RGDATA welcomes tax reforms and extension of TBESS
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The Minister for Finance Michael McGrath received approval from Dáil Éireann to give immediate effect to a number of the taxation measures announced by Government to continue to assist businesses deal with high energy prices and cost of living challenges.
The Minister brought three Financial Resolutions to the Dáil to give effect to changes in VAT and Excise Duty. He also brought forward a Motion to make amendments to the Temporary Business Energy Support Scheme (TBESS) by Ministerial Order as provided for in Finance Act 2022.
In the coming weeks, the Minister will bring forward a Finance Bill to give full legal effect to the taxation measures announced in recent days.
Minister McGrath said:
“I am acutely aware that for so many, the high cost of living and in particular high energy bills are a real challenge. The government has delivered unprecedented support to help individuals, families and businesses to date, and this week we have gone further to provide more help for the months ahead.
“The changes to the VAT and excise duty elements of the package announced yesterday now have legal effect and a Finance Bill will be brought forward in the coming weeks for the remaining tax elements.
“These measures, combined with the support already announced in Budget 2023 will help citizens with the cost of living and businesses with the cost of doing business. The government is able to help due to the careful management of our public finances in recent years. It is my responsibility to continue to manage our public finances effectively, to make the best use of taxpayers’ money and to leave us with the capacity to do more in Budget 2024 this autumn.”
In terms of the Financial Resolutions, firstly, a resolution provided for the extension of the temporary reduction in VAT on gas and electricity, from 13.5% to 9%, to 31 October 2023.
A second Resolution provided for the extension of the temporary reduction in VAT on Tourism and Hospitality, from 13.5% to 9%, to 31 August 2023.
With regard to fuel excise, the current VAT inclusive per litre reductions of 21 cent in respect of petrol; 16 cent in respect of diesel; and 5.4 cent in respect of Marked Gas Oil were due to expire on 28 February. The Financial Resolution extended these reductions to 31 May 2023, and provided for an incremental restoration to full rates by 31 October 2023 as follows:
- 1 June – rates will increase by 6 cent for petrol, 5 cent for diesel and 1 cent on MGO (per litre)
- 1 September – rates will increase by 7 cent for petrol, 5 cent for diesel, and 1 cent for MGO (per litre)
- 31 October – rates will be fully restored with an increase of 8 cent for petrol, 6 cent for diesel and 3.4 cent for MGO (per litre)
The Temporary Business Energy Support Scheme (TBESS) was introduced to support qualifying businesses over the winter months with increases in electricity or natural gas costs which arose as a result of the invasion of Ukraine by Russia.
Sections 100 to 102 of Finance Act 2022 provide the legislative basis for the scheme. The scheme provides support to qualifying businesses in respect of energy costs relating to the period from 1 September 2022 to 28 February 2023, subject to monthly caps.
The TBESS is available to eligible tax compliant businesses carrying on a trade or profession, the profits of which are chargeable to tax under Case I or Case II of Schedule D. The scheme operates on a self-assessment basis and is being administered by the Revenue Commissioners.
In order to facilitate the continuation of the scheme, the Minister for Finance will exercise the power contained in Section 100 of Finance Act 2022 to extend the scheme to 30 April 2023. The Minister will also exercise the power to increase from 1 March the monthly limit on aid under the scheme to €15,000 per qualifying business in relation to a trade or profession, subject to an overall cap of €45,000 in cases where a business is carried on from more than one location.
As announced yesterday, in addition to exercising the powers contained in section 100, the Minister proposes to make a number of further amendments to the scheme. These changes will require State aid approval and subject to receiving that approval will be provided for in the forthcoming Finance Bill. The additional changes announced yesterday are as follows:
- the Scheme will be extended, to 31 May 2023
- the threshold for qualification will be reduced from a 50% increase in electricity or gas costs to 30% increase (to apply retrospectively from 1 September 2022)
- from 1 March 2023 the level of relief will increase from 40% to 50% of eligible costs
Pending implementation of these changes, claims can continue to be made under the current scheme.
