Business Irish

Wednesday 23 August 2017

Agency forced to pay €160m tax bill after loophole used by 'vulture funds' is closed

Stock photo: PA
Stock photo: PA
John Mulligan

John Mulligan

Nama was hit with a €160m tax bill after the Government shut down a controversial loophole best known for allowing vulture funds to reap huge profits almost tax-free.

The Section 110 loophole enabled vulture funds to slash their tax bills in Ireland despite owning billions of euros worth of property and loans.

The Finance Act 2016 terminated the loophole and made the new law retrospective to September last year.

Releasing its third quarter results for 2016 yesterday, Nama said it had made the preliminary tax payment to the Revenue Commissioners as a result of Section 110 of the Taxes Consolidation Act (1997) being amended.

The tax payment relates to investments Nama held through Section 110 vehicles.

The agency also revealed that it had made a profit of some €148.3m in the third quarter of last year.

It's expected to have made a total €1.5bn profit for the whole of 2016 after gains made on sales made in the final quarter of last year.

Nama, whose chief executive is Brendan McDonagh, said the preliminary tax payment "is made in respect of estimated profit" on investments in Section 110 entities between September 6 and December 31, 2016.

Payments

The scale of the payment made by Nama underscores how much money the State has lost in tax payments from investors as a result of the loophole.

Figures produced by the UCD School of Social Policy for the RTÉ programme 'The Great Irish Sell Off', which aired last month, estimated that the State lost up to €350m a year of tax revenue between 2014 and last September as a result of Section 110.

It found that investment funds had paid less than €20,000 in tax in Ireland on assets worth almost €20bn.

The latest quarterly results released by Nama showed that the agency had made a profit of €795m for the period January to the end of September last year. Nama said that it had generated €4.3bn in disposal and non-disposal proceeds during the first nine months of last year.

Irish Independent

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