Monday 21 May 2018

Finance: no 'watering down' of new vulture fund law

Finance Minister Michael Noonan. Photo: Fennell Photography
Finance Minister Michael Noonan. Photo: Fennell Photography
Dearbhail McDonald

Dearbhail McDonald

The Department of Finance has insisted that there will be "no watering down" of emergency legislation drafted to close off a loophole that allowed so-called 'vulture funds' to pay little or no tax on income from their Irish profits.

Earlier this month, Finance Minister Michael Noonan announced plans to amend S110 of the Taxes Consolidation Act 1997. A draft amendment sought to restrict tax deductions to property funds that are not paying tax in Ireland - or are not in an EU double-tax treaty country - on their profits derived from their Irish loan books.

But the funds industry fears that other vehicles, including ICAVs, S110 Special Purpose Vehicles carrying out collateralised loan obligations (CLO) activities and shadow banking funds lending directly into the Irish real estate market, would also be affected by the new legislation.

Finance officials will this week meet with a range of stakeholders to discuss the draft law, which has already impacted on a number of planned acquisitions, according to industry sources.

"There will be no watering down of this amendment," said a spokesperson for Noonan, who has already said he will review ICAVs and other tax-neutral structures, if necessary.

Concerns have been raised that ICAVs, which are fully exempt from tax on income and profits, are being used by foreign and domestic investors to avoid paying tax on rental income in this country.

Sunday Indo Business

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