Irish Revenue Releases Preliminary Tax Guidance

by Robert Lee, Tax-News.com, London

18 March 2009

The Finance (No.2) Act 2008 (Section 38) introduced revised arrangements for the payment of the preliminary tax by companies with a corporation tax liability of more than EUR200,000 in the preceding accounting period. The Revenue Commissioners have released a statement stating that this preliminary tax is now payable in two instalments, and have released guidance notes to this end.

According to the Revenue release, for companies with a EUR200,000 corporation tax liability in the preceding accounting period, the first instalment must be at least:

• 50% of corporation tax liability for the preceding accounting period, or
• 45% of corporation tax liability for the current accounting period.

The payment is due no later than the 21st day of the 6th month of the accounting period, or the 23rd day of that month in the case of companies making their returns and payments under ROS.

The second instalment, which must bring the total preliminary tax paid to at least 90% of corporation tax liability for the current accounting period, is due 31 days before the end of the accounting period and not later than the 21st day of the relevant month, or the 23rd in the case of companies making their returns and payments under ROS.

The revised arrangements have effect for accounting periods (of more than 7 months duration) which commence on or after October 14, 2008.

The revised arrangements only affect companies with a corporation tax liability of over EUR200,000. Those with a corporation tax liability lower than EUR200,000 must pay at least 90% of the corporation tax liability for the current accounting period or 100% of corporation tax liability for the preceding accounting period, which is also due on the same basis as noted above.

The Revenue has warned that companies should ensure that they comply with the revised preliminary tax requirements, if applicable to them, to avoid paying interest.

Recommended