The OECD Working Party 1 – a subgroup of the OECD Committee on Fiscal Affairs in charge of the OECD Model Tax Convention – has proposed changes to the application of Article 5 of the Model Tax Convention to extractible natural resources. The proposed changes aim to develop an alternative provision for activities in connection with the exploration and exploitation of extractible natural resources. The OECD published feedback received on the proposals which can be read here.

Last week, the Institute, under the auspices of the CCAB-I, responded to the public consultation on the Standard Fund Threshold (SFT). The SFT was originally designed to limit the level of tax relief available on the capital value of pension benefits accrued by an individual at the time of retirement. When introduced, the SFT was €5 million but had reduced to €2 million by 2014.   In our response, we recommend that the level of the SFT should be linked to changes in the Consumer Price Index. In addition, we suggested that consideration is given to harmonising the treatment of public and private sector pensions as regards the application of the SFT rules when the limits are breached.   

Revenue has published 2023 PAYE statistics which show that over 472,000 PAYE income tax returns have been processed for 2023. This represents an increase of almost 30 percent on the number of returns processed in the same period last year. 275,000 of the returns filed to date have resulted in an overpayment of tax. Health expenses and the rent tax credit account for the largest additional claims returned by taxpayers. The 2023 mortgage interest tax credit is expected to be available to claim later this week.   The Minister for Finance, Michael McGrath T.D., in conjunction with Revenue, has launched a public information campaign to raise awareness among PAYE taxpayers about claiming the range of tax credits and reliefs available. PAYE taxpayers are also reminded that they need to inform Revenue of any additional income which they have earned outside the PAYE system.  Welcoming the launch of this information campaign, Minister McGrath said:  “Since 1 January 2024, €203 million has already been refunded to individuals’ bank accounts as a result of the 2023 returns filed by PAYE taxpayers to date, but Revenue records indicate that a further €480 million may have been overpaid during the year.  I therefore encourage all PAYE taxpayers to log on to Revenue’s myAccount service to finalise their tax position as soon as they can, to ensure that they have claimed all tax credits and reliefs they are entitled to and receive any refund they are due.”  Further information is available in Revenue’s press release. 

Last week, the Institute, under the auspices of the CCAB-I, responded to the public consultation on Ireland’s taxation of share-based remuneration. In our response, we recommend maintaining the exemption from employers’ PRSI on share-based remuneration and legislating for a tax deferral on the exercise of share options.  Other key messages in our response include the requirement for:   Further enhancements to the KEEP scheme to make it more attractive and improve uptake.   Appropriate legislation to enable employees’ benefit from Employee Share Ownership Trusts as a business succession tool.   The introduction of an appropriate safe harbour in relation to the valuation of shares in unquoted companies.   A move from a pre-approval process for Revenue approved share schemes to a pre-notification process. 

Readers are reminded that the first phase of the UK’s Border Target Operating Model for imports from the EU into Great Britain commences later this week from 31 January 2024. These customs changes will impact Irish exporters to Great Britain and will mean UK customs filings must be done prior to the goods departing Ireland and health controls will be imposed on certain foods of animal origin and plants and plant products by UK officials.  Further details of other changes can be found in our EU exit corner below.

Revenue has published statistics on Local Property Tax (LPT) for 2023. LPT collected to date amounts to €511 million, with both return and payment compliance rates of 95 percent indicating that most property owners have met their payment and filing obligations. 

To reflect certain amendments to the TCA 1997 by Finance (No.2) Act 2023, Revenue has updated the following Tax and Duty Manuals:  Stock relief – young trained farmers (Part 23-02-01) and Tax credit for succession farm partnerships (Part 23-02-11) have been updated for the increase in the maximum amount of relief that may be granted under sections 667B (stock relief) and 667D (relief for succession farm partnerships) TCA 1997 and section 81AA SDCA 1999 to €100,000.  Taxation Issues for Registered Farm Partnerships (Part 23-02-09) addresses Regulation (EU) No.1408/2013, setting out the maximum de minimis aid available to any individual farmer, and reflects the increase to €20,000 in the maximum cash equivalent of relief a partner is entitled to receive over a 3-year period. 

