Welcome to this week’s Technical Roundup.   In developments this week, the World Council of Credit Unions has recently released its 2023 International Advocacy Sustainable Finance Report, ‘What Credit Unions should know about Sustainable Finance’ which highlights important issues, trends, and recommendations to promote sustainability in the global financial sector; the European Financial Reporting Advisory Group (EFRAG) has published its March 2023 update which summarises public technical discussions held and decisions taken during the month. Read more on these and other developments that may be of interest to members below.  Audit and Assurance  The International Ethics Standards Board for Accountants (IESBA) has released final revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) to further increase the Code’s robustness and expand its relevance in a world being fundamentally reshaped by rapid technological advancements and accelerating digitalization. Financial Reporting The European Financial Reporting Advisory Group (EFRAG) has published its March 2023 update. This summarises public technical discussions held and decisions taken during the month including the publication of its final comment letter in response to the IASB’s Exposure Draft 2023/1 International Tax Reform – Pillar Two Model Rules (Proposed Amendments to IAS 12). EFRAG has completed its due process regarding the Amendments to IAS 1 Presentation of Financial Statements and has submitted its Endorsement Advice Letter to the European Commission. The amendments to IAS 1, which EFRAG has endorsed, include; Classification of Liabilities as Current or Non-current (January 2020); Classification of Liabilities as Current or Non-current - Deferral of Effective Date (July 2020); and Presentation of Financial Statements: Non-current Liabilities with Covenants (October 2022). Accountancy Europe has issued its response to the IAASB’s consultation on its proposed strategy and work plan for 2024-2027. The IFRS Foundation has published its 2022 Annual Report. The International Sustainability Standards Board (ISSB) has issued its supplementary April 2023 update which highlights preliminary decisions of the ISSB in the month. The IFRS Interpretations Committee (IFRIC) has issued its Q1 2023 podcast. The topics discussed include Definition of a Lease—Substitution Rights (IFRS 16 Leases) and a question relating to Premiums Receivable from an Intermediary (IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments). The International Accounting Standards Board (IASB) has decided to finalise amendments to IAS 12 Income Taxes following the Pillar Two model rules published by the OECD. The amendments will provide temporary relief for companies from having to account for deferred taxes arising from the implementation of the Pillar Two model rules and will introduce targeted disclosures for affected companies. Separately, the FRC has released FRED 83 which proposes a similar exception to be included in FRS 102. Other Areas of Interest   With effect from 23 April 2023, company directors will be required to provide their PPS numbers in order to file certain documents with the Companies Registration Office. One purpose of this important step is to reduce the incidence of companies being incorporated based on false director details. Failure to comply, without just cause, will be a criminal offence. Given the reasons underlying this requirement, the CEA will, as appropriate, take prosecutions where non-compliance comes to our attention. In order to assist company directors in understanding their new obligations, the CEA has prepared an Information Note. The UK Department for Business and Trade have conducted a review to consider how the whistleblowing framework currently operates, including Public Interest Disclosure Act 1998 (PIDA) and subsequent legislative and non-legislative interventions.  It is expected that the research will be concluded by Autumn 2023. The World Council of Credit Unions has recently released its 2023 International Advocacy Sustainable Finance Report, ‘What Credit Unions should know about Sustainable Finance’ which highlights important issues, trends and recommendations to promote sustainability in the global financial sector. The report acknowledges the efforts by regulatory and standard-setting bodies in addressing climate-related financial risks and promoting sustainable finance, emphasizing the importance of proportionality language in regulatory frameworks and considering the unique benefits of the cooperative model of credit unions. The Irish Dept of the Environment Climate and Communications has opened registration for its next sustainable development goals national stakeholder forum in the Aviva Stadium on April 25th. This is a hybrid event. The meeting will focus on Ireland’s 2023 Voluntary National Review (VNR) which is a progress report reviewing a country’s progress towards achieving the Sustainable Development Goals. Go to this page for registration and an agenda will  be posted shortly. Minister of State for Trade Promotion, Digital and Company Regulation, Dara Calleary TD, will later this month launch a public consultation on proposals to enhance the Companies Act 2014.  The Department of Enterprise, Trade and Employment will seek views on a proposed Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill which will focus primarily on four areas of company law - corporate governance, enforcement, administration and insolvency. The Minister for Finance Michael McGrath today has published the terms of reference for the Department of Finance to conduct a review of Ireland’s funds sector and produce a report ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets.’ This body of work will seek to ensure that Ireland maintains its leading position in asset management and funds servicing and that we continue to see support for our national and regional economies. For further technical information and updates please visit the Technical Hub on the Institute website.     

