TaxFax

20 December 2018

IRISH NEWS

Contingency Plans for a No-Deal Brexit

Given the continued uncertainty surrounding the ratification of the proposed Withdrawal Agreement by the United Kingdom, both the Irish Government and the European Commission have published contingency action plans for a no-deal Brexit. The Government’s action plan sets out an analysis of a “no deal” Brexit under a number of headings including, economic and fiscal impact, security, Northern Ireland, relations with Great Britain and sectoral analyses. The document also details areas where primary and secondary legislation is likely to be required. The European Commission’s action plan also includes its legislative proposals for a no-deal Brexit. These focus on 14 areas where a no-deal scenario would create particular disruption, including customs, financial services, air transport and climate policy.

Read the Irish Government’s Contingency Action Plan - https://merrionstreet.ie/MerrionStreet/en/News-Room/Releases/No_Deal_Brexit_Contingency_Plan.pdf

Read the European Commission's Contingency Action Plan - https://ec.europa.eu/info/publications/communication-19-december-2018-preparing-withdrawal-united-kingdom-european-union-30-march-2019-implementing-commissions-contingency-action-plan_en

2019 Tax Credit Certificates for PAYE Employees

Revenue is currently issuing 2019 Tax Credit Certificates to PAYE Employees. These are available online via myAccount or Revenue Online Services (ROS). PAYE employees who have previously signed up to receive an electronic copy of their Tax Credit Certificate will receive an email notification, advising them to sign into Revenue’s secure services to view their new certificate.

New manual on provisions and accruals published

Revenue has published a new manual on the taxation of provisions and accruals. The manual replaces pages 14 and 15 of Tax Briefing 41, which was published in September 2000. It takes account of recent changes to Irish generally accepted accounting practice (GAAP), following efforts to converge UK and Irish GAAP with the International Financial Reporting Standards (IFRS). This means that former Irish GAAP standards, including FRS 12 Provisions, Contingent Liabilities and Contingent Assets, can no longer be used. The updated guidance confirms that the taxation of provisions and accruals remains unchanged under current Irish GAAP.

Read more - https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-2112018.aspx

Two reports published by the Department of Finance

The Department of Finance has published a review of financial products subject to Deposit Interest Retention Tax (DIRT) and Life Assurance Exit Tax (LAET). The paper provides an overview of both DIRT and LAET, a comparison between the products subject to DIRT and LAET and draws conclusions regarding the comparability of the products.

Read the report - https://www.finance.gov.ie/wp-content/uploads/2018/12/The-taxation-of-DIRT-and-LAET.-A-review-on-the-comparisons-and-tax-treatment-of-DIRT-and-LAET-002.pdf

A report on the elasticity of taxable income has been published as part of the Joint Research Programme between the Department of Finance, the ESRI and the Revenue Commissioners. The report examines how taxpayers manage their taxable income in response to changes in their marginal tax rate.

Read the report - https://www.finance.gov.ie/wp-content/uploads/2018/12/Elasticity-of-Taxable-Income-December-2018-DFIN-final.pdf

EU NEWS

European Parliament makes proposals on digital taxation

The European Parliament, which has a solely consultative role on tax matters, has made proposals to extend the scope of Digital Services Tax. The proposals seek to extend the list of services that may qualify as taxable revenues, to include the supply of “content on a digital interface, such as video, audio, games, or text using a digital interface”, regardless of whether the content is owned by that entity or if it has acquired the rights to distribute it. The proposals also seek to reduce the minimum threshold above which a company’s revenues are liable to be taxed from €50 million to €40 million. The December meeting of the Economic and Financial Affairs Council (ECOFIN) failed to reach agreement regarding the proposed Digital Services Tax.

EU approves trade agreement with Japan

The European Parliament has approved the EU-Japan Economic Partnership Agreement and the EU-Japan Strategic Partnership Agreement. The trade agreement is the largest bilateral trade deal ever negotiated by the EU and is expected to enter into force on 1 February 2019.

INTERNATIONAL NEWS

IRS publishes proposed BEAT regulations

United States Internal Revenue Service (IRS) has published proposed regulations on section 59A Base Erosion and Anti-abuse Tax (BEAT), which was enacted as part of the Tax Cuts and Jobs Act. BEAT is an minimum tax imposed on corporations that make certain deductible payments to foreign-related parties. The proposed regulations provide guidance regarding which taxpayers will be subject to section 59A, the determination of what is a base erosion payment, the method of calculating the base erosion minimum tax amount and corresponding BEAT amount resulting from that calculation. The rules apply to taxable years beginning on or after 1 January 2018.

Read more - https://www.irs.gov/pub/irs-drop/reg-104259-18.pdf