The Institute of Certified Public Accountants (CPA) in Ireland has called upon the Irish government to revert to the standard calculation of preliminary taxation for 2009. The body has questioned the retrospective manner in which the new rules on tax calculation have been brought in, and is urging the government to rethink its proposals to spare taxpayers from an "unnecessary financial and administrative burden."
Preliminary tax for a year is normally calculated by paying either 100% of the previous year’s tax liability or by estimating the full tax liability for 2009 and paying 90% of this figure.
To ensure certainty, most taxpayers opt to pay 100% of the previous year’s tax bill. However, this year the calculation rules have changed. To avail of the "previous year" option, it is necessary to retrospectively apply the new income levies introduced in 2009 to last year’s tax liability, in order to accurately estimate the preliminary tax due for 2009.
“At a time when all energies should be devoted by taxpayers to protecting and developing their businesses it is very unfortunate that this new burden should be imposed, particularly when it will deliver very little benefit to the overall tax take. It is one thing to increase taxes, it is quite another to change rules in a retrospective manner and to put an unnecessary financial and administrative burden on the taxpayer,” said John White, President of the CPA.
The CPA is calling for the rules to be changed so that preliminary tax can be calculated on the basis of the 2008 tax paid, as has always been the case. “There should be no requirement to recalculate last year’s tax liability in order to take the income levy into account. This avoids an extra compliance cost which must be borne by the taxpayer, their advisor, or both,” White said.
“Compliant taxpayers must have ease of administration. Introducing additional complexity benefits no-one – least of all small business owners trying to survive. This is an unnecessary additional cost on small businesses. It is also a mechanism to ensure that more small businesses pay a higher proportion of their tax a year in advance. At a time when credit restrictions are putting increasing pressure on these businesses, the further squeeze by government on their cash flow means this extra cost could be the final straw for many.”
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