Finance Minister Michael Noonan has announced a clampdown on vulture funds using a tax loophole to bulk up profits after concerns were raised about firms buying up Irish property.
His announcement came as Central Bank chiefs revealed that assets valued at €300bn in Ireland have been bought by vulture funds and special investment firms.
The revelation comes as the Dáil prepares for an emergency debate today on the Apple tax ruling, which the Government expects will rubberstamp its appeal against the Brussels judgement.
The Government will defend Ireland’s tax policies and also indicate what will be done with the €13bn in lost tax the European Commission has ordered must be recovered from Apple.
However, in a surprise move last night, Mr Noonan closed off a loophole to stop firms avoiding paying tax, especially when it came to property deals.
The loophole applies to so-called section 110 companies set up to buy assets, an arrangement which had achieved the “broad goal” of helping attract financial services here, he said.
“The proposed amendment targets the issues that have been raised and will ensure that the Irish tax base is appropriately protected,” said Mr Noonan.
The changes apply to company profits arising from property deals as of from yesterday.
Section 110 deals have come under scrutiny in recent weeks after claims the status is being used to set up special purpose vehicles to buy distressed property loans while paying little tax.
Revenue is looking into these claims and separately, the charity regulator is examining other claims that firms are using charity status to avoid paying tax.
The issue was raised in the Dáil by Independent TD Stephen Donnelly. The TD even claimed one firm had bought up distressed property loans and, while making tens of millions of euro, paid just €250 in tax in one year.
Mr Noonan said this separate issue was being reviewed but that he was open to other changes in the forthcoming Finance Bill.
However, Central Bank chief economist Gabriel Fagan admitted the bank is examining €300bn in assets here owned by investment funds. Sinn Féin’s Pearse Doherty asked Mr Fagan at the Oireachtas budget committee about qualified investor alternative investment funds and foreign-owned ones which are tax exempt in Ireland.
“They own a huge amount of property in the capital city in particular, as well as right across the State,” he said. Mr Fagan said the bank had over the last year had made “significant progress” measuring these firms but was only getting “to grips” with what was going on in the sector.
Meanwhile, Mr Noonan has sounded a note of warning about October’s budget. He told RTÉ the combination of Brexit, instability in some countries, and the upcoming US presidential election needed a “cautious budget”.
“I’m going to take no chances,” he said.
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