AIB, BoI and PTSB used loss reliefs worth almost €500m over three year period
The Minister for Finance, Paschal Donohoe, has confirmed that the three banks in which the state has shares utilised loss reliefs of almost €500m against their corporation tax bill over a three year period.
In a written Dail reply to Labour Finance spokesman, Ged Nash, Minister Donohoe confirmed that AIB, Bank of Ireland and Permanent TSB (PTSB) have utilised 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 with Bank of Ireland utilising losses of €208m against its own tax bill and PTSB utilising losses of €18m.
Minister 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 pointed out that according to the banks’ 2019 financial statements, Bank of Ireland, AIB and PTSB incurred current year corporation tax charges in Ireland totaling €70m.
Mr Donohoe stated 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”.
“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,” he said.
“Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.”
Minister Donohoe stated that in addition to corporation tax payments, the State raised €295m over the years 2017 to 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.
On Thursday, Deputy Nash stated around €150m is paid each year through the bank levy.
He stated that this should be increased to €400m.
Deputy Nash stated that concerns that any additional costs to the banks from any increase would be passed on to bank customer is “overstated – these are multi-billion euro businesses”.
He said: “The levy in the scheme of things for the pillar banks is small and the increase to €400m is a very small ask.”
Deputy Nash stated that 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”.