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| Ernst & Young Ireland - David Smyth , Head of Tax Services |
The Finance Bill 2007 (click on link to get comprehensive details) was published today by the Minister for Finance Brian Cowen T.D.
"Buried in the middle of the Bill, is a provision that will allow Irish companies to pool the tax paid by branches around Europe before they have to pay any Irish tax. This will encourage industrial and financial services groups to establish pan-European operations from Ireland. This is a fantastic development, it is the ideal complement to the 12.5% corporate tax rate."
David Smyth
Head of Tax
Ernst & Young Tax Services
"The changes to the CREST stamp duty system are welcome in that they reduce uncertainty, going forward, around the Irish stamp duty treatment of contracts for differences and other areas where the UK and Irish stamp duty rules differ. The 1% stamp duty charge on share transfers needs to be reconsidered. It discourages Irish people from investing in the companies they know best, it drives down liquidity in the Irish market, it reduces the value of pension funds, it causes Irish people foreign exchange difficulties when they buy shares in foreign markets where there is no stamp duty. Worst of all it encourages Irish people to invest indirectly in Irish shares using short-term leveraged derivatives and not by buying real shares."
Aidan Walsh
Tax Partner
Ernst & Young Tax Services
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| Ernst & Young Ireland - Breen Cassidy, Tax Partner Indirect Tax Services |
"The Finance Bill has clarified the specific measures to be introduced in respect to the deductibility of VAT incurred in respect to conference related accommodation expenses which was announced in the budget.
This is a welcome development which goes some way to address Ireland’s competitive disadvantage vis a vis other EU Member States when attempting to attract the lucrative conference centre business to Ireland. There is however still scope to extend the legislation further to include other conference expenses."
Breen Cassidy
Tax Partner
Indirect Tax Services
Ernst & Young
"Although the Finance Bill primarily introduced legislation in support of measures announced on Budget Day there are a number of new measures.
In a positive move husband and wives will be looked at separately in determining the restriction of relief for high earners.
In a retrograde step legislation has been introduced to delay the repayment of taxes where a taxpayer wins their case at the appeal commission, or circuit court until the Revenue have exhausted each stage of the court process."
Jim Ryan
Tax Partner
Human Captial
Ernst & Young
European influence been so obvious in Irish Tax Legislation
The Institute of Chartered Accountants in Ireland said today that never before has European influence been so obvious in Irish Tax Legislation, following the publication of today’s Finance Bill.
“In a Bill which contains few surprises it is the power of the EU institutions in determining Irish Tax Policy that stands out’” according to ICAI Director of Taxation, Brian Keegan.
“The proposed new domestic reliefs, such as the revisions to the BES, the Shannon Area tourism incentives, and the new regime for the bloodstock industry are all subject to Brussels approval. Other reliefs, such as the relief for cross border losses incurred by groups of companies, are actually required by decisions of the European Court of Justice. Even some of the apparently unilateral reliefs being introduced, such as tax credits in Ireland for Capital Gains Tax paid in other countries, are pragmatic measures reflecting Ireland’s position in the European context.” Many of the VAT, Excise and Vehicle Registration Tax changes are also the consequence of European rulings and decisions.
Unfortunately the measures announced in the 2007 Budget to help ensure taxpayers can avail of their tax relief entitlements are counterbalanced in the 2007 Bill by further compliance and enforcement powers being granted to Revenue. “Revenue will now have further powers to insist on information being provided to them in electronic format. This will undoubtedly make their job easier, but such measures are apparently being put in place without taking account of compliance costs for taxpayers” said Keegan.
The proposals for groups of companies paying Corporation Tax which allow such groups to take into account their overall payments in case of any individual company shortfall are good and fair. Combined with the related changes announced at Budget time, a significant overhaul of the Corporation Tax rules to the benefit of compliant companies has been achieved.
