A delegation from the Institute, under the auspices of the CCAB-I, attended the September meeting of the TALC Direct and Capital Taxes sub-committee. Among the issues discussed were the definition of “farmer” for the purposes of agricultural relief, the tax treatment of GMS income among partners in a GP practice, and the Employment Investment Incentive Scheme (EIIS).  Regarding agricultural relief, Revenue is examining the impact of “replacement land” on the definition of “farmer”. It was also noted that the manual needs to be updated generally.  On the EIIS, Revenue is considering the impact of the updated General Block Exemption Regulation (GBER) on the scheme. Revenue is engaged with the Department of Finance presently and will suggest a meeting between the Department of Finance and stakeholders in due course.  The minutes of the meeting will be published on revenue.ie once they are approved at the next meeting in November. You can access the minutes from all previous meetings here.  

Revenue has issued a reminder for eligible businesses that the deadline to submit claims for the Temporary Business Energy Support Scheme (TBESS) is 30 September 2023. The TBESS claim portal can be accessed via the e-Repayments system in Revenue’s Online Service (ROS).   This scheme is a two-step process, with registration being a necessary first step for access to the scheme, followed by claim submission. At present, there are a number of incomplete registrations and claims on ROS for TBESS. Revenue intends to make direct contact with those businesses to encourage them to complete the registration and/or claims process.  Businesses are reminded of the need to fully complete the registration and claims process to access TBESS monies that may be due to them as the facility will not be available after 30 September 2023.   As of 9 September 2023, 30,475 businesses have registered for TBESS and 56,126 claims, valued €129.04 million, have been approved.   Further information is available here. 

The Platform for Collaboration on Tax released a new report on carbon pricing metrics. The purpose of the report is to strengthen the understanding of different carbon pricing metrics of the largest international organisations, including the IMF and the UN. 

Revenue has commenced issuing notices to agents’ and employers’ ROS inboxes, inviting them to register for webinars on the new Enhanced Reporting Requirements (ERR) for employers. The notice will contain a link to Eventbrite where a free ticket can be booked to attend a webinar on a suitable date and time. These webinars are scheduled to take place over the next 8 weeks. A sample event invitation can be viewed here.  As previously reported, we have written to the Minister for Finance to highlight significant concerns our members have about the proposed introduction of ERR which will require all employers to report to Revenue details of certain non-taxable benefits and payments to employees from 1 January 2024. The letter, and comments from Cróna Clohisey, Tax & Public Policy Lead, were covered in yesterday’s Sunday Independent. 

The OECD has published a report “Tax Policy Reforms 2023” which analyses the role tax policy has played as governments sought to shield households and businesses from the surge in inflation in 2022. The OECD notes that “tax policy has been at the forefront of government support to families and businesses in the face of elevated levels of inflation”.

The European Commission has published two key proposals in the past week; Business in Europe: Framework for Income Taxation (BEFIT) and harmonized transfer pricing rules.   The BEFIT proposals set out rules for the calculation of the BEFIT tax base, the allocation of the BEFIT tax base to members of the BEFIT group, as well as rules governing the transposition of the directive into local law.   The Institute, under the auspices of the CCAB-I, responded to last year’s consultation on BEFIT and recommended that BEFIT should not be implemented until such time as the Pillar Two minimum taxation rules have matured to at least some degree.  With regard to transfer pricing, the proposals are aimed at harmonising transfer pricing rules within the EU and ensuring a common approach to transfer pricing. 

