Statutory corporate tax rates have stabilised worldwide after a lengthy period of falling rates, according to new OECD data released last week. The 2024 edition of OECD Corporate Tax Statistics shows that average statutory corporate income tax (CIT) rates have remained steady at 21.1% over the past three years. This follows a two-decade period that saw average statutory CIT rates decline from 28% in 2000 to 21.1% in 2021.  

Revenue has incorporated the contents of the Tax and Duty Manual - “Self Assessment – processing/screening of returns of companies in liquidation, death  cases, capital gains tax returns of non-residents and returns on which an expression of doubt has been made”- into a number of manuals impacted by the new guidelines.  The updated manuals are:  Part 46-01-01 Dealing with death cases  Part 46-01-02 Requests for clearance in death cases Collection Manual - Liquidation of Companies and other Company Law Issues Part 45-01-05 - Requests for Clearance – Capital Gains Tax and Non-Resident Vendors Part 41-00-09A - Self-assessment: processing/screening of returns on which an expression of doubt has been made.

Following the recent publication of Revenue's new guidelines for determining employment status for taxation purposes (which applies the new test outlined in Karshan), Revenue has since updated a number of Tax and Duty manuals which are impacted by the new guidelines.  The updated manuals are:  Taxation of Couriers Code of Practice on Determining Employment Status (Employed or Self-Employed) Part-time Lecturers/Teachers/Trainers Agency Workers Individuals described as ‘locums’ engaged in the fields of medicine, health care and pharmacy Taxation of Exam Setters, Exam Correctors, Exam Attendants, Invigilators, etc. National Co-op Farm Relief Service Operators

Revenue has updated the Tax and Duty Manual regarding the taxation of foreign retirement lump sums.   The updated manual includes:  Guidance to the effect that when determining the tax-free amount which is available on a foreign pension lump sum, this should take account of the value of all foreign lump sum payments paid on or after 1 January 2023, whether or not such payments are chargeable to Irish tax under section 200A TCA 1997 (Paragraph 4.1). A new example 8 has also been included.  Guidance that the value of a foreign pension arrangement, as defined in section 200A TCA 1997, is not taken into account for Standard Fund Threshold purposes (Paragraph 4.3.1).  Guidance on Revenue’s treatment of foreign pension lump sums paid to resident taxpayers before 1 January 2023 (paragraph 12). 

Revenue has updated the Tax and Duty Manual which provides guidance on Save As you Earn Schemes (SAYE). The updated manual reflects recent legislative changes to the taxation of unapproved share options (section 12.11).  Under certain circumstances, a SAYE (Save As You Earn) option may be treated as an unapproved share option. Gains realised on or after 1 January 2024 which are chargeable to tax under section 128 TCA 1997 are no longer taxed under self-assessment. From 1 January 2024 the employer is obliged to remit the relevant taxes through payroll. 

Revenue has updated the Tax and Duty Manual regarding the Research and Development (R&D) Corporation Tax Credit to incorporate the changes to the R&D credit introduced by Finance (No.2) Act 2023. These changes apply in respect of accounting periods commencing on or after 1 January 2024.  Key changes introduced to Part 29 by Finance (No. 2) Act 2023 include:  Increase in the rate of the R&D credit to 30%  Increase in the first instalment threshold from €25,000 to €30,000  The introduction of a pre-filing notification requirement  The manual is also updated to revise references to the use of the R&D Specified Return 2022, as it is no longer required to submit a specified return for claims going forward. 

Revenue has updated the Tax and Duty Manual which provides guidance on the Special Assignee Relief Programme (SARP). The updated manual provides new guidance on the calculation of SARP relief in re-grossed net pay/benefits cases (section 7.1.3). 

Revenue has updated the Tax and Duty Manual which concerns the publication of State Aid awards granted to individual taxpayers to reflect the current State aid numbers for several schemes:  The revised threshold for publication of €100,000 (previously €500,000) for aid granted under the General Block Exemption Regulation, i.e., Commission Regulation (EU) No 651/2014 (as amended)  The revised cumulative lifetime limit for Young Trained Farmers of €100,000 (previously €70,000) under Article 18 of the Agricultural Block Exemption Regulation, i.e., Commission Regulation (EU) 2022/2472  The expiration of the Temporary Business Energy Support Scheme  Other general updates.   

Revenue has updated the Tax and Duty Manual which provides guidance on the capital gains tax (CGT) relief on disposals within family of business or farm under section 599 TCA 1997. The updated guidance incorporates the increased age and monetary thresholds effective for disposals made on or after 1 January 2025.   The guidance also addresses the updated age limits and monetary thresholds in the context of the aggregation rules relating specifically to the disposal by an individual of shares or securities in a family company to a child.   The requirement to claim the relief as part of a return in a relevant year of assessment is included in section 3b.6.  In addition, the Tax and Duty Manual has been updated to clarify matters relating to the phrase "substantially on a full-time basis", as set out in the definition of "child" for the purpose of the relief. 

