Permanent TSB probably won't pay corporate tax for more than 20 years

PERMANENT TSB will not pay corporation tax for 21 years, the Oireachtas Finance Committee was told this morning.

The revelation comes days after AIB acknowledged that it will not pay corporation tax for over 20 years.

PTSB said the “accounting principle” is something it is obliged to comply with.

Under tax and accounting rules, known as deferred tax assets (DTA), banks are allowed to offset previous losses made during the recession against future tax bills.

In 2009, the then Finance Minister Brian Lenihan sought to prevent bailed-out banks carrying massive historic losses into the future as assets. In 2013, Michael Noonan reversed the rule change which benefits the bank lenders.

Shane O’Sullivan, Director of Operations for the bank, said this is “not unique to banking” adding that it allows businesses to carry their losses forward.

It is expected that this will result in tax being deferred for 21 years, until 2038, although exactly how long the tax asset lasts will depend on the future profitability of the bank.

State-owned banks 

Sinn Féin’s Pearse Doherty pointed out that 75% of the bank is owned by the taxpayer, adding that it is as a result of a law change by Fine Gael and Labour that this avoidance of paying corporation tax is possible.

However, Doherty said good work of the bank had to be acknowledged also, adding that he welcomed the announcement to the committee that PTSB is to allow up to 2,000 home loan holders in trouble avail of a mortgage-to-rent scheme.

Earlier this week, AIB announced its new mortgage-to-rent scheme, making it the first bank in Ireland to establish such a programme.

The bank is working with David Hall of the Irish Mortgage Holders Organisation (IMHO) and the new iCare Housing company to roll-out the scheme.

Under the scheme, iCare Housing will buy troubled properties, which will then be rented back to the homeowners. They will then be given the opportunity to later buy back their property at the discounted price it was purchased for.

O’Sullivan told TDs and senators today that it is yet to establish what “preferred partner” it will work with on the plan.

He said the scheme will be launched in the coming months. The bank aims to write to at least 200 customers it believes can avail of the scheme by the end of the year.

Earlier this month, the bank announced that some of its buy-to-let mortgage customers who are in arrears will be allowed surrender the property to the bank for sale, with the remainder of the debt being written off.

The bank said it has written to about 600 customers it believes could avail of the offer. Customers have 30 days to accept the deal, explained O’Sullivan, who added that to date the “first uptake is quite limited”.

However, he said he expects a lot of customers will take up the offer in the long-term.

Jeremy Masding, Chief Executive Officer of PTSB said he was “deeply grateful” for the help and support of the Irish government, stating that he can only repay that support by ensuring the bank returns to a profitable business.

“In a nutshell, we are performing well,” he said.

Written by Christina Finn and posted on TheJournal.ie