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Ireland Succumbs To Election Fever...

Kitty Miv, Editor
24 January, 2020

As the UK gears up to begin the process of leaving the European Union at the end of the month (the implications of which are still, to be honest, as clear as mud in terms of trade and tax matters), near neighbor Ireland has been keeping busy with its own affairs ahead of the Republic's planned election, to be held in February.

The election is set to take place on February 8, with Prime Minister Leo Varadkar explaining that this date provides a window to ensure a new government is in place ahead of the next European Council meeting in March.

In a recent speech, Varadkar revealed that the next step in the Brexit process, which is likely to especially impact the Republic due to its location and close relationship with the UK, will be to negotiate a free trade agreement between the EU and the UK "that protects our jobs, our businesses, our rural communities, and our economy."

According to Varadkar, "the capacity to everything else that needs to be done" – including tax reform – "depends on achieving this outcome." Varadkar added that his party, Fine Gael, has "a plan for fairer taxes."

Deputy Prime Minister Simon Coveney reiterated that "the future relationship with the UK must be negotiated, and negotiated at speed."

As if often the case in the run-up to an election, everyone starts to look very busy, all of a sudden (cynical, moi?), and that certainly appears to be the case in this instance, with Fianna Fail unveiling proposed changes to the taxation of property in the country if it wins the election, including allowing local property tax as a deductible expense, increasing the scope of the existing Help To Buy scheme, and introducing a rent tax credit for those renting privately.

Meanwhile, as is traditional, various organizations have started to formulate their wish-lists, with business association, Ibec front and center, calling for a tax policy that nurtures Irish-owned companies.

Ibec has argued that changing global tax rules will have a major impact on Ireland's current and future foreign direct investment (FDI) model, and stressed that the current model must be improved with a view to providing certainty and ensuring innovation, and that there should be greater support for indigenous business.

According to Ibec, Ireland is an easy place to start a business, but a difficult place in which to grow one. It called on the next government to convene a Commission on Taxation, to ensure that the country's tax system is sustainable. It said the Commission should consider how to bring coherence to and underpin the competitiveness of the taxation of corporations, property, and the environment, while incentivizing Irish business and ensuring the fairness of the personal tax regime.

Ibec suggested that the Government could further support indigenous business by reforming the capital gains tax (CGT) system for entrepreneurs, along with the Employment Incentive and Investment scheme (EII), and ensuring that businesses can take full advantage of the benefits of employee share schemes.

The business association also called on the next government to respond to the challenges of global tax reform by providing certainty on the 12.5 percent headline corporate tax rate. It said the government should improve the support offered for innovative activities and introduce accelerated capital allowances for investments in advanced manufacturing technology. (Got all that? Phew!)

Finally, in a bit of a change of pace from the slightly more frenetic pre-election preparations, the Revenue department has been updating its guidance in various areas, perhaps hoping to get its tax ducks in a row ahead of a potential change of administration.

To this end, the tax authority announced recently that it has updated two Tax and Duty Manuals (TDMs) to reflect recent changes to the criteria for certain directors not being required to file an income tax return.

The amendments have been made to TDM 41A-01-01, which covers who must file a tax return and how to calculate tax due under self-assessment, and TDM 47-06-03, which covers PAYE tax paid and the surcharge on late returns by directors.

Changes made in Finance Act 2019 relate to the criteria for certain directors not being required to file an income tax return. The company of which they are a director must now meet certain conditions in the three years to December 31 in the tax year, rather than in the three years to April 5.

Revenue also recently updated its guidance on stamp duty rates following changes introduced in Finance Act 2019.

Finance Act 2019 increased the rate of stamp duty on non-residential property and leases from six percent to 7.5 percent in relation to instruments executed on or after October 9, 2019.

The tax authority revealed that it has updated two manuals to reflect the new rate: Schedule 1 to the SDCA 1999 (stamp duties on instruments) and Section 83D (residential development refund scheme).

Until next week!

About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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