TAX REBATE FOR BANK BAILOUTS
Taxpayers will have to wait even longer than they thought to recoup any money spent to prop up the Irish banking system because banks will be allowed to offset billions in losses against their future tax bills, The Sunday Business Post reports.
The 100 largest banks operating in the state – including many of those in the IFSC – will be able to carry forward €34 billion in unused losses and capital allowances to offset against future tax bills.
“The enormous sum means the flow of tax to the exchequer from the banking sector in the years ahead will be badly hit, even long after the banks return to profitability,” the newspaper says. “The scale of the tax losses is so enormous it could be a long time before the institutions will pay the full corporation tax rate, tax sources explained.”
However, although companies are entitled to carry forward trading losses to offset against future profits until the losses are fully relieved, special arrangements have been put in place that will limit the amount of relief banks can claim.
According to finance minister Michael Noonan, the provisions contained in the National Asset Management Agency Act 2009 will be effective in making sure banks pay at least some cash back to the exchequer when they eventually return to profit.
“The measure will ensure that, when the institutions return to profitability, a minimum of 50% of their trading income will remain chargeable to tax in an accounting period, notwithstanding claims for relief for losses carried forward into that period,” he said.