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The OECD Secretariat recently published a proposal to advance international negotiations to ensure large and highly profitable multinational enterprises (MNE), including digital companies, pay tax wherever they have significant consumer-facing activities and generate their profits. The new OECD proposal brings together common elements of three competing proposals from member countries, and is based on the work of the OECD/G20 Inclusive Framework on BEPS, which groups 134 countries and jurisdictions on an equal footing, for multilateral negotiation of international tax rules, making them fit for purpose for the global economy of the 21st Century. The proposal, which is now open to a public consultation process, would re-allocate some profits and corresponding taxing rights to countries and jurisdictions where MNEs have their markets. It would ensure that MNEs conducting significant business in places where they do not have a physical presence, be taxed in such jurisdictions, through the creation of new rules stating (1) where tax should be paid (“nexus” rules) and (2) on what portion of profits they should be taxed (“profit allocation” rules).  The Inclusive Framework’s tax work on the digitalisation of the economy is part of wider efforts to restore stability and certainty in the international tax system, address possible overlaps with existing rules and mitigate the risks of double taxation. Beyond the specific elements on reallocating taxing rights, a second pillar of the work aims to resolve remaining BEPS issues, ensuring a minimum corporate income tax on MNE profits. This will be discussed in a public consultation foreseen to take place in December 2019. The ongoing work will be presented in a new OECD Secretary-General Tax Report during the next meeting of G20 Finance Ministers and Central Bank Governors in Washington DC, on 17-18 October. (Source: OECD)

Oct 10, 2019
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  Between Trump, Brexit and the unrest in Hong Kong, you might think twice before investing. Eoin McBennett gives some tips for investing in uncertain times. Looking at the headlines over the last two years, you could be forgiven for thinking that investors have experienced poor returns. It has been a rocky ride, as trade disputes between the US and China have escalated, the chances of a no-deal Brexit have risen, and the protests in Hong Kong threaten to undermine an important financial hub for China. All this should point to poor returns for investors, right? On reviewing returns, however, we have found investors had done reasonably well over this period. Both European and American shares are up over the twelve months to the end of August, and investors in other asset classes like government bonds and gold have done well. The Irish stock market, however, has lagged more recently, affected by the ongoing uncertainty being played out in the House of Commons. The truth is that heightened political risk often does not translate into lower market returns over the medium term. This is not to say that issues like US–China trade tensions or Brexit don’t matter; they do. Triggers for market uncertainty can come from a variety of macro-economic factors such as interest rates, inflation, unemployment and economic growth. One thing we can be certain about when investing is that there will be volatility. So if you are looking for tips on how to grit your teeth and invest even when the outlook seems uncertain, here are mine: 1. Time in the market, not timing the market Avoiding the temptation to time the market is perhaps the most important lesson for investing in uncertain times. American Century Investments have shown the effect on portfolios by trying to time markets. Their analysis highlighted that staying invested throughout a cycle resulted in the best return for long-term investors. Investors in shares benefit from both capital growth and dividends. Over time, the contribution of reinvested dividends to your total return can be substantial, sometimes even contributing more than half of your return. Trying to time the market, or buy low and sell low, means you miss out on the power of reinvested dividends. 2. Diversify your investments Diversifying your investments can shield you from some – though by no means all – of investment risks. Spreading your assets across a range of companies, countries and markets reduces your dependence on any one area, and the risk of one bad event making a dent in your portfolio. By investing in a range of asset classes, you can produce a portfolio which has smoother returns over time, and include exposure to assets which tend to perform well during times of uncertainty, such as gold or government bonds. 3. Don’t forget the cost of not investing People tend to see investing as a binary thing, where you are either doing it and taking a lot of risk, or not doing it and taking no risk at all, but the truth is more complicated. By not investing, you run the risk that your money will decline in value as inflation erodes away at your wealth. The cost of things around you will rise over time, but with banks offering a meagre level of interest, your money will not keep up and will not be able to buy as much for you in future. Investing before a market crash Having said all this, I know people still want to know what happens if they pick the wrong time. Let’s assume the worst and look at what would have happened if you only ever invested before a market crash. One of my colleagues has done just this for UK shares, running the numbers to see what would happen if you invested at the market peak right before the Asian Financial Crisis (1998), bursting of the dotcom bubble (2001) and financial crisis (2008). After those three peaks, the UK market saw declines of 25%, 30% and 40%. You would be feeling pretty sick. But if you had invested equal amounts right before these three crashes, you would have doubled your money by the end of 2018. You can run the analysis for US shares and reach a similar conclusion. Even if you invest right before a market crash, staying invested over the long-term tends to pay off. Make a plan Investing in uncertain times requires us to recognise that our long-term financial needs are not going away. The need to save for a pension, your children’s education or any other financial goal, does not generally disappear overnight. Keeping that in mind should help to make investing in uncertain times easier, even when we are watching the latest news report. How to invest in uncertain times? Make a plan, and stick to it. Eoin McBennett is an Investment Manager at Quilter Cheviot. This article is the sole opinion of the author. This article was originally published in The FM Report.

