Dáil Éireann Debate, Wednesday - 7 October 2020
63. Deputy Richard Bruton asked the Minister for Finance the reliefs made available to enterprises in respect of tax liabilities arising during the Covid-19 crisis; the periods covered; and the way in which it is planned to recover the warehoused liabilities in the situation in which many enterprises will remain vulnerable for some considerable time. [29129/20]
View answerThe Financial Measures (Covid-19) (No. 2) Act 2020 put on a statutory footing the arrangements for the ‘warehousing’ of tax debts that Revenue had been operating on an administrative basis since the beginning of Covid-19 related restrictions in March 2020. The arrangements apply to VAT liabilities in respect of January/February 2020 to July/August 2020 inclusive and PAYE (Employer) liabilities in respect of February to August 2020 inclusive.
The legislation provides that outstanding VAT and PAYE (Employer) liabilities incurred during the period of restricted trading (known as Period 1) can be deferred for a period of 12 months after resumption of trading (known as Period 2). Rather than the normal interest rate of c. 10% per annum on such liabilities, interest on ‘warehoused’ debts is applied at 0% to the end of ‘Period 2’ and 3% thereafter until the liabilities are paid (known as Period 3). While the debt must ultimately be paid, taxpayers can repay it over an extended ‘Period 3’ timeline, depending on their financial circumstances and avail of the reduced 3% interest rate for the payment duration.
Access to the ‘warehousing’ arrangements is dependent on all outstanding tax returns being filed and current taxes being paid on a timely basis once trading is resumed. The 0% interest rate available in Period 2 can be extended to a date no later than 31 December 2022 by Ministerial Order. Businesses that avail of the ‘warehousing’ scheme also qualify for a Tax Clearance Certificate if they otherwise meet the normal qualifying conditions. This allows them to avail of other essential Covid-19 related supports such as the Employment Wage Subsidy Scheme (EWSS) and the Stay and Spend Scheme. There are almost 70,000 taxpayers and businesses currently availing of the ‘warehousing’ arrangements to the value of €1.8 billion (€978m VAT and €825m Employers PAYE).
As a further support measure for businesses, I also introduced the reduced 3% annual interest rate for certain non- Covid-19 related tax debts as part of the July 2020 Jobs Stimulus Package. This rate represents a significant reduction from the standard 8% and 10% rates that normally apply to such liabilities and is applicable across all tax-heads and outstanding debts that cannot be ‘warehoused’, for example older liabilities and as well as tax debts not associated with Covid-19. The interest rate reduction is a key incentive to businesses to bring their tax affairs into order, be tax cleared, and thereby become eligible for the other Covid-19 related supports that are available, including the EWSS and the Stay and Spend Scheme.
To avail of the reduced 3% rate, businesses are required to agree a payment arrangement with Revenue by 31 October 2020. Revenue has advised me that almost €50m of non-Covid-19 related tax debt is now covered by phased payments incorporating the reduced 3% rate.
