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Irish Legal Professionals Propose Enhancements To Tax Regime

by Jason Gorringe,, London

14 June 2017

The Law Society of Ireland has published 22 recommendations for changes to the Irish taxation and probate systems, to boost the country's attractiveness for entrepreneurs and the creative industries.

Ken Murphy, Director General of the Law Society, said: "The effectiveness of the tax system and its ease of administration helps drive economic growth and job creation. However, we are calling on the Government to be more proactive in ensuring ongoing competitiveness for international investment in coming years given the uncertainty that surrounds us."

"We have also highlighted a number of inequities in the tax code where the system simply hasn't kept pace with recent legislative and social changes. These inequities are causing an unnecessary burden on key sections of our community."

The recommendations are contained in the Law Society's pre-Budget submission. The submission notes the challenges presented by Brexit and the ongoing international efforts to reform the tax system.

In particular, the submission criticized the delayed implementation of the tax measures included in the Companies Act 2014. According to Murphy, "a lag in implementing tax changes as part of the Act has put us at a disadvantage and created unnecessary uncertainty about doing business in Ireland." The submission stated that this has resulted in taxpayers having to write to Revenue on a case-by-case basis to agree the appropriate tax treatment of transactions.

Murphy commented: "To remain competitive, we need to be seen as a 'best in class' destination for company law and enterprise regulation. This will directly create jobs and generate much needed economic activity."

"We also need to encourage and support our entrepreneurs – the existing tax codes, and particularly the interaction with the new economy, needs updating or we risk losing some of our most innovative people to other countries."

The submission also noted that the current language in section 29 of the Taxes Consolidation Act 1997 "gives rise to an ambiguity in the context of companies that are not resident in Ireland for a calendar year." It said that references in this section to "year of assessment" should be construed as referring only to an "accounting period" in the context of a company.

In addition, the submission recommended that a change to withholding tax on interest paid by Irish companies to Irish companies should be introduced, to enable such interest to be paid without withholding tax and thereby bring Ireland into line with the UK.

According to the Law Society, the "Entrepreneur's Relief" (a 10 percent CGT rate) should be expanded. It said the conditions are restrictive and result in entrepreneurs either leaving Ireland or choosing not to locate there. It argued that the regime should be reviewed, to ensure that Ireland can compete with the UK post-Brexit.

The Law Society additionally recommended that the stamp duty rate on the transfer of stocks or Irish marketable securities be reduced to 0.5 percent, in line with the rate charged in the UK.

TAGS: individuals | compliance | tax | investment | business | Ireland | interest | law | accounting | individuals in business | entrepreneurs | small and medium-sized enterprises (SME) | legislation | withholding tax | stamp duty | standards | regulation | legislation amendments

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