Vulture funds using charities to avoid paying tax, says Donnelly
Social Democrats TD says tax losses to State likely to be ‘tens of billions of euro’
Social Democrats TD Stephen Donnelly claimed that vulture funds “are about to pull off the largest avoidance of tax on Irish profits in the history of the State”. Photograph: Eric Luke
Irish charities are being used by vulture funds to avoid paying tax in the State, the Dáil has heard.
Social Democrats TD Stephen Donnelly claimed that vulture funds “are about to pull off the largest avoidance of tax on Irish profits in the history of the State”.
He said “the scale is likely to be in the tens of billions of euro in missed taxes” on profits “earned off the backs of distressed Irish families”, through the purchase of distressed mortgage loan book portfolios.
The Wicklow TD claimed that “the level of taxes being missed by the Irish State is likely to be well over half of the total value of all of the distressed loan books sold by Nama, IBRC and private banks”.
Mr Donnelly has raised the issue a number of times, as has Sinn Féin finance spokesman Pearse Doherty, who reported the alleged abuse to the Charities Regulator.
Tánaiste Frances Fitzgerald confirmed in the Dáil that she had also contacted the Charities Regulator and asked him to examine the particular issues around the granting of charitable status and how it was being used by certain companies.
The Matheson Foundation contributes to the Irish Society for the Prevention of Cruelty to Children, Barnardos and Temple Street hospital.
In its first year of operation, Mr Donnelly said Matheson paid €250 in total corporation tax to the Irish State, despite annual revenues of €14 million,
Companies such as Mars Capital are known as section 10 companies. Mr Donnelly said section 10 was introduced in 1997 to allow global companies to structure global assets in Ireland and avoid paying tax.
The vulture funds were now using Section 10 set-ups to avoid paying taxes on Irish profits. “My understanding is that almost all of the vulture funds whose profits are generated in Ireland have section 10 status,” Mr Donnelly said.
He added that Irish companies typically paid about 30 per cent tax on their profits.