Upload
dublin-chamber-of-commerce
View
1.227
Download
1
Embed Size (px)
DESCRIPTION
Citation preview
Presentation to Dublin Chamber of Commerce
Tim O’Rahilly Private Client Services
www.pwc.com
30 November 2011
PwC
Overview
1.Current Tax Environment
2.Budget 2012
3.Trends in Tax-Efficient Structuring
2
Current Tax
Environment
www.pwc.com
Current taxation environment
• Huge changes to tax system in last 3 years to cope with crisis in public finances
• Climate for business remains generally positive
- Incentives for new businesses, new employees
- 12.5% corporate tax rate remains, despite challenges
• Situation more challenging for individuals....
- New taxes
- Restrictions on reliefs
PwC Slide 4
Recently introduced taxes:
• Income levy (superseded by USC)
• Carbon tax
• Non Principal Private Residence Charge (NPPR)
• Universal Social Charge
• Pension fund levy
• Domicile Levy
• Household charge (to come)
Combined with...
• Increases in rates / reduction in bands & credits
PwC Slide 5
PwC
• Income level at which top tax rate is hit (single person)
Challenges for Individuals...
Single Person
US (Boston) $373,650 40.3%
Germany €250,731 45%
Spain (Madrid) €175,000 44.9%
UK £150,000 50%
France €70,830 41%
Ireland €32,800 48%
Personal Tax: Future DirectionsIncome Tax 2011 2015
Marginal Tax Rate 52% - 55% ?
Property & Other Reliefs Mainly Phased Out? ?
Share Options Gains 52% tax ?
Pensions 2011 2015
Pensions Earnings Cap €115,000 Relief only at standard rate?
Max Tax-Free Fund €2.3M €1.5M
Max Tax-Free Lump Sum
€200,000 ?
CGT & CAT
CGT and CAT Rates 25% 30%?
CAT Parent-Child Threshold
€332,084 €250,000?
Business / Dwelling House Reliefs
Currently untouched Flagged for limitation / abolition
Slide 7June 2011
PwC
PwC
8
Corporation Tax: External Pressures
12.5% remains in place despite external pressures...
CCTB
Discussion of Irish tax rate in context of EU negotiations
US Developments
Budget 2012
What can we expect?
www.pwc.com
PwC
Budget 2012
• Context
• 4 year plan
• Medium Term Fiscal Statement
• Recommendations of Commission on Taxation (2009)
• Expected Changes
10November 2011
PwC
November 2010 – 4 year plan
11
2011€m
2012€m
2013€m
2014€m
Total€m
Income Tax 1,245 260 210 160 1,875
Pensions 260 225 225 155 865
Tax Expenditures 405 100 100 60 665
Site Value Tax - 180 175 175 530
Carbon Tax - 220 - 80 300
Capital Tax - 145 - - 145
Value Added Tax 310 260 570
Other measures 110 - - - 110
TOTAL 2,020 1,130 1,020 890 5,060
PwC
Budget 2012
12November 2011
€m
Tax required 1,600
Carry Forward 600
New 1,000
VAT 670
Household Charge 160
CGT & CAT: Rates & Reliefs 100
Misc 70
Total 1,000
PwC
What’s in Store....Income Tax?
• Scope for further increases in income tax?
General acceptance that “tipping point” been reached
• Annual Property Tax?
Needs to raise €160M
Cost per household €100 - €200?
• Other Measures
Strengthening of residence rules / removal of remittance basis?
Review of effectiveness of anti-tax avoidance measures?
13November 2011
PwC 14
• Proposals in the area of VAT, Excise Duties and Carbon Tax are being examined
• Programme for Government commitment that any increase in VAT will limit the standard rate of VAT to 23%”
• VAT rates 1991 – 2011o 1 March 1991 21%o 1 January 2001 20%o 1 March 2002 21%o 1 January 2009 21.5%o 1 January 2010 21%
• Impact on a fragile retail economy?
• Will VAT receipts rise?
What’s in store.....VAT?
PwC
What’s in Store.... Capital Taxes
Rate
30% rate?
Tiered rates?
Abolition of Reliefs?
Retirement relief / Business property relief / Agricultural relief
Thresholds
Loss relief
CGT / CAT offset
Principal private residence relief
15November 2011
Trends in Tax
Planning
www.pwc.com
PwC
Current Trends
17November 2011
High Earners Restriction limits use of traditional reliefs (patent income, capital allowances etc) for High Net Worth individuals
Other avenues being explored:
-> personal service companies
-> employee incentivisation - growth shares
-> restructuring of debt
Personal Service Companies
PwC Slide 18June 2011
• Planning for the future/structuring for a tax efficient exit
• Deferral/mitigation of Income Tax & Capital Gains Tax (CGT)
• Tax-free reinvestment
• Tax efficient cash extraction
• Retain competitive edge – measures to avoid accounts information being publicly available
• Various options depending on requirements, current cash resources, timescale etc
Tax Planning around Employee Incentivisation – Growth Shares
PwC Slide 19June 2011
Company
Management
‘B’ Shares
Ordinary
Shares
Debt restructuring
PwC Slide 20June 2011
Previously...
• individuals held property in own name• capital allowance schemes meant rent could be earned tax-free• no restriction on interest deductibility
No longer viable introduction of High Earner’s Restrictions and broad application of Income Levy / Universal Social Charge
now more efficient for both property and debt to be held in a company
restructuring of debt / agreement of bank required
Tim O’Rahilly
Marie Flynn
Private Client Services
www.pwc.com
Thank You
www.pwc.com