Firms must tell Revenue of tax-avoidance moves
New mandatory reporting regime is facing opposition among some accountants and lawyers
The Revenue's controversial new mandatory reporting regime, which requires companies to disclose any transactions that help to avoid tax, looks set to be introduced next year.
The Revenue has been holding a consultation process on the mandatory rules and there remains strong opposition, in some quarters, among some accountants and law firms, to the idea. A spokeswoman for the Revenue said the new rules were being "finalised'', but would require final sign-off by the Minister for Finance.
Minutes of a meeting in September with tax practitioners heard reservations on a number of grounds, including:
- The scope of the regime.
- The impact on routine tax advice.
- Legal privilege issues.
- Concerns on whether foreign direct investment might dry up.
"Revenue anticipated that the proposed final regulations would be submitted to the Finance Minister within the next month.
"On implementation, the large cases division will be managing the reports and liaising with Revenue's Legislative Services Divisions on technical matters,'' the minutes of the meeting record. The mandatory rules will require companies and individuals to disclose any transaction that enables tax avoidance.
The proposed new rules were introduced in the Finance Act 2010. Under a section of this Act "promoters" of such schemes -- such as lawyers, bankers and financial advisers -- will also be required to notify the Revenue about the existence of any tax-avoidance schemes.
Those failing to comply with the rules will be fined up to a maximum of €4,000, as well as additional penalties of up to €500 per day.
The Department of Finance is a strong supporters of the mandatory regime, saying taxpayers must pay their fair share.
"Mandatory disclosure will provide Revenue with an important instrument to tackle tax-avoidance schemes which are leading to a significant loss of taxation," said the department earlier this year.
There are similar schemes in the UK and Australia.
The Irish Taxation Institute has demanded that the rules be very clear and do not add unnecessary burdens.
Several law firms also claim that there are extensive reporting obligations on advisers already in place and the new rules are simply a duplication of these.