The tax accounting period normally coincides with a company’s financial accounting period, except where the latter period exceeds 12 months.
Corporation tax returns must be submitted within nine months (and no later than the 23rd day of the ninth month) after the end of the tax accounting period in order to avoid a surcharge (maximum of EUR 63,485) or a restriction of 50% of losses claimed (maximum of EUR 158,715).
Payment of tax
Corporation tax payment dates are different for ‘large’ and ‘small’ companies. A small company is one whose corporation tax liability in the preceding period was less than EUR 200,000. Interest on late payments or underpayments is applied at approximately 8% per year.
For large companies, the first instalment of preliminary tax totalling 45% of the expected final tax liability, or 50% of the prior period liability, is due six months from the start of the tax accounting period (but no later than the 23rd day of the month).
The second instalment of preliminary tax is due 31 days before the end of the tax accounting period (but no later than the 23rd day of the month). This payment must bring the total paid up to 90% of the estimated liability for the period.
The balance of tax is due when the corporation tax return for the period is filed (that is, within nine months of the end of the tax accounting period, but no later than the 23rd day of the month in which that period of nine months ends).
Small companies are only required to pay one instalment of preliminary tax. This is due 31 days before the end of the tax accounting period (but no later than the 23rd day of the month).
The company can choose to pay an amount of preliminary tax equal to 100% of the corporation tax liability for its immediately preceding period or 90% of the estimated liability for the current period. As is the case for large companies, the final instalment is due when the corporation tax return is filed.
Tax audit process
A system of self-assessment and Irish Revenue audits is in operation in Ireland.
Statute of limitations
Irish Revenue may undertake an audit of a company’s tax return within a period of four years from the end of the accounting period in which the return is submitted.
Topics of focus for tax authorities
In Irish Revenue’s Annual Report 2015, a continued priority is to maintain the high levels of voluntary compliance in Ireland aided by an increased focus on non-compliance. The Irish authorities aim to do so by using emerging data sources to risk-assess cases and target new forms of non-compliance and aggressive avoidance.
Another of Irish Revenue’s key aims is to make it easier and less costly for voluntary compliance through further use of digital channels and a range of initiatives to lessen the administrative burden for taxpayers.
Internationally, Irish Revenue have committed to further tax transparency and the exchange of information between authorities. Revenue also emphasis a continued focus on transfer pricing issues both at an EU and global level.
General Anti-Avoidance Legislation
The general anti-avoidance provisions are designed to counteract transactions that lack commercial reality and are put in place with a view to reducing or avoiding a charge to taxation.
The impact of the general anti-avoidance rule is that where a person enters into a transaction and it would be reasonable to consider that the transaction is a ‘tax avoidance transaction’, Irish Revenue may, at any time, deny or withdraw the tax advantage. In order to deny or withdraw that tax advantage, Irish Revenue may:
- make or amend an assessment
- allow or disallow in whole or in part any credit, deduction, or other amount that is relevant in computing tax payable
- allocate or deny in whole or in part any credit, deduction, loss, abatement, relief, allowance, exemption, income, or other amount, or
- recharacterise, for tax purposes, the nature of any payment or other amount.
The assessment made by Irish Revenue will stand unless the taxpayer successfully appeals it to the Appeals Commissioners/Courts.
In a move to promote transparency between taxpayers, practitioners, and tax authorities, provisions relating to the disclosure of tax schemes are applicable. These require promoters of such schemes to provide information to the tax authorities within a specified time of having made the scheme available. A transaction that comes within the new law and must therefore be reported to Revenue is not necessarily a tax avoidance transaction for the purposes of existing legislation. The rules are wide reaching and essentially cover all tax heads, including corporation tax, income tax, capital gains tax, stamp duty, VAT, customs duties, and excise duties.
Co-operative Compliance Framework (CCF)
The Irish authority has invited large businesses to partake in the CCF, which is seen as best practice internationally. The aim of these measures is to continue to strengthen Ireland’s position as one of the top countries in the world for ease of doing business by promoting useful collaborative relationships between taxpayers and the Irish tax authority.