As someone who deals with tax regulations on a daily basis, what is your view of the current tax landscape?
It’s difficult to view the current landscape as anything but unbalanced. So much depends on the perspective you’re coming from. If you’re a large firm with a good track record in compliance and a responsive Large Cases Division (LCD) contact, you probably have a favourable view given the expertise available to you. Less so if you’re a small firm struggling with a Foreign Tax Credit (FTC) claim and on hold with a regional tax office. In most instances, the issue lies not with legislation but with the interpretation being taken by the tax office you’re dealing with. Too often, this is impacted by a lack of experience and the process of escalation is opaque and time consuming in practice. Good Revenue contacts are worth their weight in gold.
Has the prospect of Brexit already impacted on global mobility, in your experience?
Yes. We’ve seen a large increase in the number and complexity of enquiries – especially those coming from UK-based firms considering international relocation. Comparative gross-to-nets for Ireland, Germany and Holland are a frequent request as well as queries on employment law requirements and standard benefit packages. It’s yet to puncture the numbers on assignment and we’re still seeing healthy growth in new starts. Many seem to be adopting a wait-and-see approach, which is unsurprising given the lack of clarity around any of the issues.
With Brexit and US tax reform both on the cards, what does the future hold in your view?
US Tax Reform has been promised for well over a decade. Given the difficulties the Republican majorities are experiencing with repeal of Obamacare, it’s not expected that a wholesale bipartisan reform to the tax code will sail through the Houses. Much depends on how aggressive the proposed changes are. President Trump has yet to earn a reputation for consensus building. The likelihood is that tax changes face a delay until after the healthcare question is decided. If no repeal/replace is achieved, tax reform may need to be watered down to ensure safe passage and is likely to focus on repatriation of existing offshore funds rather than dis-incentivisation of foreign operations. For Brexit, the only truism to date is that the more confident the prediction, the less informed the commentator.
Given the role of technology in the success of Immedis, are you concerned about the rise of artificial technology in the areas of tax and accountancy?
Not in the slightest! Tech will play an increasingly vital role in consolidation and standardisation of (especially) payroll but also tax and financial reporting. It’s a central component in our offering. We see more and more clients coming to us for advice. They may have bought a software platform to help manage their processes better, but there is still a need for a tax expert to review data and make sense of it all. At Immedis, we have developed our own proprietary tools to assist companies with global tax and payroll operations and the feedback we’ve had is that it will change the global payroll market forever, but the industry is miles away from replacing human expertise with algorithms. The nuance associated with statutory and legislative interpretation is too great. The landscape shifts too quickly internationally – there is always a disruptive change happening somewhere.
Having worked across a range of jurisdictions, what would you change about the Irish tax system if you had the opportunity?
In respect of legislation, we’re moving in the right direction but too slowly. The Special Assignee Relief Programme (SARP) is too restrictive and the Knowledge Development Box has yet to catch fire. It’s very easy to talk blithely about simplifying the tax code but it is needed. Transparency is the main requirement for any system and this has been complicated here by the Apple ruling. Revenue has lost a lot of expertise in the last number of years and is working hard to replace this. If I could borrow from other jurisdictions, I’d remodel SARP along the lines of the Dutch 30% rulings, and swipe the responsiveness and clarity offered by German tax offices to all queries.
Barry Flanagan ACA is Senior Tax & Payroll Manager at Immedis. Read the full interview at Accountancy Ireland here.