CONSOLIDATION ACT:AIRCRAFT LEASING businesses and those working in the green finance area are two sectors that will benefit from the amendment to section 110 of the Tax Consolidation Act 1997 in yesterday's Finance Bill.
Current tax relief relating to various securitisation and structured finance transactions is to be extended to assets relating to plant and machinery, commodities and carbon offsets.
Section 110 had been a central strand of the Government’s efforts to boost the financial services industry in Ireland and is perceived to have played a central role in developing the IFSC.
Yesterday, the Irish Funds Industry Association said the changes would have little impact on the vast majority of their members.
Traditionally, the type of assets that a section 110 company could acquire were financial products such as stocks and bonds. Yesterday’s amendments will extend tax relief to other sectors.
The inclusion of carbon offsets had been well-flagged and will give a welcome boost to the “Green IFSC” proposal, which may be brought to Cabinet next week. The initiative seeks to establish Ireland as a green finance hub, drawing on Ireland’s success in fund management and financial services.
According to Aidan Walsh of Ernst and Young, the extension of the scheme to securitised vehicles for plant and machinery may also benefit the aircraft leasing sector, as securities related to aircraft can also be included in this category.
Commodity traders will also benefit from the changes.
Yesterday’s amendment also made reference to certain restrictions to the current scheme. However, industry sources said that this will have minimal effect, as it involves a tweaking of the original schemes, to ensure that all tax is being paid in the proper jurisdiction.
