Pearse Trust Blog

The Organisation for Economic Co-operation and Development (OECD) published a report on 10 May 2012, detailing the tax burdens imposed on employment income across the 34 OECD countries.

There are many beneficial European influences on Irish tax law. The purpose of this blog is to give the reader a flavour of the more important of such effects.

Earlier this year we published a blog on the Exchange of Information Agreement between the Isle of Man and the UK At the end of the article we wondered which country might be next to sign up for this type of agreement. Not long afterwards, on 18 March, Guernsey announced a ‘FATCA style’ agreement with the UK. Peter Harwood, the Chief Minister in Guernsey, announced that the exchange of information deal with the UK was an effort to combat tax evasion and stated: 

An annual Local Property Tax (LPT), applicable to all residential properties in Ireland, will come into effect from 1 July 2013.  The LPT will be administered by the Revenue Commissioners, under self-assessment, and will be charged on the market value of the property.

The UK’s Budget was announced on March 20^th.  As the Chancellor put it himself there were no easy answers to the problems currently facing the UK economy. The tax content of the speech included strong words on tax avoiders and abusers, with further commitments to incentivise businesses and individuals who stay the right side of the line. While there were no major surprises or changes to the UK tax system, there were some alterations worth noting.

Following concerns expressed by the French, German and UK Governments about the use of Base Erosion and Profit Sharing schemes (“BEPS”) by multinational companies, the Organisation for Economic Co-operation and Development (“OECD”) has published a report detailing the pertinent issues involved.

The Isle of Man Government has agreed that the island’s banks will report on their British clients’ financial transactions to the UK tax authorities. Both Governments will collect the information from their banks and exchange this information on an annual basis. This information sharing agreement will closely follow those negotiated with the US. Allan Bell, Chief Minister of the Isle of Man, described the move as a “major repositioning of the Isle of Man for the future”.

Irish tax legislation provides very favourable tax treatment for companies wishing to commence trading in Ireland. Where certain conditions are met the relief provides that qualifying companies will be exempt from Irish Corporation Tax (“CT”) on trading income and certain gains in the first three years of trading where the trade starts in 2013 or 2014. 

In our previous blog post entitled ‘Acceleration of UK Corporate Tax rate Reductions’, we discussed the announcement in Budget 2012 of the decision to accelerate the reduction in the main UK Corporation Tax rate from 26% to 24%, with effect for the financial year commencing 1 April 2012.