Last week, the Minister for Finance, Michael McGrath TD published a Roadmap for the Introduction of a Participation Exemption to Irish Corporation Tax. The roadmap sets out a timeline for the introduction of a participation exemption in respect of foreign dividends and next steps towards the planned introduction of a participation exemption for foreign branch profits in Finance Act 2024. The Minister has also launched a public consultation on the design of the proposed systems which will run until 13 December 2023.  The Institute has made two submissions to the Department of Finance (March 2022 and April 2023) calling for the implementation of a territorial system of taxation and so this roadmap is a most welcome development to our members.  Commenting on the publication of the Roadmap and the public consultation, Minister McGrath noted:  “I am delighted to announce the publication of this roadmap, setting out a timeline for the introduction of a participation exemption for foreign sourced dividends to Ireland’s corporate tax system.  Ireland is committed to ensuring that our corporation tax code is competitive and attractive to business investment while maintaining consistency with International best practices. The corporation tax landscape globally has been undergoing a concentrated period of change in recent years, largely arising from the outputs of the OECD/G20 project on Base Erosion and Profit Shifting. Most recently, in October 2021, Ireland was one of almost 140 other jurisdictions to sign up to the OECD “Two Pillar solution to address the tax challenges arising from the digitalisation of the economy”. This has been described as a once-in-a-generation agreement and the capstone to the process of international tax reform that began over a decade ago.  These reforms have resulted in the introduction of a range of new measures to the corporation tax code, to be joined in Finance Bill 2023 by extensive new legislation to implement Pillar Two of the OECD agreement. In this context, the introduction of a participation exemption for foreign dividends to Ireland’s tax regime will provide much-needed administrative simplification and greater certainty for businesses, while continuing to ensure a robust and effective tax system. It will be a significant change to Irish corporation tax; a change which, I believe, will support Ireland’s competitiveness in the years to come.” 

In Irish news, the Institute has informed the Minister for Finance of members’ concerns with the proposed new enhanced reporting requirements and we give you an update from the recent meeting of the Tax Administration Liaison Committee Collections subcommittee. In UK news, the Autumn Statement will take place on Wednesday 22 November, and the Institute is discussing with HMRC the 31 October 2023 deadline for the end of the VAT margin scheme in respect of certain second-hand cars.  In International news, the OECD publishes the 2023 Secretary General tax report.  Ireland The Institute, under the auspices of the CCAB-I, has written to the Minister for Finance, Michael McGrath T.D., to highlight significant concerns our members have about the proposed introduction of Enhanced Reporting Requirements. Read our update from the September 2023 meeting of TALC Collections subcommittee. UK Last week the Chancellor of the Exchequer announced that the Autumn Statement will take place on Wednesday 22 November. The Institute is discussing with HMRC the 31 October 2023 deadline for the end of the VAT margin scheme in respect of certain second-hand cars. International This year’s Secretary General tax report has been published providing an update on the progress on the OECD’s Two-Pillar Solution. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s EU exit corner here which features updated guidance and publications and the news that the UK has agreed a deal to associate to Horizon Europe.     

The Minister for Finance, Michael McGrath TD has announced his intention to introduce a legislative amendment in Finance Bill (No. 2) 2023 to deal with how the Defective Concrete Products Levy (DCPL) impacts on the sale of certain precast products. Current legislation, contained in Part 18E TCA 1997, provides that while such products are not within scope of the DCPL, the pouring concrete element which forms a constituent part of precast concrete products is within scope. The amendments are to be introduced following the identification of a potentially negative impact on the export of these products.  Minister McGrath commented:  “The Defective Concrete Products Levy (DCPL) is intended to ensure a contribution by the construction sector towards the cost of the Mica Redress Scheme.  A limited number of precast products had originally been listed as being within scope of the levy when it was announced in October 2022.  Following further consideration, these were removed prior to the publication of what became Finance Act 2022. The legislation provided that while such products would not be within scope of the DCPL, the pouring concrete element which forms a constituent part of precast concrete products is within scope. This is reflected in Section 99 of the Act as passed by the Oireachtas.  My officials have held a series of meetings with industry bodies where they outlined their concerns about this aspect of the application of the levy. It has become clear that the manner in which the levy impacts on the sale of certain precast products has a potentially negative impact on the export of these products and competition from suppliers into the jurisdiction.  It is my intention to bring forward an amendment in the forthcoming Finance Bill to exclude the value of pouring concrete used in precast products from the scope of the levy. This will come in to effect on 1 January 2024 and a refund scheme will apply for the interim period to the end of 2023. Concrete blocks and pouring concrete for use other than in precast products will remain within scope of the DCPL.  It is my belief that, taking account of the proposed amendment, the overall design of the levy balances the need to ensure some of the costs of the redress scheme are met from a source other than the Exchequer, while limiting the impact on inflation in the construction sector.  The Department of Finance will, with Revenue’s assistance, closely monitor the introduction and operation of the DCPL and will continue to engage with industry to identify ways to address any issues that arise.” 