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.

Last week, Minister for Finance Michael McGrath and Minister for Public Expenditure and Reform Paschal Donohoe announced that tax revenues to the end of March were €19.7 billion, €2.5 billion (almost 15 percent) ahead of last year. The Exchequer deficit of €2.1 billion compares with a surplus of €0.2 billion in the same period last year, with the difference driven by the transfer of €4 billion to the National Reserve Fund in February 2023. Notably, corporation tax receipts increased by €1.3 billion to €3.2 billion. The increase in corporation tax has been explained as a timing issue with payments made in March which would otherwise be expected in August. At €7.4 billion, income tax receipts remained solid, up 8 percent and reflecting continued resilience in the labour market. VAT receipts increased by 16 percent to €6.8 billion. However, allowing for a technical adjustment, the underlying growth rate of VAT receipts was 12.5 percent in the first quarter. Commenting on the figures, Minister McGrath noted: “Today’s figures confirm strong momentum in our economy during the first quarter of the year. The strength of income tax shows that the labour market remains resilient, while VAT receipts suggest consumer spending remains reasonably solid. Once again, corporate tax receipts have surprised on the upside, though my officials estimate that around half of the corporate tax take is unlikely to be permanent. It is, of course, essential that windfall corporation tax receipts are not used to fund permanent expenditure. This is why I transferred €4 billion to the National Reserve Fund in February – there is now €6 billion in the Fund. I will also seek government approval in the coming weeks for a longer-term fund to meet the costs of an ageing population and other pressures that we know will arise in the future. Finally, the Government will publish the Stability Programme Update on 18th April, setting out my Department’s updated economic and fiscal assessment.” Read the full report at www.gov.ie.

The Minister for Finance, Michael McGrath, has published the terms of reference for the Department of Finance to conduct a review of Ireland’s funds sector. Ireland is a global centre of excellence for asset management and funds servicing with the latest figures showing regulated and unregulated funds in Ireland having approximately €4.6 trillion in assets under management. Nationally, the funds sector employs some 17,000 people across 180 companies. The multi-disciplinary Review Team will be led by the Department of Finance, with support from state bodies, including Revenue and the Central Bank of Ireland. It is to produce a report titled ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets.’ and will conclude its work in summer 2024. The team will look at a range of issues, which include examining the regimes for Section 110 entities, Real Estate Investment Trusts (REITs) and Irish Real Estate Funds (IREFs). It will also examine international contexts, effects on employment and the economy and the wider taxation regime for funds, life assurance policies and other related investment products. Commenting on today’s publication Minister McGrath said: “The establishment of a Review Team to develop a ‘Funds Sector 2030’ report is a proactive step and will cover a wide range of issues from competitiveness to taxation to financial stability. Ireland is a global centre of excellence for the asset management and funds servicing and over many years this has been a driver of economic and employment growth. I am confident that a new framework will support long-term growth in this area and maintain a sustainable and resilient funds sector here. This review also fulfils recommendations from the Commission on Taxation and Welfare and will ensure that our domestic funds framework is up-to-date and takes account of the significant developments in the funds sector in recent years.” Further information is available here.

The Minister for Finance, Michael McGrath TD, has published an assessment by his Department on the fiscal response to the cost of living challenge. The aim of the analysis is to outline the key objectives of the Government’s strategy and to document and quantify the fiscal response. The Government’s policy response to a sharp rise in the cost of living has been designed to assist those least equipped to respond while also aiming to avoid adding to inflationary pressures. The fiscal response has been timely, progressive and has primarily consisted of temporary supports, which are less likely to exacerbate inflationary pressures. Commenting on the analysis set out in the report, Minister McGrath said: “Government has responded decisively and effectively to the cost of living challenge, most recently with a suite of supports amounting to €1.3 billion announced in mid-February. A total of €12 billion – 4½ per cent of national income – has now been provided in direct relief to absorb some of the impact and ease the burden of inflation on households and businesses. Our response to the cost of living challenge is, by necessity, different to our response to the pandemic. Inappropriate or excessive fiscal interventions by Government would add fuel to inflation and result in fiscal policy itself becoming part of the problem. In designing its response, Government has also been conscious of rising borrowing costs – the cost of 10-year money is now in excess of 2½ per cent compared with essentially 0 per cent during the pandemic. Government has also been conscious of the need to calibrate the policy response in a manner that does not compromise the necessary transition to carbon-neutrality. Against this background, Government has, I believe, struck the right balance between supporting households and firms, while not jeopardising key fiscal and climate sustainability objectives. As we address the challenges of today, Government must also be conscious of the future. In the longer-term, alongside the need to meet the costs associated with demographic changes and finance the green and digital transitions, a future decline in tax receipts from the corporate sector is possible. This means that it is more important than ever that the public finances are kept on a sustainable trajectory so that we ensure we are in the strongest possible position to meet future economic challenges as they arise.” Further information is available here.

