The Minister for Finance, Michael McGrath TD, has welcomed European Commission approval of the enhancements to the Temporary Business Energy Support Scheme (TBESS) announced in Finance Bill 2023.The approval has been received under the State Aid Temporary Crisis and Transition Framework (TCTF). The enhancements announced in the Finance Bill (and which were called for by the Institute) include: Extending the scheme to 31 May 2023, with the option to further extend the scheme by Ministerial Order to not later than 31 July 2023, Reducing, with effect from 1 September 2022, the energy cost threshold for qualification for the scheme from a 50 percent increase in electricity or gas costs to a 30 percent increase, and Increasing, from 1 March 2023, the level of relief from 40 percent to 50 percent of eligible costs. The time limit for making claims under the scheme has also been extended. The enhancements are in addition to amendments made in February 2023 to increase the monthly limit to €15,000 per qualifying business in relation to a trade or profession, subject to an overall cap of €45,000 in cases where a business is carried on from more than one location. These changes took effect from 1 March 2023. Commenting, Minister McGrath said: “I am pleased to note that the European Commission has approved the enhancements to TBESS brought forward in Finance Bill 2023. These changes, in particular the lower entry threshold for the scheme, which is backdated to September 2022, will ensure that additional businesses can benefit from this vital support and I encourage businesses who have not already done so to register for and submit claims under the scheme.” As of 20 April, 28,035 businesses have registered for the scheme. Revenue has approved 35,613 claims to the value of €77.6 million.

Revenue has updated the TBESS guidelines to reflect the enhancements introduced in Finance Bill 2023. A qualifying business can submit claims on Revenue’s Online Service (ROS) for the March and April 2023 claim periods from Monday 17 April 2023. From the week commencing 24 April 2023, Revenue will begin reassessing claims already submitted for the period from 1 September 2022 to 28 February 2023 based on the revised 30 percent energy costs threshold. This means that it will not be necessary for a business to revise claims already submitted for these periods. Once claims have been reassessed, the business will receive a notification to their ROS inbox confirming the reassessment has occurred after which the payment due to the business will be processed. The updated TBESS guidelines also contain deemed reference unit prices for the May 2022 reference period, as provided by the Sustainable Energy Authority of Ireland (based on data provided by suppliers and the Commission for Regulation of Utilities). Further information is available in eBrief no. 096/23.

Revenue has published a new Tax and Duty Manual providing guidance on the operation of the digital games tax credit, as provided for in section 481A TCA 1997 and the Digital Games Regulations 2022. The aim of the measure is to provide an incentive to digital games developers to produce digital games that contribute to the promotion and expression of Irish and European culture. The relief is a corporation tax credit and it may be claimed by digital games development companies.    The relief is available from 22 November 2022 in respect of certain expenditure incurred by digital games development companies on the development of eligible digital games provided certain conditions are met.

Revenue has updated its process for identifying and contacting taxpayers and agents in instances of non-filing of Income Tax returns.  Previously a copy Reminder to File Notice issued to an agent for each notice issued to their linked clients.  To improve efficiency and enhance communications to agents, these agent copies will no longer issue. Instead, a single ROS inbox notification will be sent to each agent, listing out their clients based on linked TAIN that were issued the notice, with a reminder to the agent to file for their clients. The reminder to file outstanding Income Tax returns for the 2021 tax year were issued to taxpayers last week and agents will receive their respective notification lists in the coming days. A sample of the agent notification can be viewed here. 

Revenue has updated its Tax and Duty Manual regarding the tax treatment of the reimbursed travel and subsistence expenses to office holders and employees. The updated guidance clarifies that hybrid employees working part-time from home cannot claim expenses for travelling between home and the office. It also includes the new civil service rates effective from 1 September 2022.

