Ireland Finance Minister Paschal Donohoe has reminded Irish businesses that the tax debt warehousing scheme has been extended. Tax debt warehousing enables taxpayers to ‘park’ their tax debt for a specified period of time. At the same time, Donohoe reiterated that businesses that take advantage of the measures still need to file tax returns on time.
How does Ireland’s tax debt warehousing work?
During Period 1 of the scheme, you can warehouse tax debts. Phase 1 now extends to 31 December 2021. During Period 2, no interest is payable. Period to now extends to 31 December 2022.
Taxpayers must repay all relevant tax during Period 3, when 3% interest applies.
The programme only applies to eligible businesses. Donohoe says that the measure will help businesses build up cash reserves and secure long-term sustainability.
According to Ireland’s Department of Finance, “Tax Debt warehousing has provided significant liquidity assistance to businesses during the pandemic, with over €2.4 billion warehoused by over 86,000 businesses.”
File VAT returns as normal
In the release issued by the finance ministry, Donohoe stressed that businesses must still file tax returns n time.
Any companies that have taken advantage of the tax debt warehousing scheme must therefore be vigilant about preparing and submitting VAT returns, even if they have warehoused their tax.
Additional VAT relief measures in Ireland
The tax debt warehousing scheme is part of a range of measures that Ireland’s government took to mitigate the economic fallout of Covid.
Ireland temporarily cut VAT in the hospitality and tourism sector. In addition, the government applied special tax incentives to promote R&D in the country.
Many countries have experimented with VAT relief to help their ailing hospitality and tourism sectors, as lockdown and social distancing have hit those industries especially hard.
Never miss a VAT deadline
As we can see, deadlines are deadlines, even in extraordinary circumstances. Vatglobal’s proprietary VAT compliance technology makes it simple, easy and affordable to ensure your VAT returns are always submitted correctly and on time. It’s a simple solution to the complex problem of global VAT compliance.