Revenue has published the report of the Tax Administration Liaison Committee (TALC) sub-committee on Administrative Simplification of Business Reliefs for small and medium enterprises (SMEs). The subgroup, made up of representatives from Revenue, the CCAB-I, the Irish Taxation Institute and the Law Society, was established on the direction of the Minister for Finance to “identify any opportunities to simplify and modernise the administration of business supports”. Other business groups representative of Irish SMEs also contributed with a view to identifying perceived administrative issues and obstacles that deter SMEs from availing of business reliefs.  The Institute, under the auspices of the CCAB-I, made representations on behalf of members at each of the monthly meetings of the sub-committee held between January and June 2024, The group examined the business tax reliefs that are available to SMEs throughout the life cycle of the business. Written feedback on the simplification of business tax reliefs provided by the CCAB-I is included in the report. Although the sub-committee could not make recommendations regarding legislative matters, practitioners’ policy proposals have been included in Appendix B of the report.  The report was endorsed by Main TALC on 27 June and has been presented to the Board of the Revenue Commissioners and to the Minister for Finance. Revenue will be prioritising implementation of the agreed recommendations over the coming months with some of the recommendations already progressing. 

Last week, the Government published its Summer Economic Statement 2024. The document sets out the Government’s medium-term budgetary strategy and outlines the fiscal parameters within which discussions will take place ahead of Budget 2025.  Against a backdrop of a larger population and higher price levels, Government is adjusting its fiscal parameters for Budget 2025. To accommodate higher capital expenditure and to provide additional public services, core spending will now increase by 6.9 percent next year.   Budget 2025 will provide an overall package of €8.3 billion, of which €6.9 billion represents additional public spending. Taxation measures of €1.4 billion are intended to help shield workers from higher taxation arising from wage inflation.   The Budget will be presented to Dáil Éireann on 1 October 2024. Commenting on the document, the Minister for Finance, Jack Chambers TD, said:  “The Government’s forceful and timely policy responses have helped ensure the continued resilience of the economy in the face of a succession of major external shocks. Encouragingly, inflation is now back at rates consistent with price stability and the economy continues to operate at full employment. However, while the economy is in reasonably good shape at present the external outlook remains highly uncertain with elevated geopolitical tensions.  In terms of the public finances, at the headline level, our public finances are performing well and budgetary surpluses are in prospect over the coming years. However, the headline fiscal position masks the underlying vulnerabilities present in our public finances, the most significant of which is the exposure to volatile corporation tax receipts.  The two new investment vehicles – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund – signed into law last month will help us to address some of the risks around windfall tax revenues, but this must be coupled with a balanced approach to budgetary policy.  There remains the continuing need to improve public services and infrastructure, particularly in the context of a growing population and economy. The Government has adapted its fiscal strategy to take account of this, to support the continued delivery of better healthcare services as well as accommodate higher capital spending. On this basis, an overall package of €8.3 billion is being made available, consistent with expenditure growth of 6.9 per cent.  It is important to stress that in the provision of additional public services, additional financial resources must go hand-in-hand with mechanisms that improve public service delivery. Value-for-money considerations must be to the fore and an increased focus on efficiency and productivity is needed.  On the taxation side, a package of €1.4 billion has been allocated which will ensure that Government has the scope to once again adjust tax credits and bands to ensure workers do not find themselves paying a higher rate of tax because of higher wages.  I strongly believe that the strategy that we have announced represents an approach that takes into account the economic realities of today while still ensuring the sustainability of the public finances into the future. There are many challenges on the horizon but there are also opportunities. It is crucial that we use the current window of opportunity presented by the relative health of our economy and public finances to seize them.” 

In Irish news, the Exchequer reports strong tax revenues for the first half of 2024 and Revenue has published updated guidance for the online Non-resident Landlord Withholding Tax (NLWT) system. In UK news today, a new Labour government means new tax policy and a budget in the autumn and in this week’s miscellaneous updates, HMRC has advised that voluntary class 2 national insurance contributions (NICs) have been incorrectly refunded to some taxpayers. In International news, the Directorate-General for Taxation and Customs Union has published the Annual Report on Taxation 2024.  Ireland Read the Exchequer report of strong tax revenues for the first half of 2024. Revenue has published updated guidance for the online Non-resident Landlord Withholding Tax (NLWT) system. UK Read about what tax policies and fiscal events to expect over the coming weeks and months from the new Labour government. This week’s miscellaneous updates features the news that HMRC has incorrectly refunded voluntary Class 2 NICs to some taxpayers. International The Directorate-General for Taxation and Customs Union has published the Annual Report on Taxation 2024. 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.