Two separate investigations into the use of tax loopholes which allow foreign investors to escape tax on profits made in Ireland are now under way by officials in three State agencies, with officials in a fourth said to be "concerned".
Social Democrats TD Stephen Donnelly recently told the Dáil that so-called vulture funds – which have bought up distressed assets, including mortgages, in Ireland – have managed to legally avoid paying tax on profits made from the sale of these assets.
Now, The Irish Times understands officials in the Department of Finance and the Revenue Commissioners are examining if a provision in tax law, designed to promote the funds industry here, is being used for unintended purposes and enabling investors to avoid tax on profits made here. If so, official sources say, the provision is likely to be closed in the Finance Act later this year.
Several sources across Government said there was a high degree of concern in political circles about the revelations.
In addition, the Charities Regulator is examining the use of charitable trusts associated with Dublin law firm Matheson to provide services to the funds, including acting as registered owners of a number of the funds.
The Department of Justice is said by sources to be watching developments closely.
According to a spokesman, the Charities Regulator is examining whether “certain entities” should qualify as charities under its legislation.
It is understood that this refers to the charitable foundation set up by Matheson, which employs over 400 lawyers and tax specialists and has offices in Dublin, London and the US. It is recognised by legal and official sources as the leader in providing tax minimisation and avoidance schemes for international clients. The firm did not return repeated requests for comment over recent days.
The firm's charitable arm, the Matheson Foundation, is the registered owner of a number of companies set up by major international funds to acquire distressed assets in Ireland, according to statements made in the Dáil by Mr Donnelly.
Mr Donnelly recently told the Dáil that Mars Capital, an Irish subsidiary of a US vulture fund, is owned by the Matheson Foundation which, he said, may own up to 200 companies. Earlier this year, The Irish Times reported that Matheson had urged international regulators to water down proposed tougher disclosure rules for international tax-avoidance schemes.
In a submission to the Organisation for Economic Co-operation and Development, Matheson argued the proposals were too stringent and would place too heavy a burden on clients and their lawyers. The firm also featured in the Panama Papers when it was revealed a senior figure in the firm, Stanley Watson, used offshore arrangements put in place on his behalf by Mossack Fonseca.