Tax authorities across the Organisation for Economic Cooperation and Development (“OECD”) increasingly expect organisations to be able to confirm that tax risks are appropriately managed. Various measures are being introduced by tax authorities that aim to encourage good tax governance and the implementation of strong tax control frameworks. Examples of such regimes include the GST ‘Government checklist’ developed by the ATO in Australia and the Horizontal monitoring scheme operated by the Dutch Tax Authorities. Both of these encompass more than just complying with laws and regulations, but involve organisations being able to demonstrate its tax governance and risk management processes.
Recent Irish company law changes impose a new compliance related requirement on many company directors. Although a company law obligation, its scope includes all Irish tax legislation in a new measure that is consistent with the global trend of enhanced focus on tax transparency and governance. As with the Senior Accounting Officer (SAO) regime in the UK, robust systems and processes are essential to ensuring compliance with this requirement.
The requirement can be simply stated – the directors must include a statement in their Directors’ Report:
- acknowledging responsibility for securing compliance with relevant obligations, and
- confirming that certain things have been done (or providing explanations for things not done).
But what companies are affected? When do these obligations begin? What are the relevant obligations? And what are the things that need to be done?
This requirement applies to directors of all Irish PLCs and limited companies, other than Investment companies, with a balance sheet over €12.5m and turnover over €25m for financial years beginning on or after 1 June 2015. The relevant obligations are those relating to all tax laws and those company law provisions where failure to meet them is a category 1 or category 2 offence, or a serious Market Abuse or serious Prospectus offence i.e. the most serious offences.
The actions that need to be taken are to:
- draw up a compliance policy statement setting out appropriate (in the directors’ opinion) policies regarding compliance with relevant obligations
- put appropriate arrangements and structures in place to secure material compliance
- conduct a review, during the period, of the arrangements and structures
While branches of non-Irish companies are not in scope, the relatively low thresholds mean that many Irish subsidiaries of global groups must comply with this requirement.
How we can help:
PwC can provide a range of services tailored to your needs, including:
- helping your boards to understand their responsibilities
- helping you to assess the relevant obligations applicable to your organisation
- performing independent health checks – tax/company secretarial
- assisting with the drafting of policy statements
- designing and / or documenting appropriate structures and arrangements
- conducting real-time reviews
For further information on the new Directors’ Compliance Statement requirements please contact any of the following:
Andy Banks, Partner Assurance
Andy.firstname.lastname@example.org / +353 1 792 6805
Teresa McColgan, Partner Tax
Teresa.email@example.com / +353 1 792 8613
Ruairí Cosgrove, Director Entity Governance and Compliance
Ruairi.firstname.lastname@example.org / +353 1 792 6070
Elaine Mitchell, Senior Mangager Tax
Elaine.email@example.com / +353 1 792 5592