Debt Warehousing Scheme
In December, the government announced an extension to the Debt Warehousing Scheme to help businesses impacted by the public health restrictions. Period 1 was extended by three months to 31 March 2022 for taxpayers eligible for the Covid-19 support schemes.
This would allow these businesses to continue to warehouse their PAYE (Employer) liabilities for the first three months of the year and warehouse their bi-monthly VAT for January/February 2022.
On 21 January, the government extended this period by a further month to 30 April 2022, to assist businesses as they reopen and allow them to warehouse the liabilities for their April payroll taxes and the bi-monthly March/April 2022 VAT return.
The government announced an extension to the Debt Warehousing Scheme to help businesses impacted by the public health restrictions
Revenue has updated its Information Booklet: Warehousing of Tax Debts Associated with COVID-19 to provide further details on this development. It clarifies that the extension to 30 April 2022 applies to those 'businesses entitled to and who have made a valid claim for a relevant Government COVID-19 Support Scheme(s) during the period from 1 January 2022 to 30 April 2022'. The schemes referred to would include the Employment Wage Subsidy Scheme (EWSS) and/or the Covid Restrictions Support Scheme (CRSS).
Once period 1 ends on 30 April, these businesses will be able to 'park' their warehoused liabilities at a zero rate of interest for one year (until 30 April 2023), before repayment must commence at a reduced rate of interest of 3%.
Period 1 ended on 31 December 2021 for all other businesses that participated in the Debt Warehousing Scheme. As a result, their current tax liabilities fall due for payment in the normal manner as they arise. These businesses will also have to engage with Revenue by the end of 2022 to agree terms for paying their warehoused debt.
The COVID-19 Pandemic Unemployment Payment (COVID-PUP) closed for new applications following the lifting of public health restrictions from 22 January. Individuals still in receipt of the COVID-PUP by 8 March will move to a reduced weekly rate of €208. The standard jobseeker’s terms and payments will apply from 5 April.
The COVID-PUP closed for new applications following the lifting of public health restrictions from 22 January
The predecessor of the EWSS was the Temporary Wage Subsidy Scheme (TWSS). Under this scheme, government wage support payments were made to employees via their employers during 2020. Tax was not collected from employees on this income through the payroll. However, PAYE taxpayers could opt to have the tax due on the TWSS collected over four years by a reduction to their tax credits starting in 2022.
In early December, tax credit certificates (TCCs) were made available to PAYE taxpayers online, reflecting the tax credits and rate bands that apply for 2022. These were also coded to collect underpayments for 2020 arising from the TWSS (and from the COVID-PUP, where relevant) for PAYE taxpayers who had submitted an income tax return for 2020 with an underpayment and opted to have this collected over four years.
In the coming months, Revenue will communicate with PAYE taxpayers who have an underpayment in relation to 2020 but have yet to file a 2020 income tax return. This will allow an employee’s tax position for 2020 to be finalised and the relevant adjustments made to their tax credits.
At the end of 2021, the European Commission (EC) proposed a Directive to implement the Pillar Two Global Anti-Base Erosion (GloBE) Model Rules, published by the OECD. The Model Rules provide for a co-ordinated system of taxation that imposes a top-up tax on profits arising in a jurisdiction whenever the effective tax rate, determined on a jurisdictional basis, is below the minimum rate of 15%.
The proposed Directive closely follows the OECD Model Rules to implement a global minimum tax for large multinational groups in the EU with some modifications. For example, it extends the Model Rules to large-scale purely domestic groups, to ensure compliance with EU fundamental freedoms.
The European Commission is seeking feedback on the proposal for a Directive on preventing the misuse of shell entities
The EC is also seeking feedback on the proposal for a Directive on preventing the misuse of shell entities for tax purposes. The proposed ATAD 3 Directive sets out certain criteria (referred to as ‘gateway’ criteria and substance requirements), which will allow tax administrations to designate an entity as a shell. Such shell entities would be subject to new reporting obligations and denied benefits available under applicable tax treaties and secondary EU law.
The commission is inviting stakeholder feedback on both of these measures by 28 March. More information on these developments can be found on the Tax and Customs section of the EC website.
While every effort has been made to ensure the accuracy of this information, the Irish Tax Institute does not accept any responsibility for loss or damage occasioned by any person acting, or refraining from acting, as a result of this material.