Dáil Éireann Debate, Tuesday - 28 February 2023
214. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue raised by introducing a 25 percent and 50 percent cap, respectively, on corporation tax loss relief utilised in a single year by NAMA participating banks and all banks, respectively. [9574/23]
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 the case of banks in which the State holds, or previously held, an ownership stake, the value of these tax losses to the State is realised through share sales. The banks’ share prices recognise a certain value for the tax losses and, as such, the State receives value for the balance of tax losses as sell-downs complete.
The estimated revenue which could be raised by introducing a 25 percent or 50 percent cap, respectively, on corporation tax loss relief utilised in a single year, either by NAMA participating banks only or by all banks, would be dependent on the future profitability of the banks and therefore cannot accurately be forecast.
It is possible to estimate the annual yield which could have arisen from such a restriction in respect of all banks for each of the last four years for which data is available (2018 - 2021), and this is set out in the table below. Having regard to its confidentiality obligations under s851A of the Taxes Consolidation Act, 1997, Revenue is not able to provide a further breakdown of these figures between NAMA participating banks and all other banks.
All Banks
|
Year |
25% |
50% |
|
2018 |
€121.5m |
€243m |
|
2019 |
€53m |
€106m |
|
2020 |
€20.5m |
€41m |
|
2021 |
€85m |
€170m |
The Deputy will also be aware 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 www.gov.ie/en/publication/436ff7-technical-note-on-the-potential-consequences-of-changes-to-the-treat/). The technical note considered in some detail the potential implications of restricting the use of losses carried forward, or the introduction of a specific time limit or “sunset clause” on loss relief, for Irish banks, for the wider banking sector, or for the corporate sector as a whole.
