Tax Time Podcast – Global minimum tax rate

This podcast was recorded on 11 February 2022.

David Moran, Tax Associate Director with Grant Thornton is joined by Peter Vale, Tax Partner in Grant Thornton Ireland.

David discusses the latest developments in the world of tax. Peter shares his insights into the proposed minimum global tax rate and what taxpayers should consider in advance of its implementation.

Public Consultation on a Territorial System of Taxation

On the 22^nd of December 2021, the Minister for Finance Paschal Donohoe published a public consultation on a territorial system of taxation in which he has invited the public and interested stakeholders to provide their views on a move to a territorial regime of tax. It is noted that the public consultation is mainly intended as a scoping exercise seeking to identify the benefits, costs, opportunities and risks of such a move.

Submissions can be made to the Tax Division of the Department of Finance up to the 7^th of March 2022.

Finance Act 2021 Round Up

The Finance Act 2021 was signed into law on the 21^st of December 2021 implementing a range of new tax measures as announced on Budget Day.

Some of the measures included in the Act were:

• An increase of €1,500 to the standard rate cut off point for income tax and an increase in the second band ceiling for USC, which is aimed at helping taxpayers with the increased cost of living;
• Increase of €50 in the personal tax credit, employee tax credit and earned income credit effective from the 1^st of January 2022;
• EWSS regime extended to the 30^th of April 2022; however the scheme will close to new entrants from the 1^st of January 2022;
• An exemption from Benefit In Kind (“BIK”) with respect to employer provided Covid-19 tests, where the test is necessary for the performance of duties of employment. This was also extended to provide an exemption from BIK for flu vaccines provided by an employer where the vaccines are made available to all employees;
• Increase in the deduction from income tax from 10% to 30% in relation to light and heat costs incurred by employees whilst working from home;
• New interest limitation rules effective from the 1^st of January 2022;
• A new tax regime for non-resident corporate landlords which increases the rate of tax from 20% to 25%;
• A new digital gaming credit;
• A new zoned land tax which aims to replace the vacant site levy;
• Changes to the Irish transfer pricing regime and much more.

Revenue guidance on the importation of motor vehicles from the UK

Revenue released guidance on the 31^st of January 2022 dealing with the importation of motor vehicles from the UK. This guidance contains details on customs procedures, including different requirements for vehicles first registered in Great Britain compared to those first registered in Northern Ireland.

Pandemic Unemployment Payment

The Department of Social Protection released a statement on the 21^st of January 2022 noting that the PUP will close to new applicants on the 22^nd of January 2022 in line with the lifting of government restrictions. From the 8^th of March, any individual in receipt of the PUP will move to a weekly rate of €208 and finally PUP recipients will be transitioned to standard job seekers terms and if eligible, will receive jobseekers payment from the 5^th of April 2022.

Debt warehousing regime

The debt warehousing regime was a vital support offered to businesses at the height of the pandemic to assist with the cashflow burden faced by many businesses. The warehousing regime is broken into three phases as noted below:

Phase I – Tax warehousing period ended the 31^st of December 2021 (extended to the 30^th of April 2022 in certain circumstances).

Phase II – Interest free period for debt warehoused in Phase I ended the 31^st of December 2022 (extended to the 30^th of April 2023 in certain circumstances).

Phase III – Interest period commencing on the 1^st of January 2023 where a rate of 3% will be applied to any update debt warehoused at the 1^st of January 2023 (extended to the 1^st of May 2023 in certain circumstances).

Most businesses are now in Phase II and are advised to consider their warehoused debt in advance of Phase III.

EWSS

The Minister for Finance Paschal Donohoe has noted on the 3^rd of February that the EWSS is coming to a close with most businesses qualifying for the subsidy moving to the reduced weekly rate of €151.50 or €203 (depending on gross weekly wage) per employee for February followed by the weekly rate €100 per employee for March and April.

Businesses that were impacted by the public health regulations in December 2021 will continue to receive the enhanced rates for February with the graduated step-down in the subsidy rates being pushed out by a month and the scheme ending for these businesses on the 31^st of May 2022.

Global Minimum Tax Rate

Peter Vale, Tax Partner in Grant Thornton Ireland, discusses the proposed global minimum tax rate being introduced by the OECD and what this new minimum tax rate would look like, including what taxpayers should consider now.

• Benefits for Ireland of the certainty of a 15% rate as opposed to a rate of at least 15%.
• The Model Rules outlined by the OECD and the draft Directive released by the EU.
• Global scope of this reform and how individual jurisdictions will transpose these rules into their national legislation.
• Importance of taxpayers engaging early, identifying whether you fall within the remit of this reform and what steps you should consider.