Ireland’s three big commercial banks utilised loss reliefs of almost €500 million against their corporation tax bill over a three-year period, according to the Minister for Finance, Paschal Donohoe.
In a written Dail reply to Labour Party finance spokesman, Ged Nash TD, Mr Donohoe confirmed that AIB, Bank of Ireland and PTSB have utilised tax losses of €493 million against their corporation tax bills between 2017 and 2019.
Mr Donohoe said AIB was able to utilise tax losses of €267 million against its corporation tax bill over the three years with Bank of Ireland utilising losses of €208 million against its own tax bill and PTSB utilising losses of €18 million.
He noted, however, 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”.
Mr Donohoe pointed out that according to the banks’ 2019 financial statements, Bank of Ireland, AIB and PTSB incurred current year corporation tax charges in Ireland totalling €70 million.
According to the minister: “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. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period,” he stated.
Mr Donohoe also 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, Labour TD Mr Nash said about €150 million is paid each year through the bank levy. He called for this to be increased to €400 million, saying 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”.
“The levy in the scheme of things for the pillar banks is small and the increase to €400m is a very small ask,” he said.
Mr Nash said 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”.