U.S. and Ireland sign an agreement on the exchange of CbC reports

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According to an IRS announcement on its website, the competent authorities of U.S. and Ireland have concluded an arrangement on the exchange of Country-by-Country Reports. The competent authority arrangement (CAA) for exchange of country-by-country reports is on the basis of a double tax convention (DTC). The agreement was signed on 15 June 2017.

Under the arrangement, the first fiscal year for which the U.S. and Ireland intend to exchange CbC reports is the fiscal years of MNE Groups commencing on or after January 1, 2016. The CbC report is intended to be exchanged as soon as possible and no later than 18 months after the last day of the fiscal year of the MNE Group to which the CbC report relates. CbC reports with respect to fiscal years of MNE Groups commencing on or after January 1, 2017 are intended to be exchanged as soon as possible and no later than 15 months after the last day of the fiscal year of the MNE Group to which the CbC report relates.

The Competent Authorities intend to exchange the CbC Reports automatically through a common schema in Extensible Markup Language (XML).

Ireland: Summer Economic Statement 2017

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On 12 July 2017, the Minister for Finance and Public Expenditure & Reform, Mr. Paschal Donohoe T.D, published the Government’s Summer Economic Statement (SES).  The Statement is an integral part of the reformed budgetary process that facilitates a discussion of the options in advance of the annual Budget in October. The Summer Economic Statement sets out the key elements of the Government’s economic strategy. This revolves around 6 key pillars:

  • Ensuring sound and sustainable public finances;
  • Managing public expenditure to ensure maximum return on taxpayers’ resources;
  • Targeted increases in public investment;
  • Reforming the tax system to ensure it is growth-friendly;
  • Ensuring inclusive growth;
  • Facilitating access to finance, especially for SMEs.

The Statement, which outlines the broad parameters of the Government’s economic strategy, also provides an updated assessment of the fiscal space for next year – this is estimated at €1.2 billion, consistent with ‘balancing the books’ next year.  The full-year costs of measures introduced for this year mean that the current scope for new additional measures is around €500 million for next year.

Minister Donohoe highlighted the importance of looking at the totality of Government spending rather than the incremental changes each year and outlined that the Government would prioritize limited resources in those areas where needs are greatest. The SES sets out that the Government will:

  • Balance the books next year;
  • Implement sensible budgetary policies designed to ensure stability and continued improvements in living standards;
  • Establish a rainy day fund from 2019 onwards, to be capitalized with annual contributions of €500 million from the Exchequer;
  • Increase capital investment by an additional €500 million in each of the years 2019-2021.
  • Focus on the totality of expenditure which amounts to around €60 billion.
  • Continue to reduce the debt to GDP ratio until the 60% legal threshold is achieved. Thereafter work will begin on reducing the ratio to 55% of GPD and, once major capital projects have been completed, the reduced rate of 45% will be targeted.

Ireland: Revenue assessment in the absence of a return

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On 19 June 2017, the Irish Revenue published the Tax and Duty Manual Part 41A-05-02 that has been amended in paragraph 1 in relation to the pursuit of outstanding returns and in paragraph 4 in relation to appeal provisions.

According to this manual, where a taxpayer has failed to submit a Form 11, CG1 or CT1, as appropriate, section 959O of the TCA 1997 provides that penalties under section 1052 and 1054 may arise. In addition, a surcharge under section 1084 may apply (refer to Part 47-06-01 of the Tax and Duty Manual). Notwithstanding the provisions of sections 1052, 1054 and 1084, outstanding returns are pursued under the Return Non Filer Programme and, where appropriate, prosecution is considered under section 1078.

Furthermore, where a taxpayer has not filed a return (be that a Form 11, CG1 or CT1), then a Revenue Officer may, under section 959AC, make a Revenue Assessment on that person for the amount of tax, which in the best of the officer’s judgment, is due.

Ireland amends Capital Acquisitions Tax manual

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On 12 June 2017 the Irish Revenue published the amended Capital Acquisitions Tax manual dealing with business relief. This involves changes to Part 12 to incorporate material from Tax Briefing No. 33 (September 1998) in relation to the treatment of debts attributable to assets that are not used for the purposes of the business concerned.

Ireland: Interaction of PAYE and Self Assessment Procedures

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On 12 June 2017 the Irish Revenue published the amended Part 42-04-13 of the Income Tax, Capital Gains Tax and Corporation Tax Manual. The amendments reflect the changes to the income thresholds which are applied in determining whether an individual with sources of PAYE and non-PAYE income is a chargeable person for self-assessment purposes.

The changes, which apply for the tax year 2016 and subsequent years are as follows:

  • The income threshold in section 959B(1)(a) of the TCA 1997 has been increased from €3,174 to €5,000.
  • The gross income threshold has been reduced from €50,000 to €30,000.

Ireland: Charges on income for corporation tax purposes

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On 12 June 2017, the Irish Revenue published updates to the Tax and Duty Manual Part 08-02-01 dealing with charges on income for Corporation Tax purposes. The principal updates are in relation to interest as a charge on income under section 247 Taxes Consolidation Act 1997. In particular, the revised manual contains information on the anti-avoidance provisions that apply in respect of section 247 and related exclusions.

The updated manual also addresses the availability of relief under section 247 where shares are acquired pursuant to a court-approved scheme of arrangement effected in accordance with Chapter 1 of Part 9 of the Companies Act 2014.

Ireland: New Tax-Geared Penalties for Non-Submission of Returns

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On 12 June 2017, Irish Revenue published the manual Tax-Geared Penalties for Non-Submission of Returns, that provides guidance as to the application of tax-geared penalties under section 1077E TCA 1997 in circumstances where the taxpayer has failed to deliver a return on or before the specified return date as set out under Chapter 3 Part 41A TCA 1997.