08 Sep 2017 | 11.49 am
Interview: John Fitzgerald, Tax Partner, McInerney Saunders
'Taxes associated with share awards are far too high'
08 Sep 2017 | 11.49 am
John Fitzgerald, Tax Partner with McInerney Saunders, deals with all elements of taxation, including tax compliance, Revenue audits, succession and transaction planning. He also works with FDI businesses setting up in Ireland.
In your dealings with business clients, what tax planning or tax resolution issues are of most concern to them?
Revenue interventions in the form of sectoral reviews, audits or investigations which could potentially lead to significant penalties, interest and reputational damage if irregularities are uncovered are a major concern for business clients. We support clients through this process and also assist with implementing systems, procedures and internal controls that can help with meeting tax compliance deadlines as well as providing them with timely and accurate information relating to their business. Other areas of concern include
- The uncertainty around Brexit and how possible changes to VAT and customs could impact on trading with customers/suppliers in the UK.
- Staff recruitment, retention and incentivisation given the current high personal tax rates and barriers to awarding shares
- Structuring businesses that are expanding into new markets to ensure that there are no double taxation issues
- Succession planning in relation to selling businesses or transferring them to the next generation.
A business owners five years out from projected retirement – what are the important tax issues to plan for?
There are a number of tax reliefs available for business owners that are looking to retire and it is important to start talking with your advisors as early as possible in order to ensure that all qualifying conditions can be met in order to avail of the various reliefs. These reliefs can be incredibly valuable and careful planning is necessary. It is also important to plan for any tax costs that might be associated with retirement where the business owner does not qualify for relief.
In your experience, how common is it for businesses to come unstuck on VAT issues?
It is well worth seeking advice in relation to the VAT treatment of more complex cross-border and property transactions in particular to avoid any unnecessary costs associated with getting it wrong. The current standard rate of VAT is 23% and there can be a significant cost to the business where an incorrect VAT rate is applied to a transaction or the compliance regime is not followed.
What tax reforms would you like to see to assist business in the upcoming Budget 2018/Finance Act 2017?
The taxes associated with share awards in Ireland are far too high. I would be hopeful that new measures are introduced in Budget 2018 to reduce the tax burden. The current CGT rate of 33% is far too high and is a major disincentive for individuals disposing of assets, particularly property assets. The rate should be reduced to encourage people to sell property investments, which in turn could increase the stock of available housing for sale.
Sticking with CGT, good progress has been made with the revised Entrepreneur Relief but a lot more needs to be done to make it comparable with jurisdictions such as the UK. I would also like to see the abolition of the additional 3% USC surcharge, which is a complete disincentive for individuals to become successful if they are self-employed.
The close company surcharge is also something that needs to be addressed, as it increases the effective rate of corporation tax for companies providing professional services and for investment companies where profits are not distributed.