Revenue has published statistics on Local Property Tax (LPT) for the first quarter of 2023. LPT collected to date amounts to €314 million, with a payment compliance rate of 90 percent indicating that the majority of property owners have met their payment obligations. Payment arrangements for 2023 LPT liabilities are in place on over 1.7 million properties including 350,000 Annual Debit instructions debited on 21 March. 2022 was the first year that newly liable properties came within the charge to LPT on an annual basis. Owners of properties built during 2022 were required to submit an LPT return and set up a payment arrangement for 2023. Commenting on the importance of property owners making sure that they pay their LPT liability or set up a payment method without delay, Ms. Katie Clair, Head of Revenue’s LPT Branch, said: ‘’All residential property owners were required to set up their 2023 payment method by 10 January at the latest and the vast majority did exactly that. However, some property owners haven’t yet paid or set up a payment arrangement and they now leave themselves open to collection and enforcement action by Revenue. We have issued 150,000 letters to property owners who haven’t yet paid or set up a payment method to pay or make an arrangement to pay. Property owners who fail to do so may be subject to a range of collection and enforcement actions by Revenue including mandatory Deduction at Source (DAS) from salary or pension, withholding of tax clearance certification, the application of surcharges on income tax, corporation tax and capital gains tax returns or offsetting of other tax refunds against LPT arrears. I urge all property owners who haven’t made arrangements to pay their LPT to take immediate action and use this opportunity to ensure they are fully compliant with their LPT obligations. The easiest way to set up your LPT payment method is online. You can access the LPT online portal on revenue.ie. However, if property owners need assistance in completing their LPT Return or have any queries regarding their LPT obligations, they can contact the LPT Helpline at 01 738 36 26.”

The Minister for Finance, Michael McGrath and Minister for the Environment, Climate and Communications, Eamon Ryan announced a zero rate of VAT for the supply and installation of solar panels for private dwellings from 1 May 2023. The Department of Finance has estimated that the measure will cost €19 million annually. Speaking after the Government meeting, Minister for Finance Michael McGrath stated: “The Government has agreed to reduce the VAT rate on the supply and installation of solar panels to zero for private dwellings from 1 May 2023. This will result in a significant reduction in the installation cost for households and I believe will encourage more people to avail of this innovative technology. This measure underlines the Government’s commitment to help households to save money on their energy bills and reduce their carbon footprint and contribute positively to our national climate change targets. I have received approval for the measure to come into effect from the start of next month to prevent any dislocation in supply ahead of its introduction.”

Revenue has updates its Tax and Duty Manual regarding employer provided vehicles.  The main changes relate to the Finance Bill 2023 measures. The updated manual provides confirmation that employers can, if they are in a position to do so, apply the new method of calculation of BIK prior to enactment of the legislation. Furthermore, employers should apply any necessary adjustments to the BIK calculations in respect of prior 2023 pay periods by way of a current period adjustment and not amend prior period payroll submissions. The examples have been updated to apply the new rules effective from 1 January 2023, to include the additional Finance Bill 2023 measures.   Further information is contained in eBrief no.093/23.

Revenue has updated its Tax and Duty Manual regarding the Form P11D. Although employer contributions to a PRSA is no longer a taxable benefit, the employer's obligation to report the amounts of PRSA contributions on the payroll submission to Revenue remains. However, from 1 January 2023, details of PRSA contributions are not required to be included on the Form P11D.   

Revenue has amended its Tax and Duty Manual regarding the Receipts Tracker in myAccount and ROS. The amendments include updated screenshots of log in screens for myAccount and ROS.

Revenue has amended its Tax and Duty Manual containing information and services for customers with disabilities. Contact details for Access Officers numbers have been replaced with a single email address and telephone number for all queries.