TAX LIABILITIES:MINISTER FOR Finance Brian Lenihan has raised the prospect that banks and building societies participating in Nama will not be able to set off their loan losses against their tax bills.
Although Mr Lenihan told reporters at a press conference that he would not comment on tax matters in advance of the budget, his statement on the draft legislation made it clear that a restriction on set off is under discussion.
“The issue of the set-off of tax by the banks against the losses will be addressed by the Minister in the publication of the [Nama] Bill in September,” the statement said.
Each of the institutions participating in Nama is likely in the next year to incur large loan losses as a result their involvement in the project.
Thus existing legal provisions allowing for the set-off of such losses against their tax liabilities have potential to significantly curtail the exposure to tax on the future profits made by banks and building societies that participate in Nama.
Mr Lenihan’s statement stands as a clear signal that the Government does not want any institution to benefit from its participation by minimising its tax exposure whenever profits return.