Increase of accounting talent in 2–3-year Post Qualified Experience range expected in coming 18 months as professionals return from abroad Qualification now used far more widely outside traditional roles; soft skills increasingly important in profession Chartered Accountants Ireland and Barden announce new partnership to support next generation of students and members   29 January 2024 – The demand for qualified accountants is predicted to reach 10% above pre-pandemic levels in 2024, according to talent advisory and recruitment firm Barden. They also expect an increase in the supply of accounting talent in the 2–3-year PQE range in the coming 18 months, which should alleviate some of the pressure on companies trying to hire at this level.  Commenting Elaine Brady, Managing Partner, Barden Leinster said “Demand for talent is strong locally, and compounding this, the past two years have seen over a 30% increase in newly qualified accountant talent moving internationally after qualifying. An injection of highly qualified talent in the coming months will come as a relief to those hiring. The first five years PQE are a pivotal time for accounting professionals - those that are career orientated should expect to move role, internally or externally, between 2-3 times during this formative period. It’s a competitive space.  “Our data shows us that PQE level and salary level are becoming increasingly disconnected after the 3-year PQE mark - many more variables come into play, and it is no longer about PQE but about the ability to create value for a business outside of the accounting function.”  Chartered Accountants Ireland and Barden have today announced a renewed three-year strategic partnership building and expanding on an existing strong partnership between the two organisations. The partnership is focused on three programmes, the Chartered Accountants Student Society of Ireland (CASSI), Chartered Accountants Ireland Leinster Society and Young Professionals, which have a particularly strong focus on the Institute’s strategic priority of engaging the next generation of students and members. The partnership will build opportunities for connectivity, engagement and belonging in the chartered community.  Commenting Sinead Donovan, President Chartered Accountants Ireland said  “This partnership comes at a time when people skills are becoming increasingly important within the accounting profession, and equally the role that accountants play and the value they create is much wider. For those working in business, many more are having an impact in operational and leadership roles, and in emerging areas such as data analytics and ESG functions. Increasingly Chartered Accountants are using their qualifications to create value outside of the accounting function.  “As a body, it is incumbent on us to ensure that our members are equipped for the expanding remit of our profession. Recruitment data shows that 64% of career opportunity come from your direct network - those you trained with, and those you have worked with, so the importance and direct impact on business growth of the Chartered Accountants member networks cannot be overstated.”  Elaine Brady, Managing Partner, Barden Leinster continued "This strategic partnership between Barden and Chartered Accountants Ireland is the culmination of over a decade of engagement between our two organisations - partnerships of this significance and scale don't just happen overnight.  We're delighted to have built the trust to now support Chartered members from their training through to qualification and through their formative PQE years. Helping people make informed decisions about their future, and enabling those decisions, is what we are all about in Barden; this partnership enables us to be there along each critical step with members as they chart the unknown waters of the future of work.” ENDS  

On Tuesday, 16 January 2024, Sinead Donovan, President of the Institute, along with Council, launched Chartered Accountants Ireland’s campaign to seek membership approval to amalgamate with CPA Ireland. The Councils of both Institutes have unanimously agreed that a future together will be more stable, smarter, and stronger than a future apart.  Online vote now open Online voting is open from 29 January 2024, until 1pm on 14 February 2024. On 29 January 2024, you will have received an email from CAISGM@cesvotes.com, or a letter from Chartered Accountants Ireland, with the subject: Chartered Accountants Ireland SGM 21 February 2024. The correspondence will direct you to the Civica platform where you can both vote in advance and attend the SGM meeting online. Please check your spam folder for this email and contact us if you didn’t receive it. Information about the SGM, including useful guidance material about voting and attendance, is available on our website. Following amalgamation the Institute will continue to be called Chartered Accountants Ireland and the enhanced brand will be the largest professional body on the island of Ireland.  This follows months of discussions on shared goals, the strategic position of the profession and how to meet the future’s challenges and opportunities. The Council’s decision is based on a strong financial case and that the individual visions and objectives are strikingly similar. Learn more about the proposal.  Town Hall Events The Council will be holding town hall meetings, both virtual and across the country, to engage with members to demonstrate the benefits of an amalgamation which will create a stronger voice to advocate for members and the public interest. Learn more about these meetings, also listed below. Dublin, Wed 24 Jan, in-person, 12.30-2pm, Chartered Accountants House, Pearse St. North West, Mon 29 Jan, webinar, 12.30-1.30pm, virtual. Cork, Tues 30 Jan, in-person, 12.30-2pm, Clayton Hotel, Lapps Quay, Cork. Mid West, Thurs 1 Feb, in-person, 6-7.30pm, The Savoy Hotel, Limerick. Belfast, Tues 6 Feb, in-person, 12.30-2pm, Linenhall Street, Belfast - register >>> Virtual, Thurs 8 Feb: All Members, 1pm (GMT) / USA and Canada Members, 5.30pm (GMT) / Australia and New Zealand, 9pm (GMT) Virtual, Tues 13 Feb, All members, 1pm (GMT) - register >>> Dublin, Tues 13 Feb, All members, 5.30pm - register >>> All professions are facing uncertain times and as the overall number of people entering the accountancy profession falls across the globe, accountancy bodies are consolidating to address this issue. The decisions taken by bodies representing the accountancy profession in Ireland over the next few years will have implications for decades to come and in Chartered Accountants Ireland we propose taking a leadership role with this amalgamation. By taking this confident step, we will put our members and our Institute in the best position to meet those collective challenges and opportunities, now and into the future. Find further detail on the proposed amalgamation online, and discussed in these videos. If you cannot access this URL, please let us know by email.

