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Ireland Extends Deadline for Firms to Pay Deferred Tax Debt

Posted on Oct. 19, 2022

Ireland has extended by one year the deadline for businesses that have experienced cash flow and trading difficulties during the COVID-19 pandemic to clear outstanding tax debts or enter into a payment arrangement.

Businesses must clear their warehoused tax debt or enter into a payment plan with Revenue by May 1, 2024, instead of May 1, 2023, according to an October 17 Revenue release. Moreover, from January 1, 2023, businesses will be able to take advantage of the reduced 3 percent interest rate instead of the general 10 percent interest rate when they pay their debt.

“Revenue appreciates the very significant challenges that businesses are currently experiencing in meeting their tax obligations, arising from the impacts of the energy costs crisis and the financial pressures these have placed on businesses as they continue their recovery from the pandemic,” Collector-General Joe Howley said in the release.

Revenue will provide statements of debt and an official announcement of the deadline extension to all businesses with warehoused debt in early December, the release says. Howley encouraged businesses to keep records of returns and payments up to date and engage early with Revenue if they experience payment difficulties.

The vast majority of the €2.58 billion in warehoused debt belongs to 7,500 taxpayers, according to statistics published by Revenue October 17. However, most warehoused debts are small, with nearly 50,000 taxpayers owing less than €5,000.

Ireland introduced the debt warehousing scheme in May 2020 to provide liquidity to businesses during the pandemic by allowing them to warehouse tax debt. Debt warehousing applies to VAT, taxes in the Pay As You Earn system (income tax, social insurance, universal social charge, and local property tax), some income tax liabilities, and subsidy scheme overpayments.

Changes to Budget 2023 Measures

Finance Minister Paschal Donohoe has outlined changes to the defective concrete products levy and the rental tax credit, both of which were announced in the 2023 Irish budget.

In an October 18 address, Donohoe said that after receiving feedback from the industry, the government has decided to lower the rate of the defective concrete products levy to 5 percent and delay its application until September 1, 2023, according to a Department of Finance release. The government has also removed precast concrete products from the scope of the levy. Pouring concrete and concrete blocks remain in its scope, the release says.

The defective concrete products levy was designed as a 10 percent tax on concrete blocks, pouring concrete, and other concrete products to help fund the mica redress scheme, which provides financial support to homeowners who experienced damage because of the use of concrete blocks containing mica or pyrite in their homes.

“I have listened to concerns regarding the design and scope of the defective concrete product levy, and the changes I am announcing today get the balance right between reducing the levy’s impact while also ensuring consistency with the government decision on the Mica Redress Scheme,” Donohoe said.

Donohoe also said the government will extend the proposed €500 rental tax credit to parents who pay their children's third-level students’ rent when those students live in a tenancy registered with the Residential Tenancies Board. The rental tax credit expansion “will provide further help towards the cost of third level education and builds on the measures announced in Budget 2023 for the higher education sector,” Donohoe said.

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