Dáil Éireann Debate, Tuesday - 14 November 2023
124. Deputy Louise O'Reilly asked the Minister for Finance if interest payable on phased payment arrangements for tax liabilities owed under the tax debt warehousing scheme will be made tax deductible, as is the case with bank loan interest. [49443/23]
View answerThe Tax Debt Warehousing scheme allowed for the deferral of the payment of VAT, PAYE (Employer) and certain self-assessed income tax labilities, including TWSS and EWSS overpayments. It provided a vital liquidity support to businesses during the COVID-19 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% interest up to 31 December 2022 (or 30 April 2023 for those in the extended scheme). A significantly reduced interest rate of 3% applies from 1 January 2023 on the warehoused debt (or from 1 May 2023 for those in the extended scheme).
To remain eligible for the scheme and to avail of the significantly reduced interest rate of 3% per annum that applies to the repayment of the warehoused debt, returns must be filed for all periods covered by the scheme and current taxes must be paid as they fall due.
I am advised by Revenue that participants in the Tax Debt Warehousing scheme must either pay their warehoused liabilities in full by 1 May 2024 or, otherwise, enter into Phased Payment Arrangements (PPA) by that date. PPAs are concessional arrangements allowed by Revenue to afford more time to taxpayers to repay their tax debt over an extended period of time.
All PPAs include interest to compensate the Exchequer for the additional time being afforded to pay the tax debt and to ensure equity with those taxpayers who make significant efforts to consistently pay their tax debts in full and on time.
As I have indicated already, businesses availing of the Tax Debt Warehousing scheme are benefitting from a significant reduction of interest at 0% and 3% compared to the normal interest rate for late payment of taxes at 8% and 10%.
While interest on late payments of tax, or interest on instalment arrangements are not deductible for the purposes of calculating taxable profits, and legislation doesn’t provide for deductibility for interest on instalment arrangements for warehoused debt, Revenue has also advised me that it is considering this matter further over the coming months in the run up to the end of the extended warehousing period of 30 April, but that no conclusions have yet been reached.