The CSRD requires business leaders with ESG expertise, strategic vision and ethical leadership who can drive lasting organisational change, writes Michele Stokes With the advent of the Corporate Sustainability Reporting Directive (CSRD), large and listed EU-based firms will be required to collect and provide dependable and standardised sustainability data. This will give stakeholders the opportunity to assess the non-financial performance of companies and evaluate the organisation’s impact on people and the environment. So how will this change the way leaders are recruited? C-suite executives who understand the importance of sustainable and socially responsible business practices are preparing for the CSRD by formulating environmental, social and governance (ESG) strategies that align with their organisation’s goals. Executives will need to possess technical knowledge, strategic thinking and a deep understanding of sustainability principles. They will also require considerable organisational change skills. The future of work Leaders will need to be adept at navigating this transition and engaging with investors, clients, employees and regulators. The collection and handling of CSRD data presents huge technical and organisational challenges. Several companies in industries such as oil and gas, food and beverage, manufacturing, and consumer goods are already using ESG reporting and data management software from IT providers. Process effectiveness will sit across many functions including risk, finance, HR, legal, technology, procurement, supply chain and sustainability. The latter is expected to grow in importance quite substantially. Leading effectively We outline below eight competencies that are essential to lead effectively in the area of sustainability: 1. Sustainability expertise – A strong grasp of ESG sustainability concepts and how these relate to an organisation’s operations and business strategy. 2. Technical expertise – Knowledge of best practice for data management and solutions that enhance firms’ ESG performance. 3. Regulatory knowledge – The ability to interpret and implement mandatory and voluntary reporting regulations effectively. 4. Strategic vision – The integration of sustainability goals with corporate strategy, embedding sustainability objectives in the organisation’s long-term vision. 5. Risk management – The identification and mitigation of ESG risks in compliance with sustainability reporting directives. 6. Ethical leadership – Authenticity and ability to inspire and lead cross-functional teams dedicated to sustainability initiatives. 7. Monitoring and reporting performance – Tracking sustainability initiatives through KPIs and incorporating sustainability data within management reports. 8. Financial acumen – Understanding the financial implications of sustainability initiatives and making sound financial decisions related to sustainability investments. How to recruit for sustainability According to KPMG, 43 percent of CEOs in Ireland view the greatest challenge in their ESG strategy as attracting new talent. The challenge for executive search firms and HR leaders will be in selecting C-suite executives aligned to their organisation’s commitment to sustainability. The recruitment process should be rigorous, comprehensive and include each of the following stages: 1. Define role and responsibilities: Responsibilities should include developing and implementing sustainability strategies, assessing risk, ensuring compliance with relevant standards, reporting on corporate social responsibility (CSR) performance, evaluating technology and engaging with stakeholders. 2. Identify key qualifications and skills: Seek candidates with a strong background in sustainability, ESG practices and driving CSR initiatives. They should demonstrate experience in using technology to drive these initiatives efficiently. 3. Prepare a detailed briefing document: Highlight the company's dedication to CSR in the briefing document and throughout the assessment process. 4. Conduct comprehensive competency-based interviews: Assess candidate knowledge of CSR, values and ability to drive sustainable practices. Seek evidence of implementing CSR programmes and their outcomes and ascertain their approach to stakeholder engagement. 5. Evaluate cultural alignment and leadership proficiency: Evaluate the candidate's leadership style for alignment with company culture. Executives should possess the ability to motivate and guide teams towards enduring CSRD objectives. 6. Plan onboarding and integration: Formulate an onboarding strategy that encompasses an introduction to the company's CSR initiatives and organise introductions to key stakeholders. Role specifications will vary depending on the size, scale and complexity of an organisation. However, a commitment to sustainability and a willingness to adapt are essential for C-suite leaders to effectively navigate compliance with the CSRD and broader sustainability initiatives. Michele Stokes, is Director and Head of Research at HRM Search Partners

