Stephen Donnelly, Fianna Fáil TD for Wicklow and East Carlow has called for a full review of the use of section 110 companies as it emerged that Government backed private investors are using the controversial vehicle to avoid paying Irish taxes on profits made in the domestic economy.
Deputy Donnelly raised the issue today in the Dáil on the back of reports last Sunday that two funds backed by the Irish Strategic Investment Fund were using the structure as part of their activities in Ireland.
Deputy Donnelly estimates the two companies took in an estimated €3 million and €18 million respectively, but paid only €250 each in tax in 2015.
Speaking earlier today, he commented, “We must have a full independent review into the use of section 110 in the domestic economy.
“Last year we went to a lot of trouble to shut down a tax avoidance loophole being used by vulture funds. Former Minister Noonan stated clearly that the vulture funds were using section 110 in a way that was not intended. What that meant is that section 110 was being used to avoid paying tax on profits generated in the Irish economy, which is not what section 110 was established for.
“This week, we have new revelations that other investment funds are using section 110 to avoid paying taxes on Irish profits. They are doing so with the full blessing of the Government because they are working directly with the State via the Ireland Strategic Investment Fund.
“As ISIF is part of this tax avoidance scheme, so too, potentially is the European Investment Bank. This could have serious implications for Ireland’s reputation.
“These two companies are able to make their profits in the domestic economy, and then move that money out of Ireland tax-free through the use of section 110. I don’t know of any other developed economy where that is accepted, whether it is legal or not. Profits made in Ireland, on economic activity in Ireland should be taxed in Ireland. We need a complete review of the use of section 110 in the Irish economy to ensure that Ireland does not miss out further.”