Business Plus

‘We are on the precipice of a fundamenta­l change in global tax policy’

- DARYL HANBERRY Head of Tax & Legal Deloitte

ACTIVITY On the day-to-day side of our business, we are seeing far more Revenue interventi­ons on a range of topics and our teams are helping our clients address and respond to those queries and audits. These are across all tax heads, with significan­t interventi­ons on the transfer pricing and employment tax side. For example, in relation to employment tax we are seeing challenges in areas where the law has not changed and had previously been accepted practice. And yet in the absence of new guidance, we are still seeing these areas being examined in depth during an audit process.

The fundamenta­l reform of global tax rules has resulted in complex, technical and significan­t changes to Irish tax rules. The rules are dominating Irish corporate tax policy in terms of both the sheer volume of changes to our tax law and administra­tion of the corporate tax system for companies within scope of the new rules.

At the same time, the introducti­on of enhanced reporting requiremen­ts for nontaxable benefits is also placing an extreme administra­tive burden on clients. What we are finding is that companies and their systems will struggle to comply with the process as currently outlined by Revenue.

The variety of post-pandemic working models, such as working from home, hybrid working, and satellite offices have become the norm for the majority of our clients. We continue to be busy working closely with our clients to align their strategies, policies, and operations to address the potential talent and tax implicatio­ns of remote working.

The increasing role of technology in our tax practice has resulted in an expansion of our Tax Technology Consulting team. We now have a number of technology specialist­s as part of each of our tax service lines to help our tax qualified teams develop innovative cutting edge solutions to our clients.

TAX POLICY We are on the precipice of a fundamenta­l change in global tax policy. These Pillar 2 rules necessitat­e the need now for Ireland to adopt more of a territoria­l regime of taxation, where the administra­tion burden on companies would be significan­tly reduced. This is a pivotal requiremen­t along with prioritisi­ng simplifica­tion of the complex, existing double tax relief provisions in the Irish tax code.

Indigenous business must be supported through meaningful reform of enterprise tax measures. One particular area is the Key Employee Engagement Programme (KEEP), which aims help smaller firms who cannot compete with larger firms in cash remunerati­on terms to attract and retain talent in a challengin­g labour market. The current KEEP legislatio­n has presented a number of difficulti­es in operating the scheme effectivel­y, which has put SMEs on the back foot in terms of competing in the labour market. Changes introduced to the scheme in the last Finance Act are welcome. However, some challenges remain, such as the definition of a holding company for KEEP and the lack of a safe harbour or Revenue guidance regarding the valuation of shares.

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