Incentives for aircraft-leasing sector cost the State hundreds of millions - Oxfam
Incentives and tax reliefs for the aircraft-leasing sector cost taxpayers around €577m in 2014, Oxfam Ireland claims.
Irish-based lessors manage more than €100bn in aircraft assets, while estimates put the number of people employed by the sector at between 1,000 and 2,000 - concentrated in Dublin and in and around Shannon.
Oxfam cited data provided in 2015 showing the industry paid €23m in corporation tax the previous year. The charity estimated that the real figure should have been as high as €600m.
"According to the IDA, the aircraft-leasing industry manages more than €100bn in assets," Oxfam Ireland said in a new report. "While we do not have profit figures, industry observers suggest that return on investment in aircraft leasing can be between 3pc and 15pc. If we suppose, for example, a 5pc return on those assets, the profits would be in the region of €5bn, which, taxed at 12.5pc, would give us €600m in corporate tax.
"This would mean that the incentives and tax relief for the aircraft-leasing industry cost the Irish taxpayer approximately €577m in foregone corporate taxes."
Figures for the industry, provided last week by Finance Minister Michael Noonan, show that the corporate tax take from aircraft leasing has increased, rising to €52m last year. It was €34m in 2015.
The report by Oxfam also said the industry benefits from no withholding tax on lease rental payments, wide exemptions from withholding tax on interest and dividend payments, and no stamp duty or transfer taxes on the transfer of aircraft or aircraft parts. The sector has also been bolstered by tax rules that allow owners to depreciate their assets just a fraction of the way through their productive life.
The Department of Finance said aircraft-leasing companies that operate through trading companies pay the 12.5pc corporation tax rate on their profits like every other trading company.
"Like all trading companies, they are also able to avail of capital allowances for the cost of plant and machinery, which includes aircraft and aircraft engines, over eight years," said a spokesman. "It is reasonable therefore that aircraft leasing companies can use capital allowances in the calculation of their taxable profits."