Irish Taxation Institute welcomes BES incentives in particular
The Chief Executive of the Irish Taxation Institute (ITI), Mark Redmond today welcomed the publication of Finance Bill 2007, and in particular the extension and expansion of the BES tax incentive scheme. “ITI has highlighted the importance of the small business sector in sustaining growth in the economy and is delighted to see recognition of this in the Finance Bill,” said Redmond, “Last month’s Government survey underlined the success of BES schemes in creating jobs and helping small businesses achieve greater growth and increase profitability, proving beyond doubt that the BES model produces winners on all sides, including ultimately the Irish economy and taxpayers generally.
“ITI is also fully behind the introduction of incentives to promote tourism in the midlands,” said Mark Redmond “As we have pointed out previously, tax policy innovation such as this can be used to great effect to target specific areas of the economy in need of extra focus.” said Redmond. “This scheme has the potential to provide a permanent boost to local economies in the region.”
“We are also very pleased at the measures introduced in the Bill to make it easier for ordinary taxpayers to get their tax entitlements.” said Redmond, “ITI has been campaigning to make the tax system less intimidating for the public so that ordinary taxpayers are encouraged to claim back money that is rightfully theirs. We particularly welcome the measures to radically simplify relief for health expenses”
Shannon Development
Warmly welcoming the announcement today of the new Mid-Shannon Corridor Tourism Infrastructure Investment Scheme, Kevin Thompstone, Chief Executive, Shannon Development, said “Two years ago, Shannon Development made a detailed submission to the Department of Finance calling for the setting up of a special tax incentive scheme to encourage sustainable tourism development along the River Shannon Corridor. Shannon Development is delighted that many of the proposals contained in its March 2005 submission have been incorporated into the Scheme announced today by Minister for Finance, Mr Brian Cowen TD”.
Thompstone said “Shannon Development congratulates the Minister on introducing this imaginative Scheme, which addresses the economic challenges identified by Shannon Development in its submission, which included weaker tourism performance, declining population, and the lower levels of income along the River Shannon Corridor”.
“As the tourism agency for the Shannon Region, incorporating Counties Clare, Limerick, North Tipperary, and Southwest Offaly, Shannon Development looks forward to working with the Departments of Finance, and of Arts Sports and Tourism, and with Failte Ireland, in the successful implementation of this innovative Scheme. The Scheme will complement the work that Shannon Development has been engaged in with the local authorities along the River Shannon Corridor in the provision of tourism infrastructure, private sector developments, and in tourism marketing,” said Thompstone.
VAT Reform
The Irish Hotels Federation (IHF) today stated that the inclusion in the Finance Bill of a provision to allow business delegates attending conferences to reclaim VAT paid on hotel accommodation is a tremendous boost to the competitiveness of Ireland in the international business tourism market. The VAT reform announced by Brian Cowen T.D., Minister for Finance, in the 2007 Finance Bill published today, will be a major contributor to Ireland significantly growing its share of the lucrative business tourism market valued at €40 billion globally. The IHF also strongly welcomed the tax incentives announced for mid-Shannon region to stimulate tourism growth and provide a platform to take advantage of its tourism potential.
The IHF praised the Minister for addressing Ireland’s historic competitive disadvantage relative to other European countries, even Britain and Northern Ireland. The IHF believes that the communication internationally of this VAT reclaim measure together with the soon to be announced international convention centre for Dublin could see a doubling of the volume of Ireland’s share of international business tourism over the next seven years.
According to Annette Devine, President of the IHF, which represents over 1,000 hotels and guesthouses employing almost 60,000 people in the tourism industry, the measure now gives Ireland a level playing pitch when competing for an increased share of the lucrative, high end global business conference and incentive travel market. “It was vital this tax anomaly was reformed as Ireland was losing out to other destinations where VAT was refundable. Considering the National Conference Centre is being progressed and conferences organisers are looking at Ireland for potential international events when it is open for business, the VAT reform will now be a part of the overall business proposition to attract these major international events. We would suggest that this is one of the most important fiscal reforms undertaken in the last decade to assist the tourism sector,” says Devine.
The IHF maintains that the reform will be a major contributor towards meeting the ambitious targets set by the Government’s Tourism Policy Review Group to increase visitors to Ireland to 10 million people by 2012. It will greatly assist marketing efforts to establish Ireland as an attractive destination on the international conference map.
