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INDEPENDENT TD STEPHEN Donnelly has said large accounting and legal firms have told their vulture fund clients how to get around the Section 110 amendment, which was recently introduced by Finance Minister Michael Noonan to tackle tax avoidance.
The government moved last month to close a ‘loophole’ within Irish tax law, known as the Section 110 ruling, which allowed vulture funds to buy up mortgages here but pay no tax having registered as a company with charitable status.
How to get by the loophole
However, Donnelly told TheJournal.ie that within 24 hours of the loophole closure, accountancy and legal firms were explaining to their clients “how to get around it”.
This week, the new Oireachtas Budgetry Oversight Committee criticised the new changes introduced by the minister, saying it will not have an impact.
In its latest report the committee said the loophole closure still allows the assets to be marked to current market value and it only applies to property.
“Vulture funds will continue to use arm’s length loan notes which can be set against profits made,” states the report.
‘Paying little or no tax’
Chairman of the committee John Paul Phelan stated the operation of vulture funds, who have bought up distressed assets from banks here in Ireland, are “a cause for concern as they are paying little or no tax on the profits and capital gains being made from their activities here”.
Speaking the TheJournal.ie, Donnelly said while Minister Noonan’s amendment is welcome, as it stands, it won’t work.
“The accountancy firms are always going to be ahead,” said Donnelly.
Several important changes are needed, or the €20 billion in future taxes could still find its way out of Ireland. The sums involved are enormous, so it’s critical we get this right.
The Wicklow TD has sent a policy proposal to Minister Noonan and hopes to meet with his officials in the coming days.
‘Shut it down’
“Step one. Shut it down for vulture funds and those avoiding paying taxes in the domestic economy.
“It is imperative that these loopholes are closed down.”
To put it in to context for the taxpayer, Donnelly said the €20 billion in future taxes could build the equivalent of 40 National Children’s Hospitals, end the scourge of child poverty in Ireland and pay for the new national fibre optic network… 20 times over.
“It could reduce primary school class sizes from 28 to the EU average of 20…for the next 50 years. It could end the housing crisis by building 130,000 new homes,” he added.
The detailed submission made to the minister includes six proposals to shut down tax avoidance in the domestic economy, said Donnelly.
These include removing Section 110 status for all economic activity in the domestic economy and requiring all vulture funds (and Irish zero-tax vehicles) to get prior Revenue approval.
Donnelly said all Irish tax-free type vehicles should have to publish their accounts and he also called for the creation of an ongoing Oireachtas oversight of tax avoidance committee.
The Wicklow TD said “ongoing surveillance” of vulture funds and the loopholes being used is needed.
The changes can be included in the Finance Bill in next week’s Budget, said Donnelly, who added that the “funds are nervous” about what government might propose.
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It’s time for the Dept of Finance to start employing folks with economic and financial backgrounds.
They do.
@John Killeen: its obvious who ever wrote up the section 110 amendment had not got a fracking clue and made a complete fool of himself/herself.
@Juan Franc: : when the minister of finance attends hedgecraic. You know this was done in favour of vulture funds.
HedgeCraic was a gathering of about a hundred very rich people – representatives of hedge funds. They met at the Shelbourne Hotel and at the Ritz-Carlton for four days in September 2013.
They enjoyed what the event organiser termed “the craic” while discussing how to make money out of the distressed Irish economy.
Information given in the Dail revealed that in 2013 and 2014 finance officials attended meetings with representatives of hedge funds no fewer than 65 times.
On eight occasions – including HedgeCraic – Mr Noonan himself attended.
https://www.google.ie/url?sa=t&source=web&rct=j&url=http://www.independent.ie/opinion/columnists/gene-kerrigan/why-does-our-government-like-vultures-so-much-31085333.html&ved=0ahUKEwjZiN6otcPPAhWlCsAKHagCDxoQFggeMAE&usg=AFQjCNEYMPSGsFCDVDOgs3uSqc3rf4j_8Q&sig2=uw-qdxzzU8217z_D_hfZBw
Doubt they were discussing the weather
@LITTLEONE: the whole thing is one big scam aided and abetted by a poddle like mediia,hopefully the FBI and British NCA investigation into NAMA will bring the whole house of cards down.
Are these the same firm who advise the government on drawing up the legislation by any chance?
Normally no, they’re not. The draftsmen would usually be Revenue’s own. However, one thing Revenue should do is use legislation from 2010 to compel the firms to send copies of advice given to vulture funds by issuing notice that any advice given on S110 constitutes a potential “tax avoidance” scheme – notice of which must by law to Revenue.
@Brinster: No outside consultants brought in to provide advice or anything like that?
Pretty much they are also the same firms that signed off on Anglo
Like Goldman Sachs who advises the government regularly?
Including the night of the bailout, when many of their subsidiary banks had all of their losses covered?
@ Eyepopper. Submissions are sought on directions, initiatives, proposals etc from all stakeholders. Public bodies, private cos, trade unions etc. However the actual drafting is done by internal staff. Always very confidential until release.
Why doesn’t this surprise me. When you make the laws , you can make anything legal.
Just ask the fruit.
Noonan has never been serious about tackling this. His “reform’ was way to little and way to late. Do any of us honestly believe that he didn’t know that accountants would be able to find a way around his ‘solution’ to closing the loophole within 24 hours? Of course he knew! !!! That was the whole point! Make it look like you’re doing something but actually do nothing at all to upset the status quo that is Corporate Ireland Fire Sale!
We have a crisis in our hospitals,housing sector and an independent TD has to pull Noonan aside and explain to him billions is leaving the country in unpaid taxes………what in the name of god is going on?
@Juan Franc:Stephen Donnelly would need to overthrow the gang in the Dail and govern by dictat to achieve his goal.
The apathy is incredible.
That`s their job
The problem stems from the simple fact that the government employ civil servants to do their part and they are simply not up to standard and in essence they don`t give a shite once their pensions and positions are secure
A civil servant is not going to rock any boat
Of course they’re not… why would you take a job in the civil service if you were any good and driven, wanted to succeed?
The pay is rubbish, a fifth of what you could make elsewhere, it’s impossible to get rid of ineffective team members and hire good people, you probably answer to an incompetent manager from a different field/background, the travel and expenses policies are tight and you have to justify every penny spent to some clerical officer who’s basically ‘computer says no’
The only reason to take a job there is to build a profile say you have experience then use it to go to a private firm.
I should add
I was at an employment HR seminar once and one of the key points raised by the lecturer is that civil servants are promoted to the highest level of office where their incompetence has little impact
Grade`s of civil servants are put in positions because of their grade , nothing to do with experience or qualifications and are absolutely and totally out of their depth with no understanding of what they are doing or the situation presented
This policy is evident in all areas ( maybe bar Revenue) , HSE , County & City Councils , Social Welfare
And until a policy of external requirement is embarked upon it will continue
That’s what they get payed for.Hardly surprising that accountants do their job!
@John Killeen: Yes, we should be eternally grateful for the sterling work they did in auditing Anglo and others.
Obviously some very crooked forces at work in the Anglo case and crash in general but it’s an accountants job to help their client pay as little tax as possible.
Forgive me if I’m wrong but as far as I’m aware Accountancy firms are and always have been self-regulated.
An independent regulatory body wouldn’t go amiss.
Of course the loophole closure was deliberately designed to leave open another loophole. The intention was only ever to make a show of doing something as opposed to actually doing something.
have your say