The explosive growth of AI has transformative potential but also raises critical privacy concerns that must be addressed, writes Pat Moran The world of artificial intelligence (AI) took a massive leap forward with the emergence of ChatGPT in November 2022. Since then, there has been a surge in the design and implementation of AI use cases across industries such as healthcare, retail, financial services, manufacturing and others. While the emergence of AI is transformative, this powerful tool is not without its challenges, particularly the profound privacy concerns it raises. As organisations eagerly harness the potential of AI, it is vital to know the associated privacy risks, such as: Data collection and breaches – As AI models evolve, their training datasets will likely grow, increasing the risk of personal and special category data being included. These datasets must be stored and processed securely while training AI systems. Algorithmic bias and discrimination – Biased algorithms may inadvertently perpetuate biases and lead to decisions that could negatively impact certain groups of people without the organisation’s intention to discriminate. Data subject requests – Once the AI systems are trained and deployed, responding to certain data subject requests becomes increasingly difficult. Transparency – As AI systems become commonplace in organisations, users will increasingly unknowingly interact with these systems, including instances where users are affected by automated decision-making. Regulatory requirements and industry standards – Even though AI is considered a novel technology, there are existing and upcoming regulations and standards that define and guide its usage. Organisations must demonstrate compliance with these regulations and standards to maintain customer trust and meet procurement standards in the market. Misuse of personal data in AI-enabled cyberattacks – Malicious actors have begun leveraging personal data such as audio clips and deep-fake content for advanced phishing attempts and other scams. Inaccurate responses – It is common for generative AI programs to respond based on probabilities identified within the data sets used to train the AI instead of actual, accurate data points. This can result in inaccurate responses and may cause issues if users do not verify the authenticity of the system’s responses. Organisational changes for AI To successfully traverse the concerns listed above while developing and integrating AI systems, organisations should consider the following best practices: AI governance: The teams involved in developing AI governance should be interdisciplinary, including teams in AI development, legal, privacy, information security, customer success and others. Privacy by design: The foundation of responsible AI lies in the concept of ‘privacy by design’, which states that data protection and privacy considerations must be implemented throughout the development lifecycle for any AI system. This includes incorporating privacy-enhancing technologies, ensuring appropriate security, compliance with regulatory requirements and other privacy-specific principles. Some AI systems have a ‘black box’-like nature, which makes it harder to detect and fix ethical, privacy and regulatory issues once deployed, increasing the need for privacy by design. Further, there might be other processes that pose too high a risk to move towards automation through AI and will require controls such as “a human in the loop”. Transparency: Users must be provided with clear and transparent communication in the form of privacy notices and other means including: confirmation that AI systems are used to process their data (including details of automated decision-making, if present); how their data is collected and processed; how long it will be stored; an outline of their rights, etc. The information helps users provide informed consent and builds trust in AI systems as well as the organisation. Fairness: An important step is to perform regular audits of AI systems to test their performance and ensure no bias or discrimination against users. The review should include the automated decision-making algorithm, and the process by which the algorithm makes decisions should be transparent and explainable. Data management: Ensure data ingested by the AI system during training is lawfully obtained, high-quality, and rigorous vetting and anonymisation have been performed. Technologies such as pseudonymisation or data aggregation should be implemented to ensure compliance with data minimisation and retention privacy principles. Up-to-date records of processing activities should also be maintained to ensure data is managed effectively throughout its lifecycle. Remember, organisations cannot use publicly available data to train AI systems without a valid lawful basis. Risk management, compliance and information security: A risk-based approach, including a data protection impact assessment, should be implemented to assess the level of risk involved before AI systems are deployed. The organisation should also sign off on the risk levels, controls and mitigations. AI compliance monitoring should be incorporated into the organisational, regulatory compliance programme or privacy programme. The wider organisational information security programme should include AI systems and their underlying data to prevent data breaches and malicious attacks. Technical and organisational measures such as encryption, data masking, password management, access controls and network security should be implemented. Employee training: As AI is a new technology, employees must be trained periodically on responsible AI usage. Training should include the privacy impact of AI systems, compliance with data protection regulations while using AI, misuse of personal data in AI-enabled cyberattacks and how to guard against it, and data protection best practices. Conclusion The advent of AI may be compared to the invention of the combustion engine. While organisations can move faster, they will also require stronger brakes. These brakes may address these multifaceted concerns, which necessitates a holistic approach, combining technological innovation, ethical practices, user empowerment and regulatory adherence. Organisations’ responsibility will be to innovate and ensure that innovation aligns with the values of privacy, ethics and user trust. Pat Moran is the Leader of Cybersecurity Practice at PwC.

