57,000 businesses owe €1.75 billion tax debt

There is currently €1.75 billion still owed by 57,000 Irish businesses under the tax warehousing scheme, established following the Covid-19 pandemic, according to the Minister for Finance Michael McGrath.

This is down from in excess of €3bn previously owed by 110,000 businesses. However, there are real worries that a substantial number of businesses cannot now pay their tax debts back to the Warehousing Scheme, and are not viable.

Reacting to this crisis, Minister McGrath said: “Many businesses owe quite a modest amount of money in terms of warehoused tax – actually, it is about 5,000 of the 57,000 businesses, that owe the vast bulk of the money, about one and a half billion of the one and three quarter billion euro, and they’re typically or more than €50,000. Those are the businesses that we’re most concerned about.”

He said the Government will introduce flexibilities to the Tax Debt Warehousing Scheme. No details were given except that the Government was looking at issues such as the duration of repayment arrangements, the interest rate that will apply and the date by which such arrangements must have been entered into.

Speaking to RTÉ News, Mr McGrath added: “We recognise that for some businesses entering into an onerous repayment arrangement in the short term is going to be challenging.

“We are going to make some changes to the tax warehousing regime with a view to being as flexible as we possibly can.

“We’ve been engaging with the Revenue Commissioners and a proposal is currently being developed, which we hope to finalise very shortly, to introduce further flexibility.

“A lot of progress has been made, but we are really anxious to ensure that viable businesses are supported, and the Revenue Commissioners are anxious to ensure that these businesses remain in operation.

“It is important to emphasise that businesses must engage with the Revenue Commissioners, it is important that they would put in place repayment arrangements.

“Revenue will be flexible, they can be over an extended period of time and on attractive terms, and they must keep existing tax liabilities up to date and file returns – but the warehoused tax will be treated separately.

“We will seek to introduce enhanced flexibilities to make sure that these businesses can remain in operation.”