The CCAB-I issued recommendations for Budget 2022 to all TDs and Senators of the Oireachtas on Friday. Several important tax changes are recommended including a rewrite of tax law governing the eligibility of expenditure for the R&D tax credit, the reduction of the CGT and CAT tax rates, reform of the tax system to recognise the costs of remote working and the simplification of the capital allowance regime for energy efficient equipment. The CCAB-I also urged TDs and Senators to make legislative provision for a temporary change to section 997A TCA 1997 in Finance (Covid-19 and Miscellaneous Provisions) Bill 2021 (Covid-19 2021 Bill), currently moving through the Dáil, to address the issue of proprietary directors not having entitlement to credit for PAYE warehoused by their employer. If you or your clients are impacted by the interaction of section 997A and the Tax Debt Warehousing Scheme, you may wish to bring the matter to the attention of your local TD before the Covid-19 2021 Bill is passed into law in the next week or so.
The letter accompanying the submission to all TDs and Senators explains that proprietary directors of companies in the Tax Debt Warehousing scheme will not have a credit for PAYE warehoused by their employer company in the calculation of their income tax liability for 2020 and preliminary tax liability for 2021. A temporary legislative measure is urgently required to ensure that directors of SMEs are not faced with a tax bill due to their employers’ participation in the Tax Debt Warehousing Scheme for PAYE purposes. The Covid-19 Bill 2021 is expected to be passed into law before the Dáil summer recess of 14 July. Therefore, immediate action is required to bring about a legislation amendment in time.
The CCAB-I’s Pre-Budget Submission 2022 also noted that moves to increase Employers PRSI will stifle job creation and certain tax measures should be considered to help developers manage the cost of building projects with the goal of increasing the supply of houses.
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