Press release
Minister Noonan proposes to amend Section 110 to protect tax base
Published on
Last updated on
Published on
Last updated on
The Minister for Finance, Michael Noonan TD, today published a proposed amendment to Section 110 of the Taxes Consolidation Act 1997. Section 110 of the Taxes Consolidation Act 1997 sets out the regime for the taxation of special purpose companies set up to securitise assets.
The securitisation regime was designed to improve Ireland’s offering as a location for the conduct of financial services. It has achieved that broad goal and the financial services industry now makes use of these securitisations as a support to financial intermediation. Such financing is useful for the productive economy as it can underpin the supply of finance to industries and companies in Ireland, Europe and further afield. The importance of securitisation has further been recognised by the European Commission through their work on Capital Markets Union, of which one of the aims is to seek to build a sustainable securitisation regime across the European Union.
The International Financial Services sector in Ireland employs about 38,000 people directly and over 1,000 people are involved in work in the securitisation sector within Ireland. Furthermore, with over 25 years of experience as a leading fund centre, Ireland has developed a global reputation for the domiciling and administration of investment funds, with over 13,000 professionals dedicated to the industry.
Commenting on the proposed amendment, Minister for Finance Michael Noonan T.D. said:
“A number of concerns have been raised recently about the possible use of aggressive tax practices by some section 110 companies to avoid paying tax on Irish property transactions. In light of these concerns, and due to the highly technical and complex nature of the amendment, I am now publishing a proposed amendment to section 110 Taxes Consolidation Act 1997. The proposed amendment targets the issues that have been raised and will ensure that the Irish tax base is appropriately protected. Further targeted proposals in relation to the use of funds in the Irish property market are also being considered.”
Recognising the importance of the securitisation and funds sectors, the Minister commented
“I am publishing this proposed amendment to address the perceived misuse of section 110 and to ensure that the tax provisions are ring-fenced for bona-fide securitisation purposes. The securitisation and funds industries are essential areas in the broader IFS sector, a sector which now employs over 38,000 people directly in over 400 companies, 200 of which are Irish owned.“
“As this is a proposed amendment, for inclusion in the forthcoming Finance Bill, I will evaluate and give due consideration to any further amendments that are proposed. If any further abuses of the section 110 regime are identified, further measures may be brought for my consideration for the Finance Bill. I wish to reaffirm the stance that Ireland has extensive protections under our tax code to prevent tax avoidance. These are strengthened on a regular basis to keep pace with any new threats to the tax base identified by the Revenue Commissioners or otherwise.”
Once enacted this provision will come into effect from 06 September 2016.
The issue of the use of charitable trusts by section 110 companies is subject to a separate review.
ENDS
6th September 2016