Most companies have yet to pay taxes owed under the Covid stock scheme as the unpaid balance currently stands at €2.48 billion
The vast majority of companies using Revenue’s Covid tax warehousing system have not repaid the debt to taxpayers, preferring to pay interest on tax bills that have accrued since 2020.
Just 1,985 companies have signed phased payment agreements (PPAs) with the tax authority to pay off a total of €72 million in stored tax debt, according to new data released by the Irish Independent.
The vast majority of the 72,000 companies still in the program choose instead to take advantage of the option to extend repayment and add 3 percent in annual interest charges to their $2.48 billion in unpaid balances.
Companies under the program originally had to agree on a repayment schedule by January this year. Revenue extended that date to May 1, 2024 last October after lobbying for room for maneuver from the Irish Tax Institute and Accounting Services.
“This additional time should provide strong support to businesses and minimize business disruption,” a Revenue spokesman said in a statement.
Nonetheless, the extension of the deadline will also delay the repayment of significant government financial assistance and increase the final amount owed.
Internal Treasury estimates put the likely ultimate loss from tax debt storage at 25 percent of the total balance, equivalent to almost €625 million.
PPAs were originally scheduled to take effect in January, with participating companies likely to have to pay lump sums of 25 to 40 percent upfront.
For most companies, this would have been a relatively small amount, as 87 percent of the companies that have used the storage system during the pandemic have a balance of less than €5,000. But 7,500 companies in the program account for the bulk of the remaining debt, at €2.2 billion, meaning the average amount to be repaid by those companies is almost €300,000 – a bigger burden.
Tax officials have warned firms in the debt camp to file and settle their debts on time or risk losing access to the system, which would result in balances being demanded in full, with retrospective interest of 10 per cent added.
“Revenue closely monitors companies under the program to ensure they are keeping current returns and payments current,” a Revenue spokesman said in a statement.
“When companies experience payment difficulties related to tax obligations, Revenue will work with companies that have early engagement to resolve these payment difficulties. However, with continued non-compliance with tax obligations, companies lose the benefit of the scheme and their debt-stock status is revoked.”
Compliant companies that pay their debt monthly for a year beginning in May 2024 will owe an additional €700 beginning in March 2020 for every €10,000 in taxes they have withheld.
However, a company that loses access to the system due to compliance issues would face penalty interest of more than €5,000 dating back to the start of the storage period, Revenue said.
“This example underscores the negative financial impact that losing inventory can have on the final interest bill payable by the business and the importance of keeping current taxes current,” the spokesman said.
https://www.independent.ie/business/irish/most-firms-yet-to-pay-tax-owed-in-covid-warehousing-scheme-as-unpaid-balance-currently-sits-at-248bn-42328834.html Most companies have yet to pay taxes owed under the Covid stock scheme as the unpaid balance currently stands at €2.48 billion