22 Sep 2021 | 01.07 pm
Interview: Kevin McLoughlin, EY Ireland
'The world of tax has become much more tech enabled'
22 Sep 2021 | 01.07 pm
Kevin McLoughlin, Head of Tax at EY Ireland, says that Ireland being competitive on the non-tax side is more important than tax incentives for enterprise.
What’s it like operating a tax practice in the current circumstances?
We made a quick pivot to remote working last March. The transition was virtually frictionless. We will be moving to a hybrid working model this autumn. The world of tax has become much more tech enabled in recent years, but in the past 18 months, we have seen a breathtaking acceleration in tech adoption amongst our clients. It has been a very positive experience in terms of really driving exciting innovation and we’re excited to keep this momentum going.
Tax advice by Zoom or Teams – how has it worked for you?
Technology has allowed us to continue delivering a world-class service to our clients. We are determined to lock into our future ways of working from the experience of the past 18 months. That said, we know that nothing replicates in-person time with our clients and teams. Getting that balance will be important.
What tax issues have been top of mind with clients to date?
There are significant changes in global tax policy. The next two months or so will be important in this regard. The pandemic and changes in global taxation have taken up more of our clients’ time and attention than Brexit this year because most clients had strong mitigation plans in place to deal with it.
The tax debt-warehousing arrangement runs until the end of 2021. Have there been unforeseen consequences?
The range of support, from an Irish perspective, in warehousing debt was probably not as extensive as in other countries. As businesses move into a recovery phase, there may be less of an overhang around tax debt warehousing than might be the case in other geographies.
The Irish Tax Institute has made repeated submissions to government about reforms. Which incentive should be top of the agenda?
All the incentives are important for different reasons. EIIS is a source of capital and funding for indigenous businesses, while SURE and KEEP are largely to incentivise key talent which is one of the top priorities for clients currently. The R&D tax credit has been a very successful regime and is encouraging companies to innovate, a critical factor in the days ahead.
Whether these incentives remain in place or not pales in comparison to the need for Ireland to be really competitive on the non-tax side.
It is now more important than ever for government to really focus on both tax and non-tax factors to continue to ensure that Ireland provides a very positive broad business environment to support indigenous business to grow and to continue to attract international investment.
Greening the economy is a government priority. What tax measures will accelerate this process?
Government can be really smart in how it uses taxation to incentivise the behavioural change we need. The carbon tax is a good example. Getting that balance between the carrot (incentives) and stick (mandates) in how governments around the world tackle climate change is really important.
Some economists argue that Entrepreneur Relief is a wasted tax incentive. Do you have a view?
We should be looking at incentives to tap into the capital that successful entrepreneurs realise on a successful exit. The €1m lifetime limit is a really small amount. Entrepreneurs are not confined to reinvesting in Ireland, and other countries offer regimes that can be more attractive.
At what age should business owners start planning an exit strategy with Retirement Relief in mind?
It is never too early to be planning ahead. We encourage business owners to think about planning potential exit strategies, regardless of whether they are looking to take advantage of a relief that will kick in at a certain age or maintain maximum flexibility, so that they get offers from potential buyers.