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State-backed banks got relief on almost €500m in taxes

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Loss relief: Paschal Donohoe said banks still pay tax in Ireland. Photo: Julien Behal Photography/PA

Loss relief: Paschal Donohoe said banks still pay tax in Ireland. Photo: Julien Behal Photography/PA

Loss relief: Paschal Donohoe said banks still pay tax in Ireland. Photo: Julien Behal Photography/PA

Finance Minster Paschal Donohoe has confirmed that the three State-backed commercial banks utilised loss reliefs of almost €500m against their corporation tax bills over a three-year period.

In a written Dáil reply to Labour finance spokesman Ged Nash, Mr Donohoe confirmed that AIB, Bank of Ireland and Permanent TSB (PTSB) set tax losses of €493m against their corporation tax bills between 2017 and 2019.

Minister Donohoe confirmed that AIB was able to utilise tax losses of €267m against its corporation tax bill over the three years, while Bank of Ireland utilised losses of €208m against its own tax bill and PTSB utilising losses of €18m.

Mr Donohoe told Deputy Nash that it should be noted that these banks do currently pay Irish corporation tax “as the tax losses do not shelter profits made in all their corporate entities in Ireland”.

He said that according to the banks’ 2019 financial statements, Bank of Ireland, AIB and PTSB incurred current-year corporation tax charges in Ireland totalling €70m.

“Loss relief for corporation tax is a long-standing feature of the Irish corporate tax system and a standard feature of corporation tax systems in most OECD countries," said Mr Donohoe.

“It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another.

"Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.”

Mr Donohoe stated that in addition to corporation tax payments, the State raised €295m between 2017 and 2019 from the three banks through the bank levy.

Between 2017 and 2019, AIB paid over €133m in the bank levy, Bank of Ireland paid €92m and PTSB paid €70m.

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Yesterday, Mr Nash said around €150m is paid each year through the bank levy and this should be increased to €400m.

This approach is preferable “to tearing up the established system of writing off legitimate losses against corporation tax as this could have unintended consequences for other companies and employers”, he said.


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