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The EU Commission should not be appealing the decision of the General Court of the European Union in the Apple case, according to Chartered Accountants Ireland. The all-island body, representing 28,500 members, made the comments as the Irish government noted the decision of the European Commission on Friday to lodge such an appeal. Commenting, Brian Keegan, Director of Public Affairs with Chartered Accountants Ireland said “The appeal will serve little purpose. The Commission’s entitlement to look at tax issues when it comes to challenging state aid rules was confirmed by the July court ruling. This entitlement, along with the power of national officials to apply domestic law as best they see fit, may well be the only enduring lessons from the Apple case.  “The Commission should now be looking forward and outward. The power of the EU single market in a disrupted and unstable international trading environment is critical.  Commission resources should now be devoted to securing Europe's place as an international trading bloc and not fighting internecine tax wars with member states.  “The tax point at issue in the Apple case is no longer an issue, resolved neither by Irish legislation nor by European Commission activity but by changes in US tax law. The US Tax Cuts and Jobs Act of 2017 cancelled out the strategy of deferring tax on profits of US multinationals earned outside the US by keeping those profits outside the US. Decisions on where tax is paid are the focal point for the international corporation tax reform agenda led by the OECD, and Commission challenges in the Apple case will not further that agenda. “The European Treaties stipulate that a further appeal can only be on a point of law, which may be difficult given that the July ruling was largely determined on the facts.”  ENDS

Sep 25, 2020
Public Policy

In this week’s Public Policy news, read how the Government’s new Investment Limited Partnership (Amendment) Bill will make Ireland’s international financial services sector more competitive; how Ireland’s living wage is set to remain unchanged at €12.30; how concerns about deforestation and climate impact are affecting the EU-Mercosur Trade Deal; and how, in the first truly co-ordinated approach to ESG reporting, the World Economic Forum has joined forces with Big Four accounting firms to create an ESG reporting standards framework.Bill to modernise Ireland’s international financial services sectorThis week, the Irish Government approved the draft text and publication of the Investment Limited Partnerships (Amendment) Bill 2020. This Bill will modernise the Investment Limited Partnership Act, 1994. It will enhance the development and competitiveness of Ireland’s international financial services sector, making it more competitive and enriching its regulatory environment. Among other things, the Act will also extend anti-money laundering beneficial ownership requirements to Investment Limited Partnerships and Common Contractual Funds, and will provide relevant powers to the Central Bank to verify PPS numbers relating to beneficial ownership registers. The Bill also makes some technical amendments to the Irish Collective Asset Management Vehicles Act of 2015 to enhance the efficiency of the structure and also align it with the Companies Acts. This modernisation is a longstanding priority of the ‘Ireland for Finance Strategy’. Launched in 2019, this is Ireland’s strategy for the development of Ireland’s international financial services sector to 2025. Its vision is to make Ireland the location of choice for specialist international financial services. One of its aims is to grow employment in the sector to 50,000 people (up from 44,000 people directly employed in the sector at the end of 2018), and increase Ireland’s ranking as a financial services centre at a global and EU level. Minister for Finance, Paschal Donohoe TD, described the Bill as “an important step to maintain Ireland’s place as a leader for investment funds in Europe…[and] as a means to promote investment and Ireland’s competitiveness and sound regulatory environment in international financial services [the need for which] is more acute in the wake of the economic impact caused by COVID-19’.The full text of the Bill can be found here. No recommended changes to Ireland’s Living Wage Rate There is to be no change to Ireland’s Living Wage rate of  at €12.30 per hour for 2021. The announcement follows fresh calculations on living costs and taxation by the Living Wage Technical Group (LWTG), a technical group that works to establish a methodology for calculating the Republic of Ireland Living Wage. Established in 2014, the LWTG defines a living wage as “an hourly wage rate that should provide employees with sufficient income to achieve an agreed acceptable minimum standard of living”.  Any changes to the rate is determined by a fluctuation of living costs and taxation.According to a member of the LWTG, Dr Micheál Collins, a number of employers have voluntarily committed to paying the living wage, with some having increased this wage during the lockdown. It is not legally binding; however, the Programme for Government specifically aims to “progress to a living wage over the lifetime of the Government.”The current minimum wage, which is legislated for, is €10.10 per hour. Concerns about Mercosur-EU Trade Deal Following a meeting of EU trade ministers in Berlin this week, Tánaiste Leo Varadkar expressed concerns about the Mercosur trade deal between the EU and the South American countries of Brazil, Argentina, Paraguay and Uruguay, specifically around climate commitments and ongoing deforestation.The draft deal between the EU and Mercosur was agreed in principle last year following two decades of negotiations. It still needs to be ratified by all 27 EU Member States, including Ireland. Despite Brazil’s rejection of claims that the trade deal would increase destruction in the Amazon rainforest, a growing number of  trade ministers have reportedly expressed reservations about ratifying and implementing the trade deal without “cast-iron and enforceable guarantees from South American governments that they are going to honour their obligations on climate action and on protecting the Amazon”.Echoing German chancellor Angela Merkel “considerable doubts” last month over whether to back the trade deal due to worsening deforestation in the Amazon, Mr Varadkar said: “We don’t want a trade agreement that actually encourages more deforestation and more damage to our environment.” Big Four Firms and the World Economic Forum jointly release new ESG reporting framework The Big Four accounting firms and the World Economic Forum have this week released guidelines for sustainability reporting in corporate financial statements, in what was described as the first truly co-ordinated approach to ESG reporting. The resulting whitepaper Measuring Stakeholder Capitalism, Towards Common Metrics and, Consistent Reporting of Sustainable Value Creation identifies 21 core sustainability metrics and 34 expanded metrics and disclosures. These are organised under four pillars, or principles that are aligned with the UN Sustainable Development Goals and principal ESG domains: Governance, Planet, People and Prosperity.“These are the ones that we truly believe as a business community are the right measures to start with,” Bob Moritz, head of PwC, said.The metrics are deliberately based on existing standards to bring greater comparability and consistency to the reporting of ESG disclosure. The report issued guidelines, divided into the four domains. It also called for companies to move details about their ESG impacts into their mainstream annual financial reports and for the information to be verifiable and as reliable as financial metrics. The current common practice is for companies to report on ESG in separate, voluntary sustainability reports not verified by a third party.The initiative was spearheaded by the International Business Council (IBC), a community of over 120 CEOs. Members of the IBC were urged to take the lead in embracing the guidelines and are expected to discuss a timeline for adoption at the Council’s January meeting in 2021.Read all our updates on our Public Policy web centre.

