5 April 2019
Valuation date for Local Property Tax deferred until 1 November 2020
This week, the Department of Finance published its Review of Local Property Tax. The Review considers the impact of property price developments on local property tax (LPT) liabilities, including consideration of the next revaluation date and the frequency of revaluation thereafter. The outstanding recommendations of the 2015 Thornhill Review of the LPT are also considered.
Following publication of the Review, the Department confirmed that the valuation date for LPT would be deferred from 1 November 2019 to 1 November 2020. The Department confirmed in a press release that “having considered the review and in particular the background of significant, but geographically uneven, increases in residential property price levels, Minister Donohoe believes it necessary to engage in further consultation to identify a scenario that would deliver on the condition set by the Minister that there should be relative stability for all taxpayers in their LPT bills and that any increases should be modest and affordable. The Minister is also conscious of the importance of maintaining simplicity in the operation of the LPT which was a major success factor in its successful introduction.”
Read the Review - https://assets.gov.ie/7465/91ccbd3ddc97461898211710e2d7ec55.pdf
Reminder: Amended RPNs for DEASP increases available from Monday
As noted in last week’s TaxFax (http://elinkeu.clickdimensions.com/m/1/97135019/p1-b19088-838bed444d73452a9986090c7c6803af/1/25/bd4a444e-8b1c-4555-9b0b-62b32ee73857), rate increases for pensions and weekly social welfare payments announced in Budget 2019 took effect at the end of March. Amended RPNs to collect income tax on taxable payments will be available to employers and pension providers from next Monday, 8 April. Revenue has issued an Employer Notice to alert employers to this development. The Employer Helpline and the PAYE Helpline will be ready to deal with calls from employers, tax agents and employees.
Revenue provides Brexit advice at Dublin and Rosslare Ports
Revenue Customs Officers are at Dublin and Rosslare Ports from today to provide information to truck drivers on how changes, resulting from Brexit, will impact their journeys. Customs Officers will be talking to truck drivers as they wait to embark the ferry, and will also be available on-board a number of sailings to answer questions about what they need to do post Brexit, and to help them understand what the changes will be for them as they move through Irish ports.
Read Revenue’s press release - https://www.revenue.ie/en/corporate/press-office/press-releases/2019/pr-040419-brexit-advice-for-transport-companies.aspx
Update to Revenue Manual on Home Carer Tax Credit
Finance Act 2018 increased the Home Carer Tax Credit to €1,500 for 2019 and subsequent years. The relevant Revenue Manual has been updated to reflect this increase.
Updates to Revenue Manual on Health Expenses
The Institute received feedback from members, about instances in which Revenue expressed the view that prescription charges incurred by medical card holders were not qualifying medical expenses, because the charges were a government levy and not a cost of the medicine prescribed by a practitioner.
At TALC, we put forward that these charges are a cost incurred in the supply of the medicine and therefore, should be considered qualifying health expenses for the purposes of section 469 TCA 1997. Revenue’s Manual Health Expenses – Qualifying Expenses has now been updated to confirm that prescription charges incurred by medical card holders are qualifying health expenses (where all other qualifying criteria have been met).
Revenue’s Manual has also been updated to:
- Remove references to the MED 1 Form, as it is no longer applicable
- Update the Kidney Expenses rates (Appendix 1)
- Add content regarding health expenses paid out of an individual’s estate following his or her death
Read Revenue’s eBrief - https://www.revenue.ie/en/tax-professionals/ebrief/2019/no-0722019.aspx
Film Relief Regulations published
Section 26 of Finance Act 2018 extended film relief under section 481 TCA 1997 to 31 December 2024 and introduced a number of changes to the existing system for obtaining film relief. A commencement order (S.I. 120 of 2019 - http://www.irishstatutebook.ie/eli/2019/si/120/made/en/pdf) which took effect from 27 March 2019 has brought the section partially into effect (it excludes those parts relating to the introduction of the regional film development uplift and some administrative provisions).
In addition, the Film Regulations 2019 (S.I. 119 of 2019 - http://www.irishstatutebook.ie/eli/2019/si/119/made/en/pdf) have been enacted with effect from 27 March 2019, which set out the rules and procedures for obtaining the tax credit. An application for certification must now be made in writing to the Minister for the Department of Culture, Heritage and the Gaeltacht. An application form and guidance notes on completing the form have been published on the website of the Department for Culture, Heritage and the Gaeltacht.
Read the guidance notes and application form - https://www.chg.gov.ie/arts/creative-arts/projects-and-programmes/film/
Revenue updates Manual on Control and Examination of Baggage
Revenue’s Manual on Control and Examination of Baggage has been updated to reflect:
- The removal of the quantitative limit restrictions for cigarettes from certain countries
- Budget 2019 changes to Excise Duty to be charged on imported tobacco products in passengers' accompanied baggage
- Other minor amendments
Updates to Revenue Information Powers Manual
The Revenue Information Powers Manual has been updated to incorporate material previously contained in Statement of Practice SP Gen 1/99 (Revenue Powers) and to include links to specific powers manuals.
