Bill to give Revenue greater powers

THIS year’s Finance Bill is likely to facilitate the introduction of the previously mooted national solidarity bond and give the Revenue Commissioners greater powers when collecting tax.

The full details of the bill are set to be published this afternoon.

Given the greater focus on expenditure cuts rather than taxation in Brian Lenihan’s Budget 2010 speech in December, this year’s Finance Bill is likely to be different and more technical than usual.

However, it is fully expected that the new solidarity bond savings initiative – which will ultimately come under the stewardship of the National Treasury Management Agency (NTMA) – aimed at attracting small investors to invest for periods of five, seven or 10 years; will be introduced.

Elsewhere, new powers for Revenue to collect tax, which were vaguely referred to by Mr Lenihan in December, are likely to be copper-fastened.

According to Brian Keegan, Chartered Accountants Ireland director: “The minister stated that he would give Revenue more powers. PAYE is Revenue’s preferred way of collecting tax. PAYE cannot be operated on companies, only on individuals. The word on the street is that this may change. This could create issues for freelancers in many professions, especially IT, training and even journalism.”

Some miscellaneous aspects of the bill could include the extension of VAT laws for local bodies, particularly those finding themselves in direct competition with private enterprises – for example county councils will have to charge VAT on things like residential waste collection services, just like private operators.

The new domiciles levy, mentioned in the budget – the €200,000 per year tax charge on those Irish people earning more than €1m a year, internationally, and paying little or no tax on it here – is also likely to be included in today’s Finance Bill, but there is already concern over how Revenue can successfully police it over time.

Finance Bill 2010 is also expected to implement some of the recommendations of last September’s Commission on Taxation report – which included the introduction of property, carbon and water taxes, tax on social welfare payments and an overall simplification of the income tax system. Tax incentives are also being called for.

“Ireland Inc really needs some tax incentives to get people back into the workplace. There are several ways the tax system can help – from attracting foreign investors to set up R&D and high-tech manufacturing to giving existing employers extra tax relief for hiring new staff,” added Mr Keegan.

Rules around transfer pricing – the practice of multinational companies arranging to have most of their profits earned in countries with low tax rates – will also probably be addressed, even though it wasn’t mentioned in the budget.