputy. Such calculations are normally completed where a change of policy is being brought forward by Government and the associated estimated cost or yield is calculated in order to inform the Oireachtas in relation to the impact on the Exchequer of such a policy change. Such costings help to inform the associated debates in these Houses. In this case however, the position is that the Revenue Commissioners are interpreting and implementing tax law as it stands and there has been no departure from existing policy and interpretation.
Depending on the particular circumstances and incomes of each taxpayer involved, the setting out of this tax treatment by the Revenue Commissioners could result in additional taxes being due, or indeed in a reduced tax burden for some. Calculation of a tax yield impact analysis in such a scenario, would be difficult and as outlined previously, unwarranted given the position of the Revenue Commissioners that there has been no change in practice on their part in terms of the appropriate tax treatment of such income.
52. Deputy Catherine Murphy asked the Minister for Finance if he has considered if the practical application of sections of the National Asset Management Agency Act 2009, which require NAMA to contribute to the social and economic development of the State and protect or otherwise enhance the value of those assets in the interests of the State, are being carried out appropriately by NAMA in view of a documentary (details supplied); and if he will make a statement on the matter. [1723/17]
Amharc ar fhreagra69. Deputy Catherine Murphy asked the Minister for Finance if he has considered requesting a temporary halt to all NAMA sales while a full evaluation as to whether the social and economic interests of the State are being prioritised as part of NAMA's sales processes; and if he will make a statement on the matter. [1731/17]
Amharc ar fhreagraI propose to take Questions Nos. 52 and 69 together.
I appreciate the questions and have considered these issues since the establishment of NAMA. It is important to understand NAMA and how it is achieving its purposes.
One of many important purpose of the NAMA Act is "to contribute to the social and economic development of the State." The NAMA Act is one of the most complex pieces of legislation ever enacted by the Irish legislature and the provisions of the Act must be interpreted in light of the Act as a whole. As a statutorily independent commercial body, the NAMA Board has carefully balanced this complexity in fulfilling its legislative mandate.
NAMA's ultimate social and economic contribution will be measured by its success in recouping the maximum amount possible for the taxpayer from its loans. Within the context of this overriding commercial remit, NAMA is at all times conscious of the broader social and economic contribution that it can make. It conducts its activities in a way which assists the property market to operate efficiently and in a way which achieves longer term sustainability while taking account of its wider societal objectives.
Ireland's national debt levels and dependence on international support, prohibited the State from directly investing in the assets acquired by NAMA. Exposure to the banks, IBRC and NAMA each became exposures of the taxpayer net liabilities - that had to be reduced for the State to regain financial stability.
Strong interest from the capital markets led to much needed capital investment in our economy during periods of high risk and uncertainty. This allowed us to make important financial adjustments across our system. Without this investment Ireland would be experiencing a much more difficult recovery. The timely sale and the accompanying investment in these assets is making a strong contribution towards our broader recovery. Think of the numerous renovated hotels, finished housing estates, commercial property developments, ongoing residential developments and the commerce and jobs this creates. All of this is a direct result of investment in Ireland, much of it by the acquirers of these loans.
In addition, NAMA has demonstrated a direct commitment and contribution to the achievement of wider social and economic policy objectives through a number of initiatives. NAMA continuously reviews the assets of every NAMA debtor to establish if properties securing their loans could be utilised for residential development or social housing and with the cooperation of its debtors is willing to make such opportunities available to local authorities and approved housing bodies. NAMA has made properties available, on commercial terms, for social housing, schools, healthcare facilities and urban economic, environmental and cultural regeneration. NAMA also plans to facilitate the delivery of up to 20,000 private residential units to end 2020, assuming commercial viability.
I recognise the urgency of the issues that the Deputy seeks to address and believe NAMA already plays a meaningful role in addressing these issues in line with its mandate. NAMA is effectively carrying out its mandate, including a significant social and economic contribution. This being the case I have no intention of directing NAMA to halt its activities. To do so would irreparably damage NAMA's positive contribution to our recovery and be detrimental to the interests of Irish taxpayers.
53. Deputy Martin Heydon asked the Minister for Finance the status of the working of the Tax Strategy Group in 2017, with particular reference to a review of the current system of betting tax; and if he will make a statement on the matter. [1656/17]
Amharc ar fhreagraThe Deputy will be aware that the Tax Strategy Group (TSG) is in place since the early 1990s and is chaired by the Department of Finance with membership comprising senior officials and political advisers from a number of Civil Service Departments and Offices. Papers on various options for tax policy changes are prepared annually for the Group by Department of Finance officials. Papers relating to PRSI and social welfare issues are also prepared for the Group by the Department of Social Protection.
In line with the Government's commitment to Budgetary reform including greater engagement with the Oireachtas, the Tax Strategy Group papers relating to Budget 2017 were published in July 2016. This was well in advance of Budget Day and helped to facilitate informed discussion. Decisions in relation to the TSG for Budget 2018 have yet to be finalised but I am satisfied that the approach adopted last year worked well and I do not expect to change it significantly.
It is important to note that the Tax Strategy Group is not a decision-making body and the papers produced are a list of options and issues. They are only one part of an overall Budgetary and Finance Bill process which now includes the National Economic Dialogue, the Budget Oversight Committee and the provision of pre-Budget submissions and engagement with specific groups and individuals.