Institute responds to Consultation on Ireland’s Transfer Pricing Rules
On Tuesday, the Institute responded to the Department of Finance Public Consultation on Ireland’s Transfer Pricing Rules. Our response outlined 25 recommendations on the proposals contained in the consultation paper, including:
- The Institute fully supports the adoption of the 2017 OECD Guidelines into Irish law. However, the Guidelines should apply to accounting periods commencing on or after 1 July 2020, to allow Irish businesses some time to assess the impact of the updated guidelines on their operations and for the Revenue to publish clear and comprehensive guidance on how they will administer the transfer pricing rules under the new framework.
- If the grandfathering provisions are removed from 1 January 2020, clear guidance must be provided by Revenue regarding the repricing of existing grandfathered transactions and recognition given for limitations on data availability in pricing pre-1 July 2010 grandfathered arrangements.
- The Institute strongly supports the continued exemption for SMEs from the Irish transfer pricing regime.
- Regarding the proposed extension of transfer pricing rules to non-trading income, policymakers could consider excluding domestic non-trading transactions from the scope of transfer pricing rules, in order to minimise the potential impact of the differing corporation tax rates applying in domestic situations.
- If transfer pricing rules are extended to capital transactions, policymakers should consider introducing a hierarchy within the tax code or aligning the existing legislation that applies market value to capital transactions with transfer pricing principles, to alleviate the significant documentation burden for taxpayers.
- Ireland should adopt the OECD set of common criteria in Annex I and II of the 2017 Guidelines for Master and Local Files, as the standard for content for transfer pricing documentation. The filing of Master and Local Files should be upon written request by Revenue, rather than imposed as a mandatory filing requirement.
We also highlighted the need for a well-resourced Competent Authority to deal with the probable increase in international disputes and Mutual Agreement Procedures that are likely to occur following the adoption of the OECD 2017 Guidelines into Irish law.
Read the Institute’s submission - http://taxinstitute.ie/Portals/0/Tax%20Policy/Revenue%20Practice%20and%20Representations/FinalSubmissiontotheDepartmentofFinancePublicConsultationonIrelandsTransferPricingRules.pdf
Making Tax Digital becomes law
On 1 April 2019, the UK Government’s Making Tax Digital programme became law for over one million VAT-registered businesses earning more than £85,000. The new rules mean most UK businesses above the VAT threshold will need to keep their records digitally and submit their VAT return, using compatible software for VAT periods starting on or after 1 April.
The Netherlands and Germany release a joint statement on global minimum tax
Following a meeting of the German Finance Minister and the Dutch Ministry of Finance last week, a joint statement was released which notes that “BEPS is still a pressing issue with entities that are subject to no or low taxation” and that further measures are important to ensure a sufficient level of taxation globally. The statement refers the Global Base Erosion (GloBE) proposal that is under discussion within the OECD and says it ensures that all internationally operating businesses pay a minimum level of tax and reduces the incentives to allocate returns for tax reasons to low taxed entities. The statement notes the two countries commitment “to further work out this minimum tax standard, while taking into account undesired risks of double taxation and over‐excessive administrative burdens”.
The Netherlands has already decided to introduce a withholding tax on interest and royalties from 2021. From that date, companies based in countries with a corporation tax rate of under 9% will pay the Dutch tax authorities a 20.5% tax on any interest and royalties they receive from the Netherlands. The same will apply to companies in countries on the EU ‘Blacklist’ of non-cooperative jurisdictions for tax purposes.
Read the Dutch Ministry of Finance’s press release - https://www.government.nl/ministries/ministry-of-finance/news/2019/03/27/netherlands-and-germany-agree-to-work-together-on-minimum-tax-rate
EU Joint Transfer Pricing Forum
The EU Joint Transfer Pricing Forum has agreed a Report on the application of the profit split method within the EU. The report clarifies key concepts under which conditions to use the method and how to split the profit.
New consolidated version of the Explanatory Notes to the Combined Nomenclature
The European Commission has published a new consolidated version of the Explanatory Notes to the Combined Nomenclature (CN) in 23 EU languages. The Explanatory Notes to the CN are an important aid for interpreting the scope of the various tariff headings but do not have legally binding force. The Explanatory Notes were established by Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff. The latest version is now available from EU Official Journal C 119 (https://eur-lex.europa.eu/legal-content/EN/TXT) of 29 March 2019.
Tax administrations agree global action on delivering tax certainty
The OECD’s Forum on Tax Administration (FTA), of which Ireland is a member, met in Chile on 26-28 March. The agenda focused on tax certainty, enhanced tax co-operation and the collective challenges of digital transformation. FTA members agreed:
- To ramp up work on tax certainty, with 17 FTA members, including Ireland participating in the second phase of the pilot on the International Compliance Assurance Programme (ICAP)
- To support policymakers in the development of new standardised reporting requirements to facilitate international exchange of information on those selling goods and services through the sharing and gig economy
- To pursue collective work on the effective use of the vast amount of information on offshore accounts currently being exchanged under the OECD/G20 Common Reporting Standard
- To set out in concrete and practical terms a digital vision for Tax Administration 2030 and to help reduce compliance burdens for small and medium sized enterprises through the use of new technologies
Netherlands deposits instrument of acceptance of the Multilateral BEPS Convention
The OECD has announced that on 29 March 2019, the Kingdom of the Netherlands deposited its instrument of acceptance of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“the MLI”). Georgia has also deposited its instrument of ratification for the MLI.