Sep 25, 2020
Sustainability

 The Big Four accounting firms and the World Economic Forum have this week released guidelines for sustainability reporting in corporate financial statements, in what was described as the first truly co-ordinated approach to ESG reporting. The resulting whitepaper Measuring Stakeholder Capitalism, Towards Common Metrics and, Consistent Reporting of Sustainable Value Creation identifies 21 core sustainability metrics and 34 expanded metrics and disclosures.  Progress, not perfection“These are the ones that we truly believe as a business community are the right measures to start with,” Bob Moritz, head of PwC, said. “We’re not looking for perfection, we’re looking for progress.”The metrics are deliberately based on existing standards to bring greater comparability and consistency to the reporting of ESG disclosure. Four PillarsThe report issued guidelines organised under four pillars, or principles, that are aligned with the UN SDGs and principal ESG domains: Governance, Planet, People and Prosperity.It also called for companies to move details about their ESG impacts into their mainstream annual financial reports and for the information to be verifiable and as reliable as financial metrics. The current common practice is for companies to report on ESG in separate, voluntary sustainability reports not verified by a third party.The project was developed within the International Business Council (IBC), a community of over 120 global CEOs, run by Brian Moynihan, chief executive of Bank of America. It aims to encourage the 120+ large global companies in the IBC to adopt the standards for their 2021 accounts.Described as “perhaps the biggest step yet to rally companies, regulators, and standard-setters around a single set of ESG metrics and integrate them into mainstream financial reporting” the initiative was the result of a growing demand for global consistency and comparability in ESG reporting. For years there has been a drive to create a common accounting framework, driven in part by frustration among investors at the number of competing systems for measuring sustainability. These include metrics under the TCFD, SASB, GRI and others. It is hoped that the initiative will overcome the challenges that arose from the ‘alphabet soup’ of competing metrics and piecemeal reporting. Although it remains to be seen how many global companies will adopt the new standards, the backing of all four top accounting firms is expected to help. Members of the IBC were also urged to take the lead in embracing the guidelines, and are expected to discuss a timeline for adoption at the council’s January 2021 meeting.

Sep 23, 2020
Tax International

During the 2020 State of the Union address last week, Ursula von der Leyen, President of the European Commission touched on taxation measures, specifically the Carbon Border Adjustment Mechanism and Digital Tax. The President outlined that “carbon must have its price – because nature cannot pay the price anymore.”During her speech the President also outlined that “this Carbon Border Adjustment Mechanism should motivate foreign producers and EU importers to reduce their carbon emissions, while ensuring that we level the playing field in a WTO-compatible way.”When speaking about digital tax the President outlined that “we will spare no effort to reach agreement in the framework of OECD and G20. But let there be no doubt: should an agreement fall short of a fair tax system that provides long-term sustainable revenues, Europe will come forward with a proposal early next year.”For more information read the full speech. 