The Minister for Finance, Michael McGrath TD has signed the Commencement Order to implement Finance Act 2022 amendments, providing for an increase of the effective tax rate for the Knowledge Development Box (KDB), with effect from 1 October 2023.  The KDB provides relief from corporation tax on income arising from qualifying assets such as computer programs, inventions protected by a qualifying patent, or certified inventions for SMEs. The amendments are in line with the implementation of Pillar Two Solution of the OECD agreement and demonstrate Ireland’s continued commitment to agreed international tax reforms.  Commenting, Minister McGrath said:  “This is an important step in the implementation of the OECD Two Pillar agreement. Ireland is fully committed to agreed international reforms. Work is continuing to transpose the EU Minimum Tax Directive in Ireland in the Finance Bill this autumn, to provide for the 15 percent minimum effective corporation tax rate element of Pillar Two.”   

The Department of Finance has published the Fiscal Monitor incorporating the Exchequer Statement for August 2023. Tax receipts to end-August were €53.1 billion, up €3.3 billion, or 6.6 percent on an annual basis.   Income tax receipts remained robust at €20.7 billion to end-August, up 8.2 percent on the same period last year and reflecting the strength in the labour market. VAT remains ahead of the same period last year, up by €1.4 billion, or 11.2 percent. While cumulative corporation tax receipts to end-August were €12.7 billion, up by €0.9 billion on an annual basis; August receipts were €1.8 billion which is €1 billion less than collected in August 2022. Although a decline was expected, and there may be timing issues at play, the magnitude of the decrease is larger than had been anticipated, highlighting the inherent volatility in corporation tax receipts.  Commenting on the figures, the Minister for Finance, Michael McGrath TD said:  “The tax data to end-August return remain broadly positive, with tax revenues €3.3 billion ahead of the same period last year. However, the €1 billion drop in corporation tax this month, compared with the August 2022 figures, serves as a timely reminder of the underlying vulnerabilities that still remain in our public finances.  This is a risk that I have highlighted many times, and Government has taken a number of steps to mitigate our exposure to this volatile revenue stream. €6 billion in windfall corporation tax receipts has been transferred to the National Reserve Fund, and work is ongoing in relation to establishing a longer-term investment fund. Government has also committed €2¼ billion in windfall receipts to fund increased capital investment over the period 2024-2026, enabling us to use some of these temporary revenues to fund permanent improvements to our economy and society.  As we approach Budget 2024, the fall in corporation tax reinforces the importance of striking the correct balance between continuing to invest in our public services and maintaining the long-term sustainability of our public finances.” 

