23 March 2018
BIK on Preferential Loans – update to Revenue Manual
Finance Act 2017 amended the basis on which preferential loans are chargeable to benefit in kind (BIK). Previously, Section 122 TCA 1997 imposed a BIK charge on the difference between the interest “paid or payable” on the loan from the employer and the “specified rate”. Under the new provisions, the BIK charge is imposed on the difference between interest actually paid in the year of assessment and the interest arising under the specified rate.
Read Revenue’s updated Manual - https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-0392018.aspx
Section 23 Relief and Residential Owner-Occupier Relief
The contents of Revenue's leaflets A Guide to Section 23 Relief and A Guide to Residential Owner-Occupier Relief have now been incorporated into Revenue Manuals
Expenses of Travel - Non-Executive Directors Attending Board Meetings
Revenue’s Manual on Expenses of Travel of Non-Executive Directors Attending Board Meetings has been amended to update cross-references to relevant Revenue Manuals on travel expenses.
December Main TALC minutes
The Main TALC minutes of the meeting on 5 December are now available. Matters discussed include:
- The practical application of Section 135.
- EII and claims processing.
- PAYE modernisation.
- The process for obtaining a letter of tax residency.
Reminder – eRCT Bulk Rate Review and facility to self-review
As noted in last week’s TaxFax, Revenue’s eRCT Bulk Rate Review will take place at the beginning of April. Subcontractors and tax agents can check in advance on ROS that all returns and payments are up-to-date to obtain or retain a zero withholding rate.
Read about this “self-review” facility on ROS - https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-0362018.aspx
Commission publishes two proposals on the taxation of digital activities
On Wednesday, the European Commission published two legislative proposals on the taxation of digital activities in the EU. The Commission is proposing to reform corporate tax rules, so that profits are registered and taxed where businesses have significant interaction with users through digital channels and introduce an interim tax of 3% on certain revenues from digital activities in the EU.
Yesterday, we issued a bulletin to members outlining the two legislative proposals published by the Commission this week. Commenting on the proposals on Wednesday, Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD stated:
“I note the Commission proposals published today and believe that this should to be seen in the context of the OECD report of last week. As usual, Ireland will work with other Member States to critically assess the proposals from the Commission. This is the beginning of a process that will go on for some time in parallel with the work of the OECD. It is noteworthy that the OECD report did not find consensus among countries on this issue.”
Read the Institute’s Bulletin - http://links.taxinstitute.ie/m/7cf27257cc6d4be8bfa3561a168a4073/FABE6C60/8935507A/032018n?_cldee=bnJvb25leUB0YXhpbnN0aXR1dGUuaWU%3d&recipientid=lead-63453271a8f7e71180ff3863bb346b18-653673117dc444e591804e070f005a55&esid=7479d226-a42e-e811-8101-3863bb358f88&urlid=7
Read more on the European Commission proposals - https://ec.europa.eu/taxation_customs/business/company-tax/fair-taxation-digital-economy_en
Commission publishes guidelines to ensure EU funds are not channelled through the EU Blacklist
On 21 March, the European Commission published guidelines on the use of EU funds to ensure that they cannot be channelled through non-cooperative tax jurisdictions (the EU “Blacklist”). The guidelines provide a framework to prevent EU external development and investment funds being channelled or transited through entities that are resident in EU blacklisted tax jurisdictions. The new requirements relate to funding by International Financial Institutions, such as the European Investment Bank and the various Development Financial Institutions.
Read the guidelines - https://ec.europa.eu/info/sites/info/files/economy-finance/c_2018_1756.pdf
MLI will enter into force on 1 July 2018
The OECD has confirmed that the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“the MLI”) (http://www.oecd.org/tax/beps/multilateral-convention-to-implement-tax-treaty-related-measures-to-prevent-beps.htm) will enter into force on 1 July 2018. This confirmation follows ratification of the MLI by Slovenia on 22 March 2018, becoming the fifth country to do so. Austria, the Isle of Man, Jersey and Poland have all previously deposited their instruments with the OECD. The entry into force of the MLI on 1 July 2018 will bring it into legal existence in these five countries. The contents of the MLI will start to have effect for existing tax treaties as from 2019 in accordance with the rules of the convention. The MLI will modify existing bilateral tax treaties to implement the tax treaty measures developed in the course of the OECD/G20 BEPS Project.
OECD publishes tax report to G20 Finance Ministers
The OECD has published their tax report which was presented to the G20 Finance Ministers meeting in Buenos Aires on Tuesday. The report provides an update on the activities and achievements of the OECD’s tax agenda and the further progress needed, through the Inclusive Framework on BEPS. It also includes a Progress Report by the Global Forum on Transparency and Exchange of Information for Tax Purposes.
OECD releases additional guidance on the attribution of profits to a PE under BEPS Action 7
The OECD has released the report Additional Guidance on the Attribution of Profits to Permanent Establishments (BEPS Action 7) (http://www.oecd.org/tax/beps/additional-guidance-attribution-of-profits-to-a-permanent-establishment-under-beps-action7.htm) this week. The additional guidance sets out high-level general principles, which countries agree are relevant in attributing profits to a permanent establishment (PE)in accordance with applicable treaty provisions. It also provides examples on the attribution of profits to certain types of PEs arising from the changes to the PE definition under BEPS Action 7.