Social Democrats TD Stephen Donnelly reiterated yesterday that the State was losing as a much as €20m a week as some firms are using a loophole to pay just €250 in tax to Revenue.
He has told the Dáil that Irish charity status is being used by vulture funds, some of which have bought up distressed property loans, to avoid paying tax.
Typical businesses here pay 30% tax on their profits. But some companies are using what is called ‘Section 110’ status, where profits go offshore, which allows them pay virtually no tax at all.
Revenue yesterday confirmed to thethat “interventions are currently under way in respect of a number of such companies”.
Officials said companies must notify Revenue in advance of their intention to avail of the status and are “required to pay their taxes and file their tax returns in the same way as all other companies”.
‘Section 110’ companies chosen for compliance investigations were selected based on certain “risk indicators”, Revenue said. Officials will not identify which companies are being scrutinised.
Mr Donnelly has told the Dáil that Section 110 structures “are now being used by nearly all of the vulture funds to take profits generated in Ireland and, very frustratingly, to take profits generated in Ireland by ordinary, decent families trying to pay their way out of negative equity and distressed mortgages”.
The TD says Section 110 was never intended to be used to take profits out of the country.
“This is happening on a scale that is potentially worth tens of billions of euro.”
The Wicklow TD yesterday told RTÉ the tax loophole was set up with “broad parameters” and was not being monitored properly.
“What we are looking at is perfectly legal tax avoidance on a scale the Irish State has really never seen before.”
Ministers have said that the Department of Finance is examining if companies are abusing charity status to move their profits offshore.
Education Minister Richard Bruton said any abuses of the tax system would be “stamped out”.
The charities regulator is also examining any abuse of the Section 110 structures.
The regulator said it was looking into “several entities”, or special purpose vehicles