This month’s roundtable discusses the potential impact on the FS industry of the amendments introduced in the Finance Bill to the anti-avoidance provisions in S.110 TCA 1997. The changes provide for stronger provisions and put the tax avoidance main purpose test on an objective footing.
Implementation of the EU’s mandatory disclosure regime for cross-border transactions, ‘DAC6’, is another area not addressed as part of the Budget but which will require significant further clarification. DAC6 must be introduced into Irish law by the end of this year but will apply retrospectively to the date at which the Directive came into force, 25 June 2018.
Practical issues, such as reporting mechanisms and administrative concerns, will be a key focus to ensure duplicate reporting is minimised wherever possible. In this roundtable we also look at the value of investing in technologies in the Fintech, analytics, cognitive and robotic process automation space for regulatory and financial reporting purposes and how this can be addressed initially using time-boxed ‘experiments’ to identify appropriate technologies.
With Brexit an unending source of uncertainty, the roundtable also reflects on the way in which it will affect supply chains/logistics, warehousing, cash flow, invoicing, IT processes and VAT reporting. Its possible effects on direct taxation are likely to be less, however, as Ireland will continue to hold its double tax treaty with the UK.
Legislation governing hybrid mismatches is due to be introduced in the Finance Act 2019, and while it is hoped that when enacting these rules that Ireland does not go beyond what is necessary to implement the Directive, as it has the capability to interfere with our international competitiveness.
It is also incumbent on taxpaying firms to be prepared for the changes inrtoduced in advance of the implementation date of January 1st 2020.
The growth of Ireland’s international financial services sector will depend in part on personal effective tax rates, according to Cormac Kelleher of Mazars, who is reflecting an increasing sentiment shared across the tax advisory community. This in turn reflects increasing tax competition in the corporate area and noises from politicians across the Irish Sea about personal taxation of all kinds in an effort to boost UK competitiveness in a post Brexit environment.
The Special Assignee Relief Programme (SARP) regime, has been the vehicle used to soften the effective tax rate for relocating employees in an FDI context in Ireland, and this month’s tax Monitor references the SARP consultation process that is ongoing. Regarding potential Income Tax issues in the Budget, the SARP is an essential part of the tax system - in terms of continuing to attract senior personnel to Ireland, says Susan Carroll, Manager, Deloitte.
Major issues for the international financial services industry were identified in calls from industry representative bodies and in policy identified in the Government strategy for IFS to 2015, Ireland for Finance (albeit this was not a tax policy document).
There is a possibility that new tax changes could introduce interest restriction rules as required by the EU Anti-Tax Avoidance Directive (ATAD), says Lisa Mangan, Manager, Deloitte. Any change in interest deductibility might have an impact on securitisation, leasing and treasury companies, she contends. “Clarity should be provided as soon as possible, to permit the financial services industry sufficient time to consider the ramifications for their businesses, model the impact of the rules and restructure where needed,"Mangan said.
If the international financial sector is to continue to grow, the jurisdiction attractiveness from a personal perspective will be important, says Cormac Kelleher, International Tax Partner, Mazars. It has long been acknowledged that the regime may require changes to retain competitiveness when compared with other alternative jurisdictions, he adds.