VAT and Relevant Contracts Tax (“RCT”) in light of current landscape

 Irish and Global Assistance

Given the unprecedented situation facing taxpayers and the Irish economy as a result of the worldwide COVID-19 pandemic, the Irish Revenue Commissioners (“Revenue”) has been required to consider how it can assist taxpayers, and their agents, that are inevitably experiencing difficulties caused by the impacts of the COVID-19 virus. This also follows advice from the EU Commission suggesting that countries provide VAT payment delays and act in unison where possible.

Assistance to SME’s

On Friday, 13 March 2020, the Revenue announced a number measures to assist small and medium enterprises (‘SMEs’) experiencing cash-flow difficulties arising from COVID-19:

• Suspension of Interest: the application of interest on late payments is suspended for January/February VAT and both February and March PAYE (Employers) liabilities.
• Debt Enforcement: All debt enforcement activity is suspended until further notice.
• Tax Clearance: current tax clearance status will remain in place for all businesses over the coming months.

Importantly, Revenue still requires all businesses experiencing temporary cash flow difficulties to continue to send in tax returns on time.

Taxpayers, other than SMEs, which are experiencing temporary cash-flow or trading difficulties should contact the Collector-General’s office. Alternatively, such businesses can engage directly with their branch contacts in Revenue.

Suspension of RCT rate review

Revenue has also suspended the Relevant Contracts Tax (“RCT”) rate review that was scheduled to take place in March 2020 on the basis that a subcontractor’s RCT rate may increase due to changes in their compliance position as a result of this review. Despite the RCT rate review being suspended to prevent any increase in a subcontractor’s RCT rate, subcontractors can still check if their rate should be lower on the Revenue Online Service (‘ROS’) and can then ‘self-review’ to avail of a lower deduction rate.

“Green routing” status

Revenue have also announced that critical pharmaceutical products and medication will be given Customs ‘green routing’ status. The effect of this is that the normal checks of the goods and supporting documentation will not be required to facilitate uninterrupted importation and supply.

Worldwide response – Global VAT measures

Given the global nature of the COVID-19 pandemic, countries across the world have been forced to consider emergency tax breaks to support their threatened economies.

The table below summaries the global VAT measures already announced, as of Friday, 27 March 2020.