An accountancy body is calling for any additional tax gathered as a result of a move to a new PAYE reporting system to be shared with employers to cover the cost of the move.
From January 1st next year, employers across the State must comply with new PAYE modernisation rules, which involve the most significant reform of the system since its introduction in 1960.
It means employers will have to engage in real-time reporting, and will need to calculate and report their employees’ pay and deductions as they are being paid.
While Revenue maintain PAYE modernisation will reduce employers’ administrative burdens, the Association of Chartered Certified Accountants (ACCA) argues that it will increase their financial burden, and that the Revenue needs to cover these costs.
“The new system risks being viewed as an additional administrative tax on smaller companies,” the ACCA said, pointing to the costs of training staff on the new system and implementing new procedures and updating company software.
The ACCA expects the new system will generate an additional €220 in tax per employer, on the back of additional tax compliance across the State. This will boost Revenue’s tax take by about €50 million a year. However, the ACCA want this money to go towards covering the cost of the scheme.
“The €50 million in additional taxation revenue divided out equally by the number of employers involved, at about €220 per employer, would be a move in some direction to meet the cost of implementation. Revenue are in a position to alleviate some of this burden and should meet that cost,” said Stephen O’Flaherty, chairman of ACCA Ireland.
Mr O’Flaherty added that he expects the implementation of the new regime in Ireland will have similar teething problems to those experienced in the UK.
“ Even if the PAYE Modernisation system was to work perfectly in January, the cost to a micro business will be considerable including upskilling of staff, implementation of new software and systems and potentially renegotiating wage payments with staff; for example, moving from weekly to monthly wage payments,” he said.