The end of January sees several customs changes that will have a significant impact on Irish exporters to the UK. Brian McNamara discusses what you need to know to avoid delays and charges After several delays, HMRC will finally introduce full UK import checks on goods coming from the island of Ireland. On the same day, the UK Department for Environment, Food & Rural Affairs (DEFRA) import controls will also begin for certain food and plant products coming from the European Union. Below are three important points businesses moving goods to the UK should be aware of in relation to these changes: 1. UK import declaration and goods movement reference The biggest change from 31 January is that UK customs filings must be done prior to departure of the goods. Up to this point, there has been an easement in place allowing the import declaration to be carried out after the event. From Wednesday next, if the UK import declaration has not been submitted, the goods simply won’t get on the ferry in Dublin or Rosslare. Further, truck drivers will need to scan a goods movement reference (GMR) document when checking in with the ferry company. The import declarations for all goods on the truck need to go into the GMR. Exporters should talk to all parties in their supply chain (freight companies, clearance agents and UK suppliers) and get comfort that all necessary documents will be in place to ensure their goods keep moving. 2. DEFRA controls The 31 January also sees the introduction of health controls on the import of certain foods of animal origin (FOAO), plants and plant products from the EU. While the EU insisted on such checks on UK imports straight away on 1 January 2021, the UK government elected to delay the introduction of a similar regime. These DEFRA import requirements include the advance notification of the consignment on the UK’s IPAFFS system, and the submission of an export health certificate for certain goods. DEFRA has classified all FOAO, plants and plant products as either low, medium or high risk. The exact requirements each category of goods is subject to will depend on their risk classification. Exporters in the agri-food and plant industries should get a clear picture of the risk category of their goods and ensure all necessary steps are taken. As with the general UK import controls, if the correct submissions are not made, the goods won’t move. 3. Repairs/goods moving for processing Ireland is a smaller market than the UK. In some industries there isn’t the same level of capability locally, so it’s not unusual for goods to go to the UK for repair or further processing. A common misconception concerning customs is that, if goods are not being bought/sold, people think there is no import duty due on them – machinery moving to the UK temporarily for repair, for example. This is not the case, however. Once goods cross a customs frontier, an import declaration is required, and the goods are potentially liable to import duty. It is possible to gain relief from import duties on goods entering the UK temporarily by using Customs Special Procedures such as Inward Processing or Temporary Admission. However, businesses should be aware that it can take time to properly put these procedures in place. Taking short cuts could lead to the goods getting stuck and/or incurring import duty and VAT. So to an extent, the full impact of Brexit will only now be felt by Irish companies moving goods to the UK. To stay on top of this, businesses should make sure that all the correct documents are in place to keep their goods moving, minimise import duty and stay customs compliant. Brian McNamara is MD at SwiftFile Customs.