Saturday 22 October 2016

Noonan to amend emergency 'vulture' law

Published 11/09/2016 | 02:30

Finance Minister Michael Noonan. Photo: Frank McGrath
Finance Minister Michael Noonan. Photo: Frank McGrath

Emergency legislation drafted to close off a loophole that allowed so-called 'vulture funds' to pay little or no tax on income derived from their Irish profits may have to be amended, the Department of Finance has conceded.

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Last week, Finance Minister Michael Noonan announced plans to amend S110 of the Taxes Consolidation Act 1997 in the wake of a public outcry over its use by funds who lawfully avoided paying tax on their Irish profits, including profits deriving from the acquisition of distressed mortgages.

The proposed law, effective from last Tuesday, when the draft amendment was published, restricts tax deductions to property funds that are not paying tax in Ireland - or are not in an EU double-tax treaty country - on the profits derived on their Irish loan books.

However, it has also captured funds directly lending into the Irish real estate market, including US funds supported by State agencies, such as the Irish Strategic Investment Fund (Isif).

It is also feared that the law will affect the activities of funds using S110 special purpose vehicles (SPVs) to carry out Collateralised Loan Obligation activities.

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