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Will Brexit make tax free shopping possible for us all? Eoin O'Shea takes a look. Visitors to the EU buying goods to bring home with them can obtain a refund of the VAT paid. The process is called, officially, the ‘Retail Export Scheme’. There are big savings to be made, too: €187 on a spend of €1,000, for example. The scheme only covers goods, and not services, and they must be capable of being carried in the traveller’s personal baggage. Goods which need to be sent by freight, e.g. fridge freezers or cars, are not covered.  The most obvious of these tourists would be the American travelling home with gifts from Ireland in their luggage for loved ones. However, Brexit very well could give UK citizens the right to shop tax-free in Ireland and vice versa – thus considerably expanding the range of people who will be able to benefit from the scheme. So, for example, a ‘tourist’ travelling from Newry (outside the EU) to Dundalk (inside the EU) will be able to shop VAT free in Ireland, if the conditions of the scheme are met.  The scheme only provides a refund/VAT free purchase if and when the goods are exported. Proof of export is normally done at an airport because, as of now, practically speaking, the only way a person in Ireland can directly leave the EU is on a flight. There are retail scheme booths at airports, operated by agents of the scheme, where tourists can have their export vouchers stamped and, out of hours, where they can leave their documents for future processing.  Post-Brexit, it will be possible to leave the EU, from Ireland, by train, ferry or car (or by bicycle/on foot/on a horse) as well as by flight. How will proof of export be possible in those circumstances? It’s complicated, but it is possible (with the agreement of the retailer, who has the prior approval of Revenue) for exports to be vouched by Revenue officials, policemen, and lawyers in the tourist’s home country.  In border areas, in particular, it is likely that retail outlets will need to consider whether the scheme makes sense for them to operate post Brexit, given that the amount of ‘tourists’ qualifying for the scheme will increase dramatically.  The ‘tourist’ must also consider, however, the fact that, when they bring the goods back to their home country, there may be import VAT and, perhaps, customs duties to be paid if the goods are valued above a certain level. What the tax code giveth, the tax code taketh away. But, there are thresholds below which VAT and customs duties do not apply when goods are imported (€430 currently) so there may be arbitrage opportunities for the ‘tourist’ and the retailer post-Brexit. Eoin O’Shea FCA is a practising barrister, specialising in commercial and tax law.  

Jun 18, 2017
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What is your overall take on May’s performance in the recent general election? Chaotic. Catastrophic. To go seeking a mandate she didn’t need, on a manifesto which pretty much set out to infuriate precisely the demographic within which the Tories are strong (the elderly) would be bad with a capital B. But to allow a seven week campaign was a rookie error. Within three weeks, a governing party can create momentum and keep the campaign on track. Seven weeks is too long. It inevitably allows for mistakes, and she certainly made a few. Did you identify any strategic shortcomings that contributed to the Conservatives’ result? Failure to appreciate the Prime Minister’s media inadequacies has to come top of the list. Her appearance on Jeremy Paxman argues that nobody did proper media training with her, because if there’s one thing sure about Paxman, it is that he is predictable. That seems to have led to her ceding the ensuing TV debate to Jeremy Corbyn, who at that point was lit up and raring to go. These two major errors, which were strategic in nature, led to tactical failure. Nobody seems to have figured out that social media would take her to the cleaners after Paxman, and the Conservatives mounted no fightback worth the name. Making the claim that she wanted to be out meeting the real people meant that mainstream media pursued her like hounds, capturing pictures and stories of a rigid, dull and limited personality being dumped upon by angry voters. Since election day, how has may and her party performed from a PR point of view? Badly. Her robotic initial media performance was so bad, particularly in its failure to apologise to or express sympathy with Conservatives who had lost their seats, that party members insisted she go right back out. Which she did. And appeared even more robotic, repeating the same statements about them “not deserving” their loss so frequently, she seemed to have mechanical failure. No cohesion on the broader front, possibly because she had kept the broader front in the dark about her intentions, closeting herself with her two joint chiefs of staff, who then got their P45s, leaving no communications or policy infrastructure in place. Even the best seagoing vessels requires lifeboats and drills to make sure the right people get into the right boats. This assuredly wasn't the best vessel, but it doesn’t seem to have as much as armbands ready for the possibility of being dropped in the drink. May has stated her determination to make amends for her mistakes. Is this possible? And if so, what role will PR play in that turnaround? Now, to be fair to her, this Prime Minister does know how to do a good apology. Abject. Simple. Humble. It may take her a few days to get around to it, but you have to hand it to her, when she does it, she does it right. Will it be enough? Anybody who works with politicians will confirm that when a former rival for the job makes admiring noises about the apology made by the job-holder after a cock-up, that makes everybody feel good. And it loosens the gate for another contest. Boris talking about a “stonking” good apology performance by his leader is a perfect case in point. PR has damn all to offer in the short term. Theresa May has grievously weakened her government’s stand vis-a-vis Brexit and everything else. She will govern – for as long as she governs – in hock to the DUP, which will have de-stabilising effects on Northern Ireland. Look at it this way. If both your legs are broken, it takes time and crutches and physio before you can begin to walk properly again. Dancing comes later. And PR, in this instance, is the equivalent of Strictly… What in your view is the one lesson business leaders should draw from the Conservative’s campaign? 65% of polls and 72% of focus groups get it wrong 83% of the time (according to market research).  Eoghan McDermott is a Director of The Communications Clinic and heads up their Training and Careers Divisions. www.communicationsclinic.ie @EoghanMcDermott