Oct 06, 2019
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Leadership involves making decisions and taking actions in order to solve problems and achieve objectives, but what makes it so challenging is its unique responsibility for influencing and developing people. That’s why it’s important to develop your inner stance, says Patrick Gallen Many endeavours in life are a matter of acquiring skills and knowledge and then applying them in a reliable way, but leadership relies most strongly on less tangible and measurable things like trust, inspiration, attitude, decision-making, and personal character. These are not necessarily the result of experience; they are facets of humanity, enabled partly by the leader's character and, in particular, by their ‘inner stance’. The good news is that anyone who wants to be a more effective leader in any situation can do so by developing the ability to adapt their inner stance. In other words, they can easily alter their starting position so they come out of the gate the right way. Dusan Djukich, in Straight Line Leadership, describes inner stance as “the mental posture you assume”. Like a golf stance or yoga pose, it can be adjusted at any time to achieve a better result. You can choose the stance of serving the people you lead, rather than a stance of pleasing them. You can choose to be an enabler of others, rather than dictatorial. There are many different types of leadership stances to choose from.  Some people have only one stance, which may be right for certain situations and wrong for others. People think that stance is a personality trait, but they are simply working from an inner stance chosen at an earlier stage of life and have stuck with it, regardless of the consequences. Adaptability of stance is an increasingly significant aspect of leadership, because the world is increasingly complex and dynamic – it is essential to have a keen understanding of relationships, often within quite large and intricate networks. There is nothing false about changing your inner stance. In fact, it is about honestly assessing your stance on an ongoing basis and committing to improve it from a place of integrity. Adaptability stems from objectivity which, in turn, stems from emotional security and maturity. Again, these strengths are difficult to measure except in terms of results. The world is more transparent and connected than it has ever been and the actions and philosophies of organisations are scrutinised by the media and the general public as never before. The ability to be aware of and adapt your inner stance is more important than ever. In order to lead people and achieve greatness, it is essential that the modern leader has the ability to understand and apply the correct inner stance to a myriad of situations. Patrick Gallen is Partner – People and Change Consulting in Grant Thornton Northern Ireland.

