VAT Advisor

Deduction for Digital Services Taxes

 

 

On 5th August 2022 the Irish Revenue Commissioners issued a new Tax and Duty Manual Part 04-06-03, which provides guidance on the tax deductibility of Digital Services Taxes (DSTs).

 

For full information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-06-03.pdf

 

The guidance provides that certain Digital Services Taxes (DSTs) incurred wholly and exclusively for the purposes of a trade (taxable under Case I and Case II Schedule D) are deductible in calculating the income of that trade for the purposes of computing Irish corporation tax.

 

The Revenue’s position is that Digital Services Taxes are a turnover tax.

 

They are levied on revenues associated with the provision of digital services and advertising and not on the profits.

 

The guidance provides that, in circumstances where the following DSTs have been incurred wholly and exclusively for the purposes of a trade, the Irish Revenue Commissioners will accept that they are deductible expenses in calculating the income of that trade:

  • France’s Digital Services Tax;
  • Italy’s Digital Services Tax;
  • Turkey’s Digital Services Tax;
  • United Kingdom’s Digital Services Tax; and
  • India’s Equalisation Levy.

 

 

The Guidance material doesn’t distinguish between the two forms of equalisation levy under the Indian regime. At this time there is no clear guidance available however, it would be expected that that since both types of levy are so similar that both should be covered. If this situation applies to you, it is advisable to contact the Irish Revenue Commissioners to seek clarification via MyEnquiries.

 

This Guidance should be interpreted as an initial list.  According to The Revenue Commissioners “The list of DSTs above may be updated as required.”

 

VAT and Excise Reductions

 

 

Today the Irish Government announced the following measures to help with the rising costs of energy, in addition to the cost of living measures of €2 billion which were previously announced:

 

  • A temporary reduction in the rate of VAT on the supply of gas and electricity, from 13.5% to 9%, from 1st May until 31st October (at an estimated cost of €46 million to the Exchequer).
  • An additional once off €100 lump sum to households eligible for the fuel allowance (for an estimated 370,000 recipients).
  • A further reduction of 2.7% per litre in the excise levy on marked gas oil or green diesel.
  • The reduced rates of excise duty on petrol (20 cents per litre), diesel (15 cents per litre) and green diesel (2 cents per litre), which were announced last month, will be extended to Budget Day at the end of August (at a cost of €80 million to the Exchequer).

 

The Minister for Finance also confirmed that the Public Service Obligation (P.S.O.) Levy will be set to zero by October 2022.

 

 

For full information, please follow link:  https://www.gov.ie/en/press-release/0a129-government-announces-further-measures-to-help-households-with-rising-cost-of-energy/?_cldee=lcXqBawaGsFsOWw3I_ME4giIjrsplWXd-72lcBtEruyHtX5gNJK0C75jcfN8DtDRoL9I-M69U5_UiLjbKHtHpQ&recipientid=contact-baa265b900fae71180fd3863bb3600d8-34a5f9f973f64e0ead12cc385e40b831&esid=f492a4af-0abc-ec11-983f-6045bd8c5c09

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.