Revenue has updated its Tax and Duty Manual regarding the payment and receipt of interest and royalties without deduction of income tax. The updated manual now includes: Reference to the International Monetary Fund in section 8 'Payments to certain statutorily tax-exempt bodies', and In respect of applications under section 246(3)(d) TCA 1997: To require completed Forms RTS 1A and supporting documents accompany applications, To remove the postal contact address, To provide My Enquiries contact information.

The Department of Finance has published the minutes of the recent Business Tax Stakeholder Forum. The Forum is limited in scope to discussing direct business taxation. It is consultative in nature with the focus on knowledge and information sharing, including reflecting on tax developments at the EU and international level as well as domestic corporation tax legislation. As previously reported, the Institute, under the auspices of the CCAB-I, was represented at the inaugural meeting of the Business Tax Stakeholder Forum. The meeting provided an opportunity for the Institute to engage with the Department of Finance in a constructive and meaningful way. While the forum is not a decision-making body, it is intended to complement the wider engagement process between the Department and its business tax stakeholders.

Revenue has updated its Tax and Duty Manual for State Aid Transparency Requirements: Publication of information regarding State aid granted to individual taxpayers. The manual has been updated to include the following additional schemes that are subject to State aid transparency requirements: Relief for Investment in Digital Games (section 481A of the Taxes Consolidation Act 1997), Accelerated Allowances for Capital Expenditure on Slurry Storage (section 658A of the Taxes Consolidation Act 1997), and Temporary Business Energy Support Scheme (TBESS) (sections 100 to 102 of Finance Act 2022).

The Minister for Finance, Michael McGrath, has welcomed the upgrade of Ireland’s long-term sovereign credit rating by Moody’s to Aa3 from A1 with a stable outlook. The revised rating returns Ireland to Moody’s AA category for the first time since 2010. The upgrade puts Ireland’s rating on a par with core Eurozone countries including France (Aa2), Belgium (Aa3) and Austria (Aa1). Other issuers in the Aa3 category include the United Kingdom and Hong Kong. The Minister for Finance Michael McGrath said: “The announcement by Moody’s of an upgrade to Ireland’s sovereign credit rating is a very positive development, reflecting the ongoing strength of the Irish economy and the public finances. It underlines the importance of Ireland’s prudent fiscal policies and the adoption of a robust fiscal framework. Moody’s expectation that the economy will continue to grow at a solid pace in the near to medium term, albeit slowing from the exceptional rates of growth in 2021 and 2022, is particularly welcome. As a country, we are making progress across a number of fronts, building up our National Reserve Fund, reducing our overall National Debt, and investing in capital infrastructure to underpin our long term well-being and prosperity. In their report, Moody’s note Ireland’s corporation tax receipts are dependent on a relatively small number of firms and I am taking action to address this. I will shortly bring forward proposals to put the National Reserve Fund on a sound long term footing using the windfall corporation tax receipts we have been experiencing.”