As regards betting duty, during the Finance Bill Committee Stage Debates in both the Dáil and the Seanad, my colleague, Minister of State Eoghan Murphy TD, gave a commitment that betting duty would be examined as part of the Tax Strategy Group process in 2017. I can inform the Deputy that officials in my Department are in the early stages of examining the area with a view to completing a review for inclusion in the Excise TSG Paper 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]
Amharc ar fhreagraThere 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.
55. Deputy Richard Boyd Barrett asked the Minister for Finance his views on whether significant mistakes have been made by the Government in relation to vulture funds in terms of the scale of acquisitions of property and property-related assets and in terms of the taxes forgone as a result of tax loopholes benefiting these funds; if he proposes any further policy or legislative action in relation to these funds; and if he will make a statement on the matter. [1610/17]
Amharc ar fhreagraThe Section 110 regime in its current form was inserted by Finance Act 2003. It was introduced to facilitate structured financial products, including the securitisation of loan books by banks and was designed to provide a tax neutral structured finance vehicle.
An effective securitisation regime is vital to the efficient working of the financial service industry. It enables banks and other financial companies to raise money from the capital markets more economically and also frees up capital for further lending by those institutions. The section 110 regime was also designed to improve Ireland's offering as a location for the conduct of financial services.
However, a concern arose about the use of the regime by international investors to reduce their Irish tax liabilities on Irish property backed transactions. Section 22 of the Finance Act 2016 (an amendment of section 110 Taxes Consolidation Act 1997 (TCA 1997)) was thus introduced to address the concerns about the use of the section 110 regime by international investors for the distressed debt that they had purchased from financial institutions.
The amendments made in Finance Act 2016 will ensure that tax will be payable by section 110 companies on their profits from Irish property transactions from 6 September 2016 onwards.
The measure has the effect that for the purposes of section 110 TCA 1997 the use of profit participating loans will be restricted where they are used by qualifying companies relating to Irish property transactions. The final proposal does not permit the section 110 companies to 'mark to market' or revalue their assets on 5 September 2016 ensuring that unrealised gains will be captured in the charge to tax.
The final legislation as passed meets the original policy objective of the protection of the Irish tax base whilst not encroaching on bona fide securitisations.
56. Deputy Joan Burton asked the Minister for Finance if he will provide a report on his recent meeting in Dublin with the British Chancellor of the Exchequer, Mr. Philip Hammond. [1647/17]
Amharc ar fhreagraI met with Chancellor Philip Hammond during his recent visit to Dublin on 9th January last. I was glad to have the opportunity to continue our bilateral discussions, following on from my meeting with him last September in London. This is, of course, in addition to our regular contacts at monthly meetings of EU Finance Ministers at ECOFIN.
Chancellor Hammond and I engaged constructively on the very strong relationship between Ireland and the U.K, the importance of trade between the two economies, and on the many areas of common interest shared by our two countries. I reiterated that the Irish Government's headline priorities concerning Brexit remain the economy, Northern Ireland, the Common Travel Area and the future of the EU itself.
In line with the agreement at EU level, there have been and will be no negotiations with the UK until Article 50 has been triggered. Chancellor Hammond is aware that Ireland remains a committed EU Member State and will be part of the EU 27 team both for the preparations and for the forthcoming negotiations. We want negotiations to be constructive and believe that a close and positive future relationship between the UK and the EU post-departure is of benefit to us all. Chancellor Hammond also confirmed that the unique relationship between Ireland and the UK has never been more important or as complex and that Prime Minister May has made clear that she is personally committed to building on the strengths of this relationship. Trade between our two countries benefits each nation enormously and supports hundreds of thousands of jobs, so it is in everyone's interest to build upon our strong ties.
I underlined that it is important for the British Government to set out its Brexit negotiation objectives as soon as possible. This will contribute to ensuring that the forthcoming negotiations are conducted in an organised and constructive way, leading to an orderly withdrawal of the UK from the EU.
I look forward to continuing my discussions with Chancellor Hammond in the context of our Government's ongoing preparations for Brexit.
57. Deputy Pearse Doherty asked the Minister for Finance if he will make a request to a company (details supplied) that it attend the upcoming finance committee hearings on the EU state aid ruling related to the company and Ireland. [1736/17]
Amharc ar fhreagraI am aware of reports that the company concerned has been invited to attend at the Finance Committee. It is a matter for the company to decide whether it will accept the invitation. I have no role in the matter.
60. Deputy Joan Burton asked the Minister for Finance the contact he has had with the European Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, regarding the common consolidated corporate tax base since December 2016. [39709/16]
Amharc ar fhreagraThe European Commission's proposal for a Common Consolidated Corporate Tax Base was published in October and discussed at the November ECOFIN meeting at which both Commissioner Moscovici and I were present. During the discussion, which was held in public session, a number of my fellow Ministers gave some initial impressions of the proposal.
At the December ECOFIN, Council Conclusions were approved in respect of the Commission's wider package which includes the CCCTB proposal but there was no specific discussion of the proposals at that meeting.
No other specific contact has occurred between myself and Commissioner Moscovici on the proposal since then.
