AIB, Bank of Ireland and Permanent TSB used loss reliefs of almost €500 million against their corporation tax bill over a three-year period, the Minister for Finance Paschal Donohoe has confirmed.
In a written Dáil reply to Labour finance spokesman, Ged Nash, Mr Donohoe confirmed that the three banks used tax losses of €493 million against their corporation tax bills between 2017 and 2019.
He noted that AIB was able to use tax losses of €267 million against its corporation tax bill over the three years, with Bank of Ireland using losses of €208 million against its own tax bill and PTSB using losses of €18 million. Both AIB and Permanent TSB are majority State-owned, while the State controls 14 per cent of Bank of Ireland.
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”. The Minister said that according to the banks’ 2019 financial statements, Bank of Ireland, AIB and PTSB incurred current year corporation tax charges in the State totalling €70 million.
He added that “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”.
Mr Donohoe continued: “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.”
He said that in addition to corporation tax payments, the State raised €295 million over the years 2017 to 2019 from the three banks through the bank levy.
Between 2017 and 2019, AIB paid over €133 million in the bank levy, Bank of Ireland paid €92 million and PTSB paid €70 million.
On Thursday, Mr Nash called for the collective annual bank levy to be increased to €400 million, describing concerns that any additional costs to the banks would be passed on to bank customers is “overstated”.