Revenue annual report
Revenue’s annual report for 2021, released in May, highlighted how exceptional that year was. Against the backdrop of a fundamentally changed trading environment due to Brexit, and the continued significant disruptions from the Covid pandemic, Revenue collected a record amount of tax and duty, amounting to almost €96.6bn.
An overview noted a number of developments relating to Covid support schemes, as well as a large increase in customs activity. In 2021, Revenue processed 29.8 million customs declarations, 27.1 million of which were import declarations, compared with just over one million import declarations in 2020. By 31 December 2021, €2.9bn of tax debt owed by 98,000 businesses was included in the debt warehousing scheme.
The overview also lists six statistical analysis and research reports from Revenue alongside the annual report. They cover topics such as corporation tax and income tax receipts.
Revenue also published its medium-term vision of a modern tax administration regime with a focus on opportunities for enhanced digital operations. Proposals include: a new online capital taxes portal to report the ‘full suite’ of capital tax events on a gift or inheritance; reform of the VAT reporting and payment systems; availability of a tax credit at the time of purchase for medical expenses; and tax on a ‘pay as you go’ basis in the gig economy.
Revenue is asking employers to conduct a final self-review to verify their eligibility for all EWSS subsidies
EWSS self-review
The employment wage subsidy scheme (EWSS) ended on 31 May 2022. In total, EWSS subsidies paid to employers amounted to around €7bn with PRSI (pay-related social insurance) forgone of €1bn.
On 20 June, Revenue started issuing letters to all employers that received EWSS payments asking them to conduct a final self-review to verify their eligibility for all subsidies and PRSI credit received. There is an eligibility review calculator on the Revenue website.
Employers that are satisfied that all their EWSS claims were valid and correct do not need to take any further action. However, if an employer identifies any invalid claims, the payroll record must be corrected and the relevant subsidy amount and PRSI credit repaid no later than 30 September 2022. Businesses eligible for the debt warehousing scheme can include any repayments as part of their warehoused debt, provided the amounts are declared by 30 September.
The letters advise that Revenue may undertake a review of an employer’s EWSS eligibility at a later date. If this identifies incorrectly claimed subsidies and/or PRSI credits, interest and penalties may be charged. By doing the self-review now, employers can avoid this outcome.
Practitioners who are agent-linked for EWSS will receive a list from Revenue of their clients who have received a self-review letter.
Debt warehousing
At the end of May, Revenue began issuing final notices to businesses that are using the debt warehousing scheme and have overdue tax returns. Recipients have been given 10 days to submit all overdue returns or lose the benefits of the debt warehousing scheme. Revenue had previously issued warning letters to businesses with outstanding returns, which set a 30 April deadline to get up to date. It is likely that Revenue will issue further notices on a rolling basis, as cases with overdue returns come to its attention.
Revenue has said it will be pragmatic in reaching agreement on debt warehouse repayment terms
Most businesses participating in the scheme are due to start making repayments of their warehoused debt from January 2023 (at the lower rate of interest of 3%). Revenue will be writing to businesses later this year about agreeing a payment arrangement and has consistently indicated it will be pragmatic in reaching agreement on the terms and will not adopt a one-size-fits-all approach. This will be important considering the current inflationary cost pressures on businesses, which may make agreeing payment terms more difficult.
Revenue recently enhanced its online systems to allow consolidated phased payment arrangements. Both warehoused debt and non-warehoused debt can now be included in a single payment arrangement.
Compliance interventions
The new code of practice for Revenue compliance interventions came into operation on 1 May 2022. Additional information resources have been provided about Revenue’s revised approach to interventions and the provisions of the new code, including a video for taxpayers and agents and a one-page guide.
Minimum tax rate
In May, Ireland launched a public consultation on implementation of the OECD’s pillar two global anti-base erosion rules, which introduce a global minimum effective tax rate of 15% for in-scope large businesses.
The final text of the proposed EU directive to implement the pillar two minimum tax rate into EU law has not yet been agreed by all member states. However, Ireland is supportive of the proposal, and agreement is expected to be reached in due course, with the directive transposed into each state’s national law and in operation by the end of 2023.
The consultation remains open for responses until 22 July 2022.
BEPS pillar one
As part of the two-pillar solution to address the tax challenges of digital trade, the OECD Inclusive Framework group on tax base erosion and profit shifting (BEPS) has been consulting with stakeholders on a number of aspects of pillar one since early 2022.
Draft model rules on each building block for the allocation of taxing rights in pillar one are being released in stages to obtain feedback quickly and before the work is finalised.
While the timeframe for the implementation of pillar one remains uncertain, OECD secretary-general Mathias Cormann told the World Economic Forum in Davos in May that it is ‘most likely that we will end up with a practical implementation from 2024 onwards’.
A public consultation document is expected in mid-2022.
While every effort has been made to ensure the accuracy of this information, no responsibility for loss or distress occasioned to any person acting or refraining from acting as a result of this material can be accepted by the Irish Tax Institute, the designer, authors, contributors or publishers. Professional advice should always be sought for your particular circumstances before acting on any tax issue.
