Updates on Taxpayers Preliminary Tax Obligations
Recently Irish revenue has provided updates on taxpayers preliminary tax obligations with regards to corporation tax. As well as clarifying rules around where there is no preliminary tax due and due dates.
The change has been made on the (TDM) Tax and Duty Manual Party 41A-07-02. This was issued in September after the amalgamation of older guides. This guidance has since been updated.
Updates for Large Companies
Large companies preliminary tax will now be due in two instalments. This is provided that the company’s accounting period is seven months or greater. A company is considered a ‘large company’ whose corporation tax liability is above €200,000 in the previous accounting period.
In the first instalment, the TDM clarifies, is due for these companies earlier than the:
- last day within six months of the start of the accounting period, or
- 21st day – 23rd day for electronic payments – of the month in which the date (1) falls.
A company has 2 options when it comes to the amount. due. The first option is 50% of the corporation tax liability for the previous accounting period. Or the second option is 45% of the corporation tax liability for the current accounting period.
With regards to the second instalment, it is due on the earlier of:
- 31 days before the end of the accounting period, or
- on the 21st – or 23rd day for electronic payments – of the month in which the day at (1) falls.
As like before there are two options available. The first option is, the amount due is the balance that will bring the preliminary tax up to 90% of the final tax due for the current accounting period. The second option available is for a company would pay 90% of the preliminary tax in one instalment if the accounting period is less than seven months.
Updates for Small Companies
The update for small companies is that they will make a single payment of preliminary tax.
According to the TDM outlines that the tax is due on the earlier of:
- 31 days before the end of the accounting period, or
- the 21st day (or 23rd day for electronic payments) of the month in which the day at (1) falls.
The amount due for small companies is either 100% of their corporation tax liability for the previous accounting period or 90% of their corporation tax liability of the current accounting period.
For small companies, no preliminary tax is due where a company is not liable to corporate tax. For example where it makes a loss.
New or start companies are exempt from paying preliminary tax for their first accounting period. This is subject to their corporate tax liability being less than €200,000. However, they must pay a final corporate tax charge for the first accounting period when submitting their corporate tax return.
Corporate tax returns in Ireland are due within nine months of the end of the accounting period.
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