Minister for Finance, Paschal Donohoe TD, launched a second Feedback Statement on the transposition of the Anti-Tax Avoidance Directive (ATAD) Interest Limitation Rule (ILR). The Feedback Statement responds to the observations of stakeholders and brings forward proposed draft legislative approaches to the ILR provision as a whole, including all the group elements and exclusion options.
The ATAD ILR, which is based on the recommended approach outlined in the OECD BEPS Action 4 2015 Final Report, is intended to limit base erosion through the use of interest expenses to create excessive interest deductions. The ILR is a fixed ratio rule that seeks to link a taxpayer’s allowable net borrowing costs directly to its level of earnings, by limiting the maximum net deduction to 30 percent of earnings before tax and before deductions for net interest expense, depreciation and amortisation (EBITDA).
This second Feedback Statement builds on responses to the November 2018 public consultation on implementation of the ATAD Anti-Hybrid rules and ILR and on the responses to questions in the first Feedback Statement, published in December 2020.
The press statement announcing the launch of the consultation notes, “The views of stakeholders will be important in ensuring that Ireland’s ILR, when introduced with effect from 1 January 2022, meets the standards required under ATAD while also being clear and operable in practice and remaining consistent with Ireland’s long-standing focus on the taxation of activities with substance in Ireland.”
The closing date for receipt of submissions is Monday, 16 August 2021.
Members who wish to have their feedback included in the CCAB-I’s response to the consultation can email the tax inbox – tax@charteredaccountants.ie.
For more information download the ATAD Implementation Article 4 Interest Limitation Feedback Statement July 2021.
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