Sep 21, 2020
Public Policy

In this week’s Public Policy news, read how European Commission President Ursula von der Leyen presented her vision to make Europe green, digital and more resilient; what official figures reveal about the labour market in the UK; and how Ireland has extended its redundancy provisions to help reduce insolvencies, bankruptcies and further job losses.A green, digital and more resilient Europe Last week, European Commission President Ursula von der Leyen gave her State of the European Union address where she set out her vision to make Europe become green, digital and more resilient. Key points covered were:Protecting Health: Building a stronger European health union in the wake of the coronavirus outbreak with measures such as:an EU4Health programme; a reinforced European Medicines Agency (EMA);a strengthened European Centre for Disease Prevention and Control (ECDC); anda new European agency for biomedical advanced research and development (BARDA).Protecting livelihoods: protecting workers by introducing a legal framework for setting minimum wages and protecting businesses from external shocks; and boosting the single market by reinforcing the Economic and Social Union, getting the Schengen area working in full again and updating the EU’s industry strategy and competition framework.Reinforcing the Green Deal:increasing the emissions-reduction target from 40 percent to 55 percent by 2030 to achieve climate neutrality by 2050 and meet Paris Agreement obligationsrevising all of the EU’s climate and energy legislation by summer 2021;raising 30 percent of the €750 billion #NextGenerationEU budget through green bonds; and investing 37 percent of that funding in European Green Deal objectives.Leading a Digital Transformation : 20 percent of NextGenerationEU’s budget will be invested in moves to create a common plan for ‘digital Europe’ with connectivity, skills and digital public services.Deeping Global Relations: revitalising and reforming the multilateral system, including the World Trade Organisation and World Health Organisation; building agreements and relationships with the US, the UK and Africa; and building global agreements on ethical, human rights and environmental issues, and on digital taxation.Deliver a new Pact on Migration, with an approach based on humanity and solidarity.A first annual Rule of Law report covering all Member States.A European anti-racism action plan, with the appointment of an anti-racism coordinator, as well as strengthened racial equality laws.More on the vision for Europe can be read here. Labour market statistics reveal unemployment rates for the UK Employment data published last week shows that the overall rate of unemployment in the UK grew from 3.9 percent to 4.1 percent from May to July of 2020. The majority of job losses were among those aged between 16 and 24. According to official figures, almost half of those furloughed since May returned to work by mid-August rather than into unemployment or inactivity; however, it is expected that employment will fall more sharply and unemployment will increase more quickly as the furlough scheme nears its end in November. In Northern Ireland, labour market statistics published by the Northern Ireland Statistics and Research Agency on the same day revealed that proposed and confirmed redundancies more than doubled since August 2019, with record high numbers recorded in June and July. However, the Northern Ireland unemployment rate (2.9 percent) for the period May-July 2020 remains below the UK rate (4.1 percent), the European Union (27 Member States) rate (6.7 percent) for May 2020 and the Republic of Ireland rate (5.3 percent) for June 2020. Extension of Ireland’s redundancy provision On 15 September the Government approved an extension of the redundancy provisions relating to temporary lay-off and short-time work. Minister for Social Protection, Heather Humphreys TD announced that the measure, which suspends redundancy provisions – and which arose as a result of COVID-19 – will remain in place until 30 November. Describing the measures as necessary to “ensure businesses survive and that permanent job losses are avoided as much as possible”, Minister Humphreys reminded employees who remain on lay-off or short-time work for the requisite period that they will be entitled to exercise their right to claim redundancy from their employer when this emergency measure expires, and that all other redundancy provisions such as notice periods and payments of redundancy lump sums still apply, as does the existing employment rights legislation.Read all our updates on our Public Policy web centre.

Sep 21, 2020
Sustainability

 PwC has pledged to achieve net zero greenhouse gas (GHG) emissions by 2030. The commitment includes supporting its clients to reduce their emissions, as well as reducing those from the PwC network’s operations and suppliers.PwC plans todecarbonise its operations, including its travel footprintinvest in carbon removal projects to neutralise its remaining climate impact engage its suppliers to tackle their climate impactwork with its clients to support their efforts to make a net-zero future a reality for allcontribute to public policy developments in support of net-zero at national, regional and global levels.Bob Moritz, Global Chairman of the PwC network, said: “Businesses and economies must evolve quickly to address the significant challenges facing our societies and our planet. Whether you look at this through the lens of human need or from a capital allocation perspective, it is in the interests of everyone that we see systemic change that averts climate catastrophe and unlocks the potential of green growth.”“A net zero world is within reach. Getting there will take innovation, hard work, collaboration and bold thinking but the benefits will be immense. The business community has a responsibility to act and we are determined to play our part, not just in our own operations and supply chain, but also in the way we advise and support our clients to create a sustainable world for future generations.” Read more here. 

Sep 18, 2020