What are your main post-Budget 2027 and Finance Bill observations on preliminary tax?
Contributor: Angela Fleming, Partner & Head of Financial Services Tax, BDO
The Bill increases the corporation tax liability threshold for treatment as a small company from €200,000 to €350,000.
It also introduces a new top-up mechanism. A company that has paid at least 80%, but less than 90%, of its final liability by the normal preliminary tax date may preserve its preliminary tax position by making a further payment within four months after the end of the accounting period, bringing the aggregate payment to at least 100% of the final liability.
Furthermore, it amends the rules such that when calculating interest on late or underpaid preliminary tax, interest is calculated by reference to the lower of 50% of the prior year tax liability, or 45% of the current year tax liability, for the first instalment of preliminary tax for large companies.
The changes will apply to accounting periods commencing on or after 1 January 2027.
It is expected that there will be no net impact on the quantum of Corporation Tax receipts to the Exchequer, however, the timing of Corporation Tax receipts may alter slightly in some cases.
These measures should provide greater flexibility for Financial Services businesses whose final taxable profits can be difficult to determine accurately before the end of the accounting period, although they do not go as far as the changes I suggested in my article published in August.
Content adapted from Finance Dublin Irish Tax Monitor.