The 2020 Tax Strategy Group Report
Overall, what in your view are the most impactful issues dealt with in the annual report of the Tax Strategy Group (TSG), from the point of view of the impact on your clients, and for the economy generally?
Class S PRSI contributors: a 7 p.c. increase?
The TSG report references the possibility of raising Self employed individual payments to the 11% rate that employers and Self employed Taxpayers pay in employer PrSI contributions in respect of their employees. How might this impact incorporated businesses and principals in SMes with employees, and how, since it is stated to be a means of replenishing and supporting the Social Insurance Fund, might its benefits match the posited increase in contribution suggested?
ATAD - should SMEs plan for change in the medium term?
The Department of Finance has expressed an opinion that the Irish approach, which differs from the eU Directive (ratio based approach) in this area, can be as
effective in combating the effects that the ATAD seeks to counter. It has also adverted to the potentially wide impact of this across the economy, in that it can affect the tax levels of SMes. Nevertheless, if this is a battle that Ireland loses eventually, would it be advisable for companies to be now taking planning measures to mitigate risks arising from potential breaches by them of the 30% eBITDA rule in future years?
ATAD and long term equity strategy
Could the ratio based ATAD approach of the Directive be a stimulus for a shift towards more equity-based forms of financing of balance sheets from financing by credit and debt securities in the medium term? And, could this conceivably be a stimulus towards equity financing across the EU generally, to the benefit, in the medium term of the development of Capital Markets Union objectives?
The Knowledge Development Box
Figures revealed in the Tax Strategy paper reveal that the Knowledge Development Box, has by any standards not been a success, as only a handful of companies have availed of it (12 in 2016, 13 in 2017, and ‘less than 10’ in 2020). The TSG report says that “In part this is due to the restrictive requirements of the relief”. It also points out that Sunset Clauses, (KDB is currently set to expire on 31 December 2020) are good practice, and raises the possibility that it should be rolled over nevertheless. In your view, would there be any interest amongst companies in improving the benefits in the Budget, where possible, and where compliant with overall BEPS objectives, etc?.
CRS: how the new reports will work
What are the up to date requirements for Irish Financial Institutions regarding CRS (Common Reporting Standards)?
Ireland has adopted the ‘Wider Approach’ to CRS due diligence and as a result, Irish Financial Institutions are required to carry out due diligence on all (but some specifically excepted customers), including Controlling Persons of Passive NFEs, and to obtain a Self-Certification upon account opening.
Revenue has recently provided clarification of the Common Reporting Standards (CRS). What significant clarifications emerge from this?
For further information see here
Digital Tax Issues
Digital Tax issues are of critical issue for Ireland, not least because of its hosting of major digital enterprises, both large and small, and the sustained evolution of tax measures at OECD, EU, US and unilateral measures such as in the UK and India makes for an uncertain picture right now. In view of the conflicting policy views that are in play, what in your view should, and can, Irish digital enterprises act to plan for mitigate future risks?
The final countdown: Brexit, customs, tax and tariffs
Irrespective of the outcome of Brexit negotiations, from January 1st next the rules of the single market and the customs union will no longer apply to the UK and a range of customs formalities and taxation sensitive requirements will be in place for goods that move through, or to and from, Ireland and Britain. What measures can importers/exporters be undertaking now with just 12 weeks to go to minimise disruption from a customs, excise and sales tax (VAT) point of view?
Making your Tax Department ‘future ready’
Budget 2021 is just one facet of the tax landscape of interest to finance directors and boards, and changes and challenges will continue even after the Finance Bill process in 2020. In the face of a rapidly changing tax landscape, how can directors take steps to make their tax departments future ready?