• Irish Advisers to Report Aggressive Cross-border Tax Planning

Irish Advisers to Report Aggressive Cross-border Tax Planning

11 July 2018

Angela Fleming, Tax Director, comments in ‘Irish Advisers to Report Aggressive Cross-border Tax Planning’ by Ali Qassim for Bloomberg Tax.

Speaking to Ali Qassim of Bloomberg Tax, Angela Fleming, Director provides an insight into new rules requiring tax professionals to report certain aggressive cross- border tax planning arrangements to national tax authorities.

‘‘Practitioners and other in-scope persons need to have appropriate systems in place from this earlier date in order to capture reportable transactions.’’

Ireland, like other member European Union member nations, have until Dec. 31, 2019, to adopt and publish national laws required to comply with DAC6.

Fleming said the new rules were likely to lead to a substantially higher number of disclosures.

Since Ireland introduced its own regime, the tax authority has received 11 disclosures of tax schemes, potentially involving almost 500 taxpayers, Fleming said, citing figures provided by Finance Minister Pascal Donohoe last September.

‘‘While this is a relatively low number, we would expect that the number of disclosures that will be made under DAC6 will be substantially higher than that un- der the existing regime,’’ she told Bloomberg Tax in a June 22 email.

For instance, under the current regime, ‘‘a transaction is disclosure if, in addition to one of the main benefits of the transaction being tax avoidance, the trans- action falls into one or more of the ‘‘hallmarks or specified descriptions,’’ she said.

However, under the EU mandatory disclosure, ‘‘some transactions which feature hallmarks are disclosable even if the main benefit test is not met—in other words, where the transaction is not entered into with the main benefit, or one of the main benefits, being to obtain a tax advantage.’’

As a result, she expected a rise in transactions ‘‘that represent normal tax planning, or indeed normal commercial organisation of international business activities’’ such as a foreign branch arrangement.

Fleming feared that ‘‘a flooding of the system with reports of transactions that do not contain anything close to aggressive tax planning appears to us to be counterintuitive.’’ She said she hopes a ‘‘more practical and focused approach to mandatory reporting of cross-border transactions will develop over time.’’

Review of Reporting Procedures Fleming acknowledged that ‘‘the expectation that there will be far more transactions in scope under the new regime poses a significant challenge to us as a firm.’’

BDO, for instance, is currently undertaking a review of its current procedures to ensure that it has ‘‘a robust system in place to capture reportable transactions going forward.’’

The firm is also providing training to its staff on the new regime ‘‘so that they are aware of their obligations, and what is (and is not) reportable,’’ she said.

Fleming said that ‘‘as is currently the practice for the domestic disclosure regime, and other reporting requirements’’ such as cross-border tax rulings, BDO ‘‘will advise clients on a case-by-case basis where we believe they are in scope of reporting.’’

She said ‘‘our engagement terms with our clients already refer to our obligations to report under mandatory disclosure regimes, however, we are undertaking a review to determine if these engagement terms require updating to reflect our obligations under DAC6.’’