The Minister for Finance, Michael McGrath TD, and the Minister for Public Expenditure, National Development Plan Delivery and Reform, Paschal Donohoe TD published the Government’s Stability Programme Update for 2023. This document sets out macroeconomic and fiscal forecasts for the periods 2023-2030 and 2023-2026 respectively. Emerging data suggest that the outlook for the global economy in 2023 may not be as pessimistic as forecast last Autumn. However, the global outlook remains fragile, with heightened uncertainty a key feature in the global environment. It is now expected that headline inflation will average 4.9 per cent this year on the back of an easing in energy prices, however non-energy inflation will remain elevated. The labour market has remained remarkably resilient with record numbers in employment and the unemployment rate standing at 4.3 per cent in March. Commenting on the figures, Minister McGrath said: “Despite multi-decade high inflation rates and heightened global uncertainty, the Irish economy has proven remarkably resilient, most notably in the labour market where the unemployment rate is at a near-record low. At the same time the mobilisation of government supports helped mitigate, to some extent, the impacts of inflationary pressures on households and businesses over the winter months. With energy prices in retreat, it now appears as though inflation, absent any further energy price shock, is on a downward trajectory, though it will remain elevated throughout this year. Headline inflation is expected to average 4.9 per cent this year, before returning to 2½ per cent in 2024.” On the public finances, Minister McGrath said: “Regarding fiscal developments, we are projecting a surplus of €10 billion for this year, the equivalent of 3.5 per cent of national income. This is based on the assumption of tax revenue amounting to almost €89 billion, a growth rate of almost 7 per cent. While this is, of course, very much welcome, the headline surplus this year is heavily dependent on volatile ‘windfall’ corporate tax receipts. Excluding the impact of these receipts, estimated at almost €12 billion this year, an underlying deficit of €1.8 billion is projected for this year. This is a better metric for assessing the resilience of our public finances. From a fiscal perspective, serious challenges lie ahead: an ageing population; risks to the sustainability of corporate tax receipts; de-carbonisation and digitalisation; as well as the fallout for economic activity from rising geopolitical tensions. For example, by the end of this decade, it is estimated that additional age-related expenditure of between €7 and €8 billion per annum, relative to the level of outlays at the beginning of the decade, will be required simply to deliver existing levels of public service. Moreover, we are facing into these challenges from a position of high public debt, with the cost of borrowing increasing. That is why I will shortly be presenting proposals for a longer term focused national reserve fund. Work on such a fund is already at an advanced stage. We are hopefully emerging from the worst of the cost-of-living crisis, though immediate risks remain. However, I am confident that the Irish economy remains resilient especially in light of our robust labour market. The Government will continue to protect those most adversely impacted by cost of living pressures, while managing the public finances in a way that equips the State to address the fiscal challenges in the years ahead.” Further information is available here.

Revenue has announced it is extending the ROS return filing and payment date for certain self-assessed income taxpayers and taxpayers liable to capital acquisitions tax (“CAT”). The due date for the filing of the 2022 Form 11 and the payment of taxes is Wednesday, 15 November 2023. The due date is also extended to Wednesday, 15 November for CAT returns and payments for beneficiaries receiving gifts/inheritances with valuation dates ending in the year to 31 August 2023. The extension is available to taxpayers who pay and file through ROS only. Where either one of these actions is completed other than through ROS, the deadline for submission and payment is Tuesday, 31 October 2023.

On Wednesday 5 April the Institute, under the auspices of the CCAB-I, responded to the public consultation on Ireland’s personal tax system. In our response we noted that any revision of the personal tax system must take a holistic view of the overall tax mix given Ireland’s personal tax system, though progressive, relies heavily on high-income earners and international workers for a significant portion of its income tax revenues. In our summary, we noted the following: Taxpayers in Ireland face early entry into marginal rate taxation at a threshold which is currently below the average industrial wage. The intermediate income tax rate of 30 percent which has been raised in recent months should continue to be considered as part of Ireland’s future tax policy. Government should also consider indexation of income tax rates and bands as part of its future tax policy. The 3 percent rate of USC on self-employed incomes over €100,000 is inequitable and should be abolished. Tax policy must adapt to the modern working arrangements, including hybrid and remote working arrangements. SARP should be legislated for on a permanent basis given that it is overall positive from a cost-benefit perspective. The Rent Tax Credit should be made a permanent element of the income tax code and a similar credit should be introduced for mortgage holders to ensure parity of treatment. The Rent-a-Room threshold should be increased and the “cliff-edge” be removed from the relief. The personal tax system should be adapted to address the inequity of corporate landlords receiving more favourable tax treatment for the same source income. The government should avoid increasing the administrative burden of the PAYE tax system as onerous administrative requirements are a deterrent to entrepreneurism. USC and PRSI should be merged to reduce the overall complexity of the income tax system. Presently, three separate bases for returning tax/contributions on the same or similar income is not ideal from a tax policy perspective. Simplicity and efficiency are pillars of good tax policy.