Jun 18, 2017
News

A new survey by KPMG has found that 90% of Irish CEOs see disruption as a growth opportunity for their business, not a threat. KPMG CEO Outlook for 2017, in association with Forbes Insights, looks at CEO sentiment about the local and global economy, the opportunities provided by disruption and what CEOs are doing to ensure they have the skills to deliver in a changing world. This year’s CEO Outlook emphasises that disruption has become a fact of life for many chief executives. Many Irish CEOs see disruption as an opportunity to transform their business model, develop new products and services and to re-shape their businesses, the study finds. According to Shaun Murphy, Managing Partner of KPMG, Irish CEOs are optimistic about the future of their own businesses, despite risks to the global economy. “The majority of CEOs we spoke with are optimistic about their company and its prospects, as well as both the national and global economies. They say they are taking the necessary steps for their business to be a disruptor, rather than be the disrupted.” Optimism The report highlights that over two thirds of Irish CEOs are highly positive about their short-term growth prospects and, although aware of the challenges posed by issues such as Brexit, are optimistic about the future. 84% of Irish CEOs are confident about Irish economic growth in the year ahead and almost three in four expect positive global economic growth. New technology challenge The study did find, however, that new technology will have the biggest impact on company growth over the next three years. “The CEOs we interviewed spoke in particular of the twin challenges of ‘disrupt and grow’. In the face of the uncertainty of Brexit and the potential threat of protectionism, Irish CEOs are looking to use technology to create new opportunities and ensure that they are the disruptors, not the disrupted,” said Murphy. Mission critical issues A decade ago, themes such as cyber security, data and analytics, artificial intelligence and cognitive computing were niche but now are playing on the minds CEOs and the boards of their organisations. According to the report, four in five CEOs are concerned about their capabilities around critical business issues they have not previously encountered. Skills In keeping with their global peers, Irish CEOs are reassessing their skills and attributes to help them lead better. More than 90% have taken a course to upskill and 70% agree that they are now “more open to new influences and new collaborations than at any time in their career.” With continued pressure on the bottom line, Irish CEOs are focused on managing their businesses’ core strengths while transforming the way they create value, the report finds. You can download KPMG's CEO Outlook 2017 report here.

