New professional taxes 'not a luxury', warn industry bodies
Published 02/02/2011 | 05:00
NEW taxes on subscriptions to professional organisations are "sending the wrong signal" about Ireland's commitment to the highest business standards, industry groups have warned.
The measures introduced in the Budget mean thousands of professionals will have to pay benefit-in-kind tax on their annual fees to organisations like accountants' bodies and the Institute of Directors.
The annual fees, which can run to more than €1,000 for some bodies, are typically paid for by employers and were traditionally exempt from tax. Under the new rules the fees are treated as a benefit-in-kind (BIK), triggering taxes of up to 52pc for individuals and PRSI of 10.5pc for companies.
The changes are being vigorously opposed by a range of professional organisations including Chartered Accountants Ireland, the Society of Actuaries and the Institute of Taxation.
"It's very counter-productive in terms of promoting Ireland as a safe place to do business," said Eamonn Siggins, who heads up the Institute of Chartered Public Accountants (CPA).
"Professional competence is something that should be encouraged, not taxed."
Brian Keegan, who heads up fellow accountants body Chartered Accountants of Ireland, said while he didn't expect much slippage in his organisation's 20,000-strong membership, other areas could be hit.
"We'd have a lot of people with us who are also in other organisations like the Institute of Taxation," he said.
"They could be less likely to maintain those two memberships if they have to pay for it, particularly when those same employees are also paying higher taxes generally."
A spokesman for the Institute of Taxation said he had "strong concerns" which were "counterproductive for Ireland and its services".
"It is not a luxury or optional subscription for professionals but is a necessary educational and professional development requirement so they can practice and advise to the highest possible standards," he stressed.
Professionals who can demonstrate a legal need to be members of certain bodies, for instance auditors who need to be in accountants' organisations, can be exempted from the tax.
But Mr Keegan stressed that it would be up to employees and firms to make their case for an exemption to the Revenue -- "there's going to be a large administration burden".
Jim Murphy, secretary of the Society of Actuaries, said his organisation was "hoping" there might be some changes to the measures in a second Finance Act later in the year.
"Michael Noonan ( Fine Gael's finance spokesman) tabled an amendment (when the bill was going through), so that bodes well," he said, in a reference to the anticipated change in government.
Failing a change, the Society of Actuaries is considering remodelling its charges so that the annual fee of €850 is broken into a subscription figure and fees for seminars throughout the year. This would trigger less tax, since BIK is only payable on membership fees.
"We'll keep lobbying for a return to the status quo," said Mr Keegan. "We're not going to stop."