The Institute, under the auspices of the CCAB-I, made representations on behalf of members at last week’s meeting of the TALC Collections subcommittee. Among the issues discussed, Revenue provided updates on the implementation of the Enhanced Reporting Requirements for employers, the Debt Warehousing Scheme and the non-resident landlord withholding tax. Revenue also informed the group that interest charges on the late payment of tax, suspended since March 2020, is to recommence this month.  Enhanced Reporting Requirements for Employers  Revenue intends to hold information webinars commencing 14 September 2023 on the new enhanced reporting requirements for employers for agents and employers. Invitations to attend the webinars will be delivered to the employer’s ROS inbox and an email notification is also to be provided.  We will continue to keep members updated via Chartered Accountants Tax News.  Debt Warehousing Scheme  At the end of July 2023, the total debt warehoused was €1.9 billion consisting of over 60,000 businesses, 42 percent of which owe less than €500 each, with 66 percent owing less than €5,000 each. Just under 6,000 businesses owe a combined €1.6 billion, each owing in excess of €50,000. Revenue initiated a telephone outreach campaign in July, commencing with 600 businesses that each owe in excess of €500,000.   The Debt Warehousing Scheme is currently in Period 3, running from 1 January 2023 to 1 May 2024, with interest accruing at 3 percent per annum on the unpaid debt. The 3 percent interest charge will be incorporated into the phased payment arrangement (PPA) for its duration. Where there is no PPA, the interest will be charged retrospectively.  Taxpayers have until 1 May 2024 to agree a PPA with Revenue and are reminded that they can make interim payments during this period, and also request for the offset of any refunds owing against the balance of tax warehoused. To date there have been 2,200 agreed PPAs from the Debt Warehouse Scheme valued €100 million.   Revenue is encouraging taxpayers to engage now in the PPA process as there is much flexibility in terms of payment terms, amounts and downpayments. In addition, payment breaks can be arranged once the PPA has been commenced. A nominal downpayment amount of 0.1 percent of tax and interest can be input using the online application system to commence the process of engagement and negotiation with the caseworker.   Arrangements will be subject to review of supporting documentation contained in the Form ePPA1. For amounts exceeding €50,000 supporting bank statements are required to be uploaded, other documents such as cashflow statements and management accounts will also be required where the debt exceeds €100,000.   Revenue has prepared a number of ‘How to” videos in relation to the PPA process which are now available on the Revenue website (link to videos). The topics covered include:  PPA Application  Defer your Next Payment  Apply for a Payment Break  Consolidation  Change Bank Details  Change Payment Date  Pay in Full  Revenue would encourage taxpayers to view these videos in advance of applying for a PPA to assist taxpayers to become familiar with the PPA online facility and understand the range of flexible payment options that are available to suit their individual circumstances.   Non-Resident Landlords   Following the introduction of the new non-resident landlord withholding tax (NLWT) system from 1 July 2023 over 4,300 rental notifications have been made in respect of 2,300 properties by over 1,000 filers in respect of €10 million rental receipts with €2 million withholding tax paid. These figures exclude HAP (circa 1,800 properties).   There will be a further Tax and Duty Manual update in the coming weeks with improved functionality to allow amendments to rental notifications (RNs). Revenue confirmed that there has been an issue with setting up repeat RNs and this is the be fixed in the coming weeks.  Section 216D TCA 1997 micro-generation of electricity Section 216 D TCA 1997 provides for an exemption of up to €200 from income tax, USC and PRSI for certain profits arising to a qualifying individual who generates energy from renewable, sustainable or alternative energy sources for their own consumption and applies from 1 January 2022.   Revenue advise that such income is assessable under Schedule D Case IV net of the exemption of €200. It should be included in Panel G Other Irish Income on the ROS Form 11 or included as non PAYE income ‘fees and commissions’ if filing a Form 12 where relevant.  Interest on late payment  Interest on late payment is a charge provided for in tax legislation, the purpose of which is to encourage timely payments, compensate the exchequer for late payment and to ensure equity for those taxpayers who do make their payments on time.  From mid-September, Revenue intends resuming the collection of interest on late payment, with automated interest warning notices for VAT and PREM late payment issuing for July 2023 periods onwards. Interest charges on late payment were suspended in March 2020 in conjunction with the introduction of certain public health measures. Where subsequent late payments occur following the warning notice, interest will be charged on any future occurrences of late payment, and a standard notice will issue to taxpayers outlining the Interest on late payment charge.   Change to acceptance of certain card types for tax payments   From 1 October 2023, Revenue will no longer accept commercial credit cards for payment of tax. A warning message will display to the taxpayer on the online payment screens to advise that this card type is not accepted. Revenue continues to accept personal debit and credit cards in addition to commercial debit cards. Revenue advises that where a taxpayer is unsure of their card type, they should contact their card provider to confirm their card type.