This article was first published in the July 2012 Irish edition of Accounting and Business magazine.
01. Consultation on film relief
The Department of Finance has published a consultation paper inviting submissions as part of an economic impact assessment of Section 481 Film Relief. This relief applies to individuals and companies who make qualifying investments in certain film production companies. The department aims to review the operation of the scheme, with a view to making decisions regarding its future after 31 December 2015, the date on which the scheme is currently scheduled to terminate. The intention is to minimise the exposure of the exchequer to the costs associated with the scheme, while maximising the effectiveness of the resulting expenditure in the sector. The department is asking the following questions:
- Is the support of the film and TV sector through section 481 relief an efficient use of scarce resources and why?;
- Does the scheme maximise the potential economic benefits to Ireland in terms of stimulating activity in the sector?;
- What are the economic arguments for restricting or terminating the scheme?;
- What changes to the existing scheme should be considered, and why?;
- Is there merit in extending the scheme beyond 2015?; and,
- How does the scheme interact with other enterprise tax incentives?
The full consultation document can be downloaded from the Department of Finance website and the closing date for submissions is 31 July 2012.
02 Finance announcements
In early May, the Department of Finance published a revision to its statement of strategy for the period 2011 to 2014. The statement provides for a revised organisational structure of the department, which will be based on four key policy divisions: international, fiscal, financial and economic. A corporate office and a finance office will also be established. With regard to tax policy, the department identifies one of its aims as 'broadening the tax base and distributing the tax burden in a manner that is supportive of growth, with a taxation policy that supports the promotion of fairness, enterprise and competitiveness.'
Guidance on VAT
Revenue have issued an information leaflet providing details of the practical application of the 'place of supply' rules for services connected with property. The place of supply of services can vary depending on whether the service supplied is directly related to a specific property or whether the service has only an indirect connection with the property. The leaflet, which is available on the Revenue website, contains a list of services that are considered taxable, where the property is located and a list of services whose place of supply is determined under the general place of supply rules. It also provides guidance for Irish suppliers providing services directly related to property elsewhere in the EU, and foreign suppliers providing services directly related to Irish property.
Enhancement to ROS Form 11
Readers who are involved with filing income tax returns, either on behalf of clients or on their own behalf, may be interested to know that the pre- population facility on the ROS Form 11 now includes information on payments received from the Department of Social Protection (DSP) for 2011. eBrief No. 24/12 notes that the nature of the payment and the amount received will appear, in a table, above the entry fields for DSP payments in the Form 11. It should be noted that, where a taxpayer is in receipt of a DSP payment that does not appear on the table, or is not in receipt of a payment despite it appearing, the correct amount must be entered on the return. Revenue also notes that it does not have access to the source of the DSP figures and are not in a position to clarify amounts. Any queries regarding amounts pre- populated should therefore be clarified directly with the taxpayer.
Repayments and offsets
Readers may recall that Finance Act 2012 introduced a provision stating that where a repayment of tax cannot be made to a person because a claim is lodged outside of the relevant time limit, an offset against any of the person, other tax liabilities, is not permitted. A limited exception to this general rule applies where tax is due and payable for a period by virtue of action taken by Revenue, to assess or recover tax, at a time that is four years or more after the end of the period involved. In such a case, an amount of tax that cannot be repaid because of the application of a time limit, but which relates to the same period as the tax liability Revenue is pursuing, is available for offset. against that liability. Revenue have now updated their tax and duty manuals to reflect this position.
VAT treatment of vouchers
EU VAT rules will be updated to ensure uniform VAT treatment of vouchers, under plans announced in May by the European Commission. The VAT directive does not currently contain rules on the treatment of transactions involving vouchers, and this has obliged Member States to develop their own solutions. The Commission plans to update the VAT Directive to define the different categories of vouchers, and to identify the point at which VAT is payable for each category.
Meanwhile, HMRC in the UK has announced a change in the UK VAT treatment of face-value vouchers. The change arises from a decision of the European Court of Justice and it is effective from 10 May 2012. VAT on such vouchers will now become due, if applicable, when they are issued rather than when they are used to purchase goods or services. VAT will also be due on each subsequent sale of the voucher.
03 Budget 2013 targets
The latest update to the EU/IMF Programme of Financial Support for Ireland was published by the Department of Finance in early June. The document confirms the tax and expenditure targets that the government has agreed to attain with measures to be introduced in Budget 2013. The government has committed to implementing tax measures that will yield at least €1.25bn. The measures to be introduced with a view to reaching that target include the following:
A broadening of the personal income tax base;
A value-based property tax;
A restructuring of motor taxation;
A reduction in general tax expenditures; and,
An increase in excise duty and other indirect taxes.
Meanwhile, Budget 2013 will also see the introduction of expenditure measures to the value of €2.25bn, including social expenditure reductions, reductions in the total pay and pensions bill and reductions in capital and other expenditure. The OECD is currently conducting an independent review of long-term pensions policy in Ireland.
Cora O'Brien is director of technical services, Irish Taxation Institute. Email cobrien@taxinstitute.ie