Dáil Éireann Debate, Wednesday - 24 May 2023
76. Deputy Colm Burke asked the Minister for Finance if he will confirm the interest rate that will be charged on the balance of tax liabilities which were deferred under the debt warehousing scheme; and if he will make a statement on the matter. [25152/23]
View answer77. Deputy Colm Burke asked the Minister for Finance if he will provide an update on the amount in tax liabilities that was deferred via the debt warehousing scheme from when it was implemented to date; and if he will make a statement on the matter. [25153/23]
View answer78. Deputy Colm Burke asked the Minister for Finance if he will provide a breakdown per sector, to include multinationals, retail and hospitality, on the amount in tax liabilities that was deferred via the debt warehousing scheme from when it was implemented to date; and if he will make a statement on the matter. [25154/23]
View answerI propose to take Questions Nos. 76, 77 and 78 together.
The Debt Warehousing Scheme allowed for the deferral of the payment of VAT, PAYE (Employer) and certain self-assessed income tax liabilities, including TWSS and EWSS overpayments. It provided a vital liquidity support to businesses during the Covid pandemic and continues to support businesses as they recover from the impacts of the pandemic and the current energy crisis. The scheme allowed for the parking of the debt at 0% up to 31 December 2022 (or 30 April 2023 for those in the extended scheme). A significantly reduced interest rate of 3%, as opposed to the general interest rate of 10%, applies from 1 January 2023 on the warehoused debt (or from 1 May 2023 for those in the extended scheme).
In October 2022, Revenue extended to 1 May 2024 the period during which debts can remain “parked” in the warehouse. This means that businesses no longer have the challenge of making arrangements to repay their warehoused debt until 1 May 2024. This significant additional time should greatly support businesses in their recovery from the impacts of the pandemic and the energy crisis and prevent business failure. Importantly also, businesses are still able to avail of the reduced 3% interest rate from 1 January 2023 when they come to pay the debt.
Businesses are reminded on an ongoing basis that it remains a key condition of the Debt Warehousing Scheme that current liabilities are filed and paid on time. Revenue is actively engaging with businesses in the scheme to ensure they are complying with this key condition in order to retain the benefits of the scheme. Where payment difficulties arise, particularly in relation to current tax obligations, I am assured that Revenue will work proactively with businesses who engage early to resolve these payment difficulties.
I am advised by Revenue that the total debt eligible for the Debt Warehousing Scheme since its introduction is €30.9 billion with over 250,000 businesses eligible to avail of the scheme. As at end-April 2023, over 93% of that debt has been paid, leaving a balance of €2.037 billion in the warehouse for 62,538 individual entities.
Of this total, 19,841 (32%) have warehoused debts of less than €100, 9,607 (15%) have warehoused debts between €101 and €1,000 and a further 11,428 (18%) have warehoused debts between €1,001 and €5,000. In total, 40,876 businesses in the warehouse (65% of the total) have an outstanding balance of less than €5,000. The bulk of the debt figure is warehoused by just 6,271 customers, with outstanding balances greater than €50,000, totalling €1.728 billion.
To reduce their interest bill, some businesses have already begun to repay their warehoused debt where their financial circumstances permit. This is very evident in the warehouse balance of €2.037 billion at end-April 2023, which shows a €179 million reduction when compared to end-March 2023. Revenue’s expectation is that this trend will continue to increase for the remainder of the year and into early 2024 as businesses proactively make plans to address the payment of their warehoused debt and reduce their interest costs.
The breakdown of the warehoused debt at 30 April 2023 by Sector, including retail and hospitality, is set out in the table below:
|
Sector |
Balance (€m) |
Customers |
|
Wholesale and retail trade; Repair of motor vehicles and motorcycles |
414 |
9,381 |
|
Accommodation and food service activities |
324 |
6,346 |
|
Construction |
255 |
9,957 |
|
Professional, scientific and technical activities |
243 |
7,265 |
|
Information and Communication |
162 |
2,444 |
|
Administrative and support service activities |
159 |
2,612 |
|
Manufacturing |
118 |
3,353 |
|
Transportation and Storage |
77 |
2,546 |
|
Real estate activities |
55 |
2,262 |
|
Human health and Social Work activities |
55 |
2,596 |
|
Other services activities |
39 |
3,879 |
|
Arts, entertainment and recreation |
32 |
1,667 |
|
Financial and Insurance Activities |
31 |
772 |
|
Agriculture, forestry and fishing |
19 |
3,310 |
|
Education |
19 |
2,023 |
|
Water supply; Sewerage, Waste management and remediation activities |
10 |
211 |
|
All other Sectors/Unknown |
9 |
1,455 |
|
Electricity, gas, steam and air conditioning supply |
8 |
53 |
|
Mining and Quarrying |
4 |
85 |
|
Public administration and defence; compulsory social security |
4 |
174 |
|
Activities of households as employers of domestic personnel; Undifferentiated goods-and-service-producing activities of private households for own use |
0 |
138 |
|
Activities of extraterritorial organisations and bodies |
0 |
9 |
|
Total |
2,037 |
62,538 |
The scheme was automatically available to businesses and individuals that are managed by Revenue’s Business and Personal Divisions. Revenue’s Business Division manages enterprises with an annual turnover less than €3 million, which accounts for the majority of business taxpayers. Revenue’s Personal Division deals with all business entities with no trade or professional income such as trusts, charities, sporting bodies.
The scheme was also available on application to larger businesses managed by Revenue’s Large Corporates and Medium Enterprises Divisions, where such businesses were adversely impacted by the pandemic, and included a small number of individuals in Revenue’s High Wealth Division. Revenue’s Medium Enterprises Division deals with businesses with an annual Irish turnover of more than €3 million (but less than €190 million) as well as the subsidiaries/parents of such companies. Large Corporates Division deals with the largest companies with an annual Irish turnover of more than €190 million per annum. The breakdown of the warehoused debt at end-April 2023 by Division is as follows:
The Breakdown of Debt Warehoused at 30 April 2023 by Division is set out in the table below:
|
Division |
Balance €m |
Customers |
|
Business |
1,286 |
58,179 |
|
Medium Enterprises Division |
618 |
1,601 |
|
Large Corporates Division |
112 |
92 |
|
Personal |
15 |
2,629 |
|
LC - High Wealth Division |
6 |
37 |
|
Total |
2,037 |
62,538 |