Jun 17, 2017
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The number of professional job vacancies available in May 2017 increased by 15% nationally compared to April, according to the Morgan McKinley Ireland Employment monitor.   There was an increase of 16% in the number of professionals seeking new roles in May compared to April 2017 and 6% growth when compared to the same time a year ago. This reflects an upswing following the Easter break and the continuing drop in Ireland’s unemployment rate. It supports estimates that the jobless rate could dip below 6% by the end of this year.   According to Morgan McKinley’s Operations Director, Bryan Hyland, “This month’s figures are indicative of a very active month following a flat period, so we expect this type of uplift. While it’s too early to say if this is a trend that will continue, if it does then it will support estimates that Ireland’s unemployment rate could dip below 6% by the end of the year.   “The General Data Protection Regulation (GDPR), which comes into effect in May 2018, will have an impact on the way in which businesses process and store the personal data of EU citizens. Many businesses, especially SME organisations, are concerned as to how exactly this new regulation will affect their business. Apart from the financial services sector, we would be concerned that some businesses are leaving themselves exposed with no great urgency to recruit professionals to ensure compliance in this area and we would encourage them to inform themselves of their obligations under the new law.   “Recruitment in the aircraft leasing and investment management space continues to grow. This is hardly surprising as more than half of the world’s leased aircraft are owned and managed from Ireland. From a recruitment perspective, we believe there will be more opportunities for candidates working in the financial services sector specialising in this area, with companies looking to improve their overall compensation and benefits packages to attract and retain the best candidates in this sector.”

Jun 16, 2017
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Global economic stability and transparency and the rebuilding of public trust will be greatly enhanced by a determined G20 push for stronger governance across all sectors, according to the International Federation of Accountants (IFAC).   In advance of the G20 Summit 2017 in Hamburg next month, IFAC issued actionable recommendations for G20 countries that will support both the global economy and the G20’s 2017 objectives.   “Rebuilding trust in the global economy and financial systems is critical to inspiring the confidence the world needs for sustained economic growth. Especially in these uncertain times, stakeholders with a passion for transparent, accountable governance must work together,” said IFAC Chief Executive Officer, Fayez Choudhury. “Individuals and institutions must be empowered by strong governance; fortified by a consistent, transparent regulatory environment; and enabled by access to a high-speed, secure digital environment.”   IFAC calls on the G20 and other key stakeholders in the global economy to collaborate on:   Raising governance standards across all economic sectors to increase transparency and accountability, and help restore trust and inspire confidence in business and government, key to the G20’s aspirations to: build resilience, improve sustainability, and assume responsibility; and Fostering greater transparency and regulatory consistency to achieve growth, confidence, and stability. This requires an inclusive digital and economic environment for businesses of all sizes, as well as implementation and adoption of high-quality internationally-accepted regulations and standards. IFAC’s member organisations represent almost three million accountants globally. They contribute nearly $250 billion gross value added annually, and facilitate higher standards of living.   Recent research also shows that a higher percentage of accountants in the workforce strongly correlates to better outcomes in Transparency International’s Corruption Perceptions Index, and that the impact is improved even further when accountants operate in countries with strong governance architectures.

Jun 16, 2017
News

The Central Bank of Ireland’s first edition of the 2017 Macro-Financial Review notes that the global economy is expected to grow modestly in 2017 and 2018. Brexit and the possibility of changes in international tax and trade policy are among the factors generating uncertainty at this time.   Market sentiment towards European financials has improved but cyclical and structural challenges in the European banking sector remain, including a high level of non-performing loans on bank balance sheets and the need to diversify profit sources and reduce overcapacity.   Risks to the projected output growth in the Irish economy remain to the downside. The impact of Brexit on the Irish economy both in the short-term and long-term is likely to be negative and material. To date, Brexit’s effects have been predominantly through the depreciation of sterling against the euro. Exchange rate effects, changes in UK demand, and any new barriers to trade arising from Brexit, as well as any changes to broader international taxation and trade arrangements, could have an adverse effect on the Irish economy.   Overall credit growth remains subdued, with annual growth in bank credit to both the household and NFC sectors remaining negative. Some categories of household credit are showing positive growth, including non-mortgage credit and mortgage lending at fixed rates. While household debt has been declining, some households remain highly indebted, leaving them vulnerable to a rise in interest rates. Those in the 30-44 age category have high debt-to-income ratios relative to other age cohorts and by international comparison.   The Central Bank’s analysis also shows that mortgage arrears cases are declining. The overall number of mortgage arrears cases has declined by 44% over a three-year period (from 2013 Q2 to 2016 Q4) with over 100,000 mortgage accounts in arrears at the end of 2016.   The report also notes that house price growth has been rising steadily since late 2016, while survey data show further price increases being expected over the medium-term. High rental growth is also being observed. A scarcity of housing in certain locations is contributing to these price and rental developments.

Jun 16, 2017