Ireland’s Tax Agenda

Leading tax experts tell John Kinsella about client tax priorities, why tax policy matters, the challenge of warehoused tax debt, and tax incentives favoured by owner-managers

COLM O’CALLAGHAN Tax Partner PwC Private

ACTIVITY Ireland’s economy continues to perform well with strong fiscal returns despite continued cost pressures and moderating global economic growth. Strong demand for PwC’s services continues across all tax heads, and particularly from private businesses and the multinational sector.

A significant development last year for PwC was the acquisition of boutique tax practice Twomey Moran to form PwC Private. Twomey Moran has further strengthened the firm’s ability to service Ireland’s private businesses, family businesses and high-net-worth individuals right across the country. PwC Private is now a group of more than 150 specialists, led by over 20 partners, including our new colleagues who joined us from Twomey Moran.

TAX POLICY Ireland will need proactive corporate tax measures to maintain its global competitive edge. This will be more important than ever after global tax reforms like Pillar Two come into effect. One of the major challenges Pillar Two presents will be the administrative burden of new compliance obligations and the support businesses need in getting ‘Pillar Two ready’ as early as possible. Therefore, where possible the compliance burden for business needs to be eased. It is also critical that tax policy should support investment and innovation in indigenous businesses. This was very much reflected in the positive announcements made in Budget 2024.

WAREHOUSED TAX DEBT Revenue have been very pragmatic with respect to clients who face the challenge of making good payments of warehoused tax debt. It is an involved process and one that can be stressful for businesses already struggling with rising costs. However, through early engagement a reasonable repayment schedule can be obtained and one which both sides are agreeable to.

TAX INCENTIVES Ireland’s personal tax system must support and reward owner managers and entrepreneurs. If we fail to support and encourage entrepreneurs within our economy we will ultimately fail to support our indigenous economy and all the jobs that go with it. Therefore, it was great to see some positive announcements in the recent budget aimed at reducing the income tax burden. The introduction of a new targeted CGT relief for angel investors in innovative start-up SMEs is a great step towards further supporting owner managers as they build their business.

‘There has been a notable increase in tax complexities’

Head of Tax Mazars

ACTIVITY Given the substantial international tax reforms either in effect or on the horizon, there has been a notable increase in complexities related to transfer pricing, interest limitation rules, and the determination of taxable business presence in specific jurisdictions. To address these evolving demands, Mazars has established a dedicated transfer pricing team in conjunction with our centre of excellence based in Hungary. This initiative positions us to more effectively meet the expanding needs of our clients.

TAX POLICY It was recently announced that 15% corporation tax rate will be legislated for by way of a top-up tax. Early indications are that the tax calculations will be complex, and that needs to be addressed. In addition, the proposed branch exemption and exemption from tax for foreign dividends should be brought in as soon as possible to ease the overall compliance burden. We also need to encourage people to come to Ireland and our personal tax system is not aligned to our corporate tax, R&D and intangible asset regimes. Personal tax rates up to 52% are very high by international standards.

WAREHOUSED TAX DEBT Revenue have been proactive in approaching taxpayers and in general are supportive of reasonable arrangement to pay the liabilities. The acid test will be keeping the repayments up to date. It will take 12 to 24 months to see what challenges will arise.

TAX REFORM One long-standing and annoying feature of our tax system is the close company surcharge of 15/20% on certain income unless the profits are distributed to the shareholders. This surcharge in the main applies to services of a professional nature that employ many people and require significant working capital. The ending of this surcharge would help to better capitalise these businesses and incentivise businesses to grow, develop and increase their workforces.