Dáil Éireann Debate, Wednesday - 10 March 2021
271. Deputy Ged Nash asked the Minister for Finance the amount forgone to the Exchequer through past losses written-off against future tax liabilities by each of the pillar banks operating in the State (details supplied) from 2016 to 2020, in tabular form; and if he will make a statement on the matter. [12619/21]
Amharc ar fhreagraAs the Deputy is aware, loss relief for corporation tax is a long-standing feature of the Irish corporate tax system and a standard feature of corporation tax systems in most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.
In relation to the Deputy’s query, section 851A of the Taxes Consolidation Act, 1997 precludes Revenue officials from directly or indirectly disclosing taxpayer information to third parties unless this is specifically provided for in legislation. Therefore, neither Revenue nor I can comment on the tax affairs of any individual or company. However, as the State is the largest shareholder in PTSB, AIB and Bank of Ireland (owning 75%, 71% and 14% respectively of each bank), the Department of Finance monitors the overall strategic direction of these banks and develops and executes plans to optimise the value of the State’s investments.
In addition, Deputies may recall that in 2018, Department of Finance officials produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation tax losses more generally (see https://www.gov.ie/en/publication/436ff7-technical-note-on-the-potential-consequences-of-changes-to-the-treat/). It was further updated and re-circulated to members during the 2019 Finance Bill process. Based on the banks’ published annual reports, the technical note estimated that the value of tax losses brought forward that were utilised by the State’s three banks in 2017, 2018 and 2019 were as shown below. Data for 2016 was not included in the report and the banks’ 2020 annual reports have only recently been published and have not yet been analysed by officials.
Value of tax losses forward utilised per annual reports
|
- |
2017 |
2018 |
2019 |
|
AIB |
€137m |
€114m |
€16m |
|
Bank of Ireland (BOI) |
€84m* |
€91m |
€33m |
|
PTSB |
€12m |
€0m |
€6m |
|
Total |
€233m |
€205m |
€55m |
The annual reports state that the banks have tax losses in Ireland and the United Kingdom (UK); although the above figures include utilisation of UK losses, they are understood to only represent only a small portion of the total. *Also, BOI executed an intragroup transaction in 2017 for the purpose of capital optimisation which reduced the quantum of tax losses utilised in the year to €17 million. Accordingly, the amount of tax losses utilised in 2016 of €84 million has been used in the above table as being representative of a more typical year.
It should also be noted that these banks do currently pay Irish corporation tax, as the tax losses do not shelter profits made in all their corporate entities in Ireland. At an Oireachtas committee meeting in 2018, Bank of Ireland indicated that it paid corporation tax of €31 million in Ireland in 2017. AIB also disclosed that it paid €58m in corporation tax in Ireland over the two years 2016/7, which would be an average of €29m each year. According to the banks’ 2019 financial statements, Bank of Ireland, AIB and PTSB incurred current year corporation tax charges in Ireland totalling €70 million. These corporation tax payments are in addition to the bank levy, which raised €295 million over the years 2017 to 2019, as shown below.
|
Bank levy |
2017 |
2018 |
2019 |
|
AIB |
€49m |
€49m |
€35m |
|
BOI |
€29m |
€29m |
€34m |
|
PTSB |
€23m |
€23m |
€24m |
|
Total |
€101m |
€101m |
€93m |
