Minister assures flexibility over tax debt warehousing scheme
Minister for Finance Michael McGrath has said the Government will introduce flexibilities to the Tax Debt Warehousing Scheme.
Speaking to RTÉ News in Davos, Mr McGrath said: “We are going to make some changes to the tax warehousing regime with a view to being as flexible as we possibly can.
“We’ve been engaging with the Revenue Commissioners and a proposal is currently being developed, which we hope to finalise very shortly, to introduce further flexibility.”
The minister said there is currently €1.75 billion owed by 57,000 businesses under the tax warehousing regime, established following the Covid-19 pandemic.
This was down from over €3bn owed by 110,000 businesses.
“A lot of progress has been made, but we are really anxious to ensure that viable businesses are supported, and the Revenue Commissioners are anxious to ensure that these businesses remain in operation,” Mr McGrath said.
“It is important to emphasise that businesses must engage with the Revenue Commissioners, it is important that they would put in place repayment arrangements. Revenue will be flexible, they can be over an extended period of time and on attractive terms, and they must keep existing tax liabilities up to date and file returns – but the warehoused tax will be treated separately.
“We will seek to introduce enhanced flexibilities to make sure that these businesses can remain in operation.”
The minister would not be drawn on the specific flexibilities, except to say that the Government was looking at issues such as the duration of repayment arrangements, the interest rate that will apply and the date by which such arrangements must have been entered into.
“We recognise that for some businesses entering into an onerous repayment arrangement in the short term is going to be challenging. Many businesses owe quite a modest amount of money in terms of warehoused tax – actually, it is about 5,000 of the 57,000 businesses, that owe the vast bulk of the money, about one and a half billion of the one and three quarter billion euro, and they’re typically or more than €50,000. Those are the businesses that we’re most concerned about,” he said.
Responding to remarks earlier in Davos by ECB president Christine Lagarde that, barring any shocks, interest rates will have peaked this year, Mr McGrath said the Government would take its guidance from market expectations which suggest rate reductions this year.
“The precise timing and scale of those reductions remain to be seen and are very much dependent on the data for further progress to be collectively made in bringing inflation down.
“But overall, I’m optimistic for the outlook for the Irish economy this year. I do believe that we will have economic growth, it will be at a more modest level than we have had in recent years.
“But against the backdrop of international uncertainty, conflict, geopolitical tension, the impact of inflation and high interest rates. I think if we can achieve economic growth, maintain essentially full employment continuing to attract inward investment, then I think we have much to be optimistic about across 2024,” the minister said.