Oct 06, 2019
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The uptick in the economy has brought with it an increased focus by Revenue on the withholding tax that is relevant contracts tax (RCT). Ciara McMullin explains. Although RCT is a withholding tax aimed at ensuring that those working in certain sectors (primarily construction, forestry and meat processing) are tax compliant, all businesses need to be aware of RCT as misdemeanours can be extremely costly, mainly when there has been a blatant failure to operate RCT or it has been incorrectly applied. What is RCT? RCT applies to payments made by those considered ‘principal contractors’ for services known as ‘relevant operations’ received from suppliers referred to as ‘subcontractors’. Legislation obliges principals to operate RCT on payments to subcontractors by real-time input of contract notifications and payment authorisations via the eRCT system. Once within the scope of RCT, a principal contractor should ensure the principal never make payments to subcontractors without registering the contract and receiving confirmation as to the appropriate withholding tax rate. Rates can be 0%, 20% or 35% and are dependent on the subcontractor’s tax compliance record with Revenue. Tenant carrying out landlord’s Category A works  Increasingly, tenants enter into lease arrangements with landlords which see landlords agreeing to make payments to the tenant for work to be carried out (for example, towards the premises being finished out) to induce them to enter into a lease. The obligation to operate RCT in respect of this arises for the tenant by virtue of being ‘stuck in the middle’ of a construction supply chain. Given that occupants usually enter into one building contract with their building contractor and do not differentiate between landlord’s works and their own fit-out works, the entire contract comes within the remit of RCT. The tenant, in these circumstances, is unable to avail of the ‘own use exemption’. Where the tenant is carrying out fit-out works on behalf of the landlord, they are considered the principal and they must operate RCT on all payments made to the contractor. If the landlord is also a principal, they must also operate RCT on the payment they make to the tenant.  Real-time operation  Revenue regularly carry out eRCT bulk rate reviews, most recently in April and September 2019, to consider the appropriateness of the RCT rates for active subcontractors, bearing in mind their tax compliance record. A considerable number of subcontractors have been reclassified under a different withholding rate, highlighting the importance of operating RCT on a real-time basis as rates are linked to ‘live’ data. Subcontractors rates can, and do, change regularly and, therefore, a principal cannot rely on the RCT withholding tax rate quoted on a payment authorisation from last year (or even yesterday, for that matter!). Unreported payments The cornerstone of RCT is the obligation for a principal to appropriately operate this withholding tax. In advance of making any payment to a subcontractor, a principal must obtain a payment authorisation. Where a payment is made to a subcontractor without having obtained a payment authorisation first, the principal is immediately obliged to submit an unreported payment notification to Revenue, bringing with it the risk of sanction by way of penalties and, can ultimately result in prosecution. Penalties depend on the RCT status of the subcontractor who has received the payment and can range from 3% to 35% of each unreported amount paid to the subcontractor. In short, a principal must always ensure that they have a payment authorisation in advance of making a payment to a subcontractor.  Historically, Revenue applied a somewhat lenient approach to this aspect of RCT if the principal was generally tax compliant. More recently, however, Revenue has begun to enforce legislation strictly and apply penalties automatically. While assessments can be appealed, taxpayers need to have a bonafide basis for seeking non-application and/or mitigation of penalties. Merger & Division Legislation (Companies Act 2014) In August 2019, Revenue issued Tax and Duty Manual Part 38-00-01 which includes guidance on tax administration and compliance with regards to mergers/divisions of companies and devotes over four pages to RCT, indicating the importance of this guidance from a practical perspective for those dealing with mergers and divisions where RCT is in scope. Ciara McMullin is a Senior Indirect Tax Manager in Deloitte.

Oct 06, 2019
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Following the recent £16 million investment to provide funding towards training and IT costs for businesses that complete customs declarations, HMRC has announced that it will provide a further £10 million in grants for customs agents and intermediaries to build capacity in managing customs declarations. This additional wave of grants has been developed to directly respond to industry feedback on what is needed to help build capacity ahead of, or after, Brexit on 31 October, alongside the additional training and IT support already available. The further £10 million in grants is open to businesses based in, or with a branch in, the UK that currently complete customs declarations for importers and exporters and are available to support costs of hiring staff, including £3,000 for recruitment costs, and up to £10,000 for salary costs, to help build business capacity. Businesses are encouraged to apply early as applications will close once all the funding has been allocated, and by 31 January 2020 at the latest. Those that applied for the first and second wave may apply again as part of this new wave of grants. PwC is administering the grants on behalf of HMRC as an accredited grant administrator. Businesses that want to apply for funding should not contact HMRC, but can apply online. (Source: HMRC)

Oct 04, 2019
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According to a new study carried out on behalf of the Health and Safety Authority, the proportion of the workforce aged 55 and over grew from 10% in 1998 to almost 20% in 2018. This is forecast to rise further. Almost one in five of those who left employment between the ages of 55 and 59 did so because of illness and disability. A similar proportion left because of job loss, while 7% left for reasons of family care. Just over 50% cited ‘retirement’ or ‘early retirement’ as the reason for leaving. The authors explore differences among early leavers, finding occupational and sectoral differences between those who retire early and those who leave for non-retirement reasons such as illness, care responsibilities and job loss. Leavers who previously held manual jobs are more likely to leave due to non-retirement reasons, compared to managers/professionals.  Workers in the construction sector and the retail sector are more likely to leave for non-retirement reasons, when compared to those in the industry sector.  Early leavers from the public sector are more likely to cite retirement reasons.  Women are five times more likely to have left early for care reasons than men. You can read the full study here. (Source: ESRI)

Oct 04, 2019