The Regulations provide for mandatory electronic filing and paying of certain tax returns and tax liabilities by government departments and offices, state bodies and larger companies.

These obligations are being introduced in 2 phases:

Government departments, certain named government offices and companies, and certain state bodies whose tax affairs are dealt with by the Large Cases Division of the Revenue Commissioners come within Phase 1, with effect from January 1, 2009.

All other state agencies and other companies which are obliged under the Companies Act to produce audited accounts come within Phase 2, with effect from January 1, 2010.

Details of the persons to whom the regulations apply are set out in Schedules 1 and 2 to the regulations.

Under the regulations, the Revenue Commissioners may exclude a person from the obligation to pay and file electronically if they are satisfied that the person does not have the capacity to do so.

In this context "capacity" is defined to mean access to the requisite technology, both hardware and software. A person may appeal a decision not to exclude them to the Appeal Commissioners.

Finally, provision is made to determine the time at which payments and repayments made by electronic means are to be taken as having been made.

According to the Institute of Chartered Accountants in Ireland (ICAI), this introduction of mandatory tax payment and tax return filing on the internet brings us into a new era, but not necessarily a better one.

“It’s important to note this applies not just to mainstream corporation tax liabilities, but to all returns and taxes including VAT and PAYE. Businesses will need to take immediate action to ensure they are geared up to pay tax and file through the Revenue On-Line Service by January 2009 for the first return affected – the January PAYE return” explained ICAI Director of Taxation Brian Keegan, in light of the Revenue's announcement.

Mr Keegan also pointed out that this new imposition could increase the compliance burden not only on existing Irish business, but also on multinationals seeking to locate into Ireland, stating:

“Mandatory electronic filing is not a feature of tax systems internationally. Inward investors will be quite comfortable with tax requirements generally, but this is new territory for them. We should be making things simpler in our tax system, not introducing new forms of tax registration and penalty traps."