Wednesday, 20 May 2020
Department of Finance
121. To ask the Minister for Finance the companies that qualify for the proposed tax warehousing scheme; if it is restricted to businesses unable to trade due to the Covid-19 related restrictions; if not, if it is for businesses which have experienced significant falls in turnover; and if he will make a statement on the matter. [6677/20]
122. To ask the Minister for Finance if the tax warehousing scheme that is currently operational on an administrative basis will be exactly the same as the scheme that will be run under legislation; if there are restrictions or limitations in place that would prevent the Revenue Commissioners from implementing the scheme without primary legislation; and if he will make a statement on the matter. [6682/20]
I propose to take Questions Nos. 121 and 122 together.
In March this year, Revenue announced that it was suspending debt collection and the charging of interest on late payment for the January/February and March/April 2020 VAT periods and the February, March and April 2020 PAYE (Employer) periods. On 7 May 2020, Revenue announced the extension of these arrangements to include the May/June 2020 VAT period and May and June 2020 PAYE (Employer) liabilities. These measures are available not only to businesses unable to trade due to Covid-19 related restrictions, but also to assist any businesses who are experiencing tax payment difficulties as a result of the Covid-19 pandemic. It is intended that, when enacted, the legislation to provide statutory backing for these debt warehousing arrangements will similarly provide for availability of the scheme on this basis.
The tax debt warehousing scheme is currently being operated under Revenue’s “care and management” powers but will be put on a statutory footing. Primary legislation is necessary to underpin the reduced rate of interest that is to apply to the deferred liabilities. Currently, statutory interest applies a rate of approximately 10% per annum on late payments of the taxes covered by the scheme - PAYE (Employer) and VAT liabilities - but the planned legislation will provide for the reduced interest rates for the scheme announced earlier this month for the Covid-19 related VAT and PAYE (Employer) tax debts. Interest under the scheme will apply as follows:
- 0% for the “Covid-19 restricted trading phase”, the period when the business is unable to trade, or has experienced tax payment difficulties, due to the Covid-19 related restrictions, and including the first two months after the business resumes “normal” trading;
- 0% for the “zero interest” phase, which will last for 12 months after the end of the first phase; and
- c. 3% per annum for the “reduced interest phase”, which will begin after the end of the second phase.
The enactment of the required primary legislation will supplement the current administrative arrangements and ensure certainty regarding the conditions of the scheme. The necessary amendments to the relevant provisions of the Taxes Consolidation Act 1997 and the Value Added Tax Consolidation Act 2010 will be brought forward in due course.
Further information on tax debts warehousing is available on the Revenue website .