Dáil Éireann Debate, Wednesday - 10 March 2021
306. Deputy Christopher O'Sullivan asked the Minister for Finance if he will consider extending the current tax warehoused at 0% from 12 months to an additional 48 months given that some businesses have remained closed throughout the Covid-19 pandemic; and if he will make a statement on the matter. [13433/21]
View answerI am advised by Revenue that the current tax warehousing schemes allow for the deferral of collection of certain tax liabilities relating to “Period 1”, the “Covid-19 restricted trading period”. The tax liabilities that may be deferred or “warehoused” are VAT, PAYE (Employer) liabilities, excess Temporary Wage Subsidy Scheme (TWSS) payments due to be refunded to Revenue by employers, and certain self-assessed income tax liabilities.
In the case of VAT, PAYE (Employer) and excess TWSS liabilities, Period 1 refers to the period when a business has been unable to trade due to the Covid-19 related restrictions and includes the first full two monthly VAT period after the business resumes trading. For example, if a business has been closed due to Covid-19 restrictions but resumes trading in April 2021, it will be able to warehouse liabilities accrued from March 2020 up to the end of June 2021.
Revenue has confirmed that where a business re-opened but has had to close again due to the re-imposition of restrictions, the trade is deemed to be still subject to the restrictions provided for in the regulations under sections 5 and 31A Health Act 1947 until it has re-opened again. This means that VAT, PAYE (Employer) and excess TWSS liabilities for such businesses can continue to be warehoused in respect of the extended restricted period.
Following the expiration of Period 1, businesses are afforded a further 12 months (“Period 2”) during which collection of warehoused liabilities will be deferred.
No interest will be charged on outstanding Covid-19 liabilities in either Period 1 or Period 2. In cases where businesses have been subject to re-imposition of restrictions intermittently since March 2020, the earliest liabilities warehoused (Jan/Feb VAT and Feb PAYE) have already been warehoused at 0% interest for almost 12 months. Where such businesses do not resume trading until April 2021, these liabilities may be warehoused at 0% interest for a period of 28 months in total (from March 2020 until June 2022). Interest on warehoused liabilities is charged thereafter at c. 3% per annum until the liabilities are paid in full (this is “Period 3” of the warehousing scheme).
Legislation underpinning the warehousing of VAT, PAYE (Employer) liabilities and overpayments of TWSS provides that Period 2 may be extended by Ministerial order but cannot extend beyond 31 December 2022. This is to ensure compliance with EU State Aid rules, provided for under the EU Temporary Framework for State Aid measures to support the economy in the current COVID-19 outbreak.
The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with Ministerial colleagues to ensure that appropriate supports are in place to mitigate these effects.
