Accounting & Business – news – December 2013
International
Regulators ‘not trusting impairment charges’
Regulators are relying on their own assessments of banks’ expected losses in reviewing capital adequacy, rather than banks’ reported impairment charges, says Fitch Ratings. Regulators appear to believe that IFRS provides a delayed and unreliable recognition of likely losses. Fitch says that third quarter earnings announcements illustrated the differences between banks’ financial reporting of impairments and regulators’ assessments of expected losses. RBS’s creation of an internal bad bank led to £4bn to £4.5bn of additional impairments and reported losses, but will not materially change the assessed capital adequacy situation. Regulators had already provided for the potential losses in their assessments. Meanwhile Swiss regulators have required UBS to set aside additional risk capital for likely future provisions.
IASB overhauls hedge accounting
Corporates no longer need to report as profits those gains that are caused by a worsening in their credit risk status under reforms to hedge accounting approved by the IASB. The change can be adopted by entities immediately, without waiting for other amendments to IFRS 9, accounting for financial instruments, to come into effect. Other changes agreed to IFRS 9 will allow entities to better reflect their risk management activities in their financial statements. The previously proposed mandatory implementation date of January 2015 for the amended IFRS 9 has been removed, allowing entities a longer transition period.
US bans firm over botched China audits
New York based audit firm Sherb & Co has been banned by the US Securities and Exchange Commission over its failed audits of three China-based companies that are publicly traded in the US. The firm’s founder, Steven J. Sherb, two partners, Christopher A. Valleau and Mark Mycio, and its audit manager, Steven N. Epstein, have also been banned. The firm will pay a $75,000 penalty. The SEC found the firm’s audits were “riddled with failures and improper professional conduct”. One of the companies audited – China Sky One Medical Inc – has since been charged with financial fraud.
OECD considers country-by-country accounting
The OECD is considering the issues associated with country-by-country reporting in what could be a precursor to its support for the principle. The move by the OECD follows the endorsement earlier last year by the G20 of the OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS). The OECD is now assessing what transfer pricing documentation would be required, the accounting requirements and what other information would be needed to produce a template for country-by-country reporting.
Chinese Plenum strengthens role of market
The market is to play a stronger role in China following the Plenum of the country’s leaders. Resource allocation will take place according to market demands rather than through planned decisions. State-owned corporations will compete on a more equal basis with privately owned businesses, including those that are foreign owned. Interest rates will be set by the market and controls on the purchase and sale of currencies will be eased. Farmers will be given stronger land ownership rights.
China adopts accruals
China’s local and regional governments are to move to accruals accounting and will be permitted to levy property taxes, the Chinese government has announced. The reforms were welcomed by Fitch Ratings, which said they should stabilise the finances of local governments, provide a more transparent financial reporting system, improve budget management and create the right financial incentives for financial sustainability. The reforms should reduce over-provision of urban infrastructure projects and restrict the use of debt by local governments, added Fitch.
ACCA welcomes audit transparency
ACCA has welcomed changes to audit standards that will make audits more transparent. It says that requiring auditors to describe ‘key audit matters’ is a “huge change” that will move audit reports beyond being simple pass or fail assessments. Audit reports will in future be read and digested, says ACCA. Its head of auditing practice David York added: “Best practice will emerge only by allowing scope for auditor judgement to tailor reports to individual client circumstances.”
PwC buys Booz
PwC has agreed to acquire leading global consultancy business Booz & Co. The firms have not revealed the agreed price, but it is rumoured to be $1bn. Dennis Nally, chairman of PricewaterhouseCoopers International, said the merger “would give CEOs the opportunity to work with a global consulting team that could provide services from strategy development right through to execution”. The acquisition is subject to approval of a partner vote that had not taken place as AB went to press.
IFAC’s Ball honoured by ACCA
Former IFAC chief executive Ian Ball has been awarded honorary membership of ACCA in a presentation at a joint ACCA Council and International Assembly Dinner at the Royal Society of Arts in London. Professor Bob Eccles, senior lecturer at Harvard Business School, was awarded the same accolade. Ian Ball was recognised for his contribution to the development of the global profession and for championing the cause of improving financial management in the public sector. Professor Eccles’ award was for his contribution to developing the thinking behind Integrated Reporting.
Launch of KPMG Capital
KPMG has launched its first global investment fund, KPMG Capital. The fund will focus on data and analytics businesses, making acquisitions and forming partnerships. Mark Toon, CEO of KPMG Capital and global lead for KPMG’s data and analytics practice, said: “With more data produced and stored in the last two years than in the rest of human history, many businesses are looking for strategic and practical solutions to manage the volume, velocity and variety of this data revolution. KPMG Capital will enable us to develop or acquire opportunities in data and analytics quickly.” The fund will be managed in London.
BDO predicts mid-tier consolidation
Within five years there will be just two or three truly global networks of accountancy firms because of the accelerating pace of consolidation, says BDO. It made the prediction as it announced its first global results following its UK merger with PKF. BDO completed other mergers in national territories, including with PKF firms in Australia and New Zealand. The enlarged BDO reported turnover of $6.45bn in the year ending September, a 7.3% rise over the previous year.
Deloitte criticised by PCAOB
A 2009 report critical of Deloitte has been published by the Public Company Accounting Oversight Board, PCAOB. The report had been held back to enable Deloitte to deal with identified issues within a year of publication. However, Deloitte failed to meet the timetable, leading to the eventual publication of the report. The report contained criticisms of Deloitte’s quality controls. A spokesman for Deloitte said: “We believe the PCAOB’s favorable determination concerning our remediation of the matters in Part II of our 2009 and 2010 inspection reports is reflective of the significant and measurable progress we have made in recent years toward the achievement of our audit quality objectives.”
GT wins IFRS Foundation audit
Grant Thornton has been appointed as auditor of the IFRS Foundation, following a competitive tendering process. Seven firms tendered for the contract, which was previously held by BDO. BDO continues to provide the Foundation with corporate tax services in the UK and the US.
IR Framework released
The International Integrated Reporting Framework has been released, representing an important milestone in the market-led evolution of corporate reporting. The framework will be used to accelerate the adoption of Integrated Reporting globally, following successful trails of it in more than 25 countries. Details of the framework were not available as AB went to press.
UK
FRC investigates Co-op Bank
The Financial Reporting Council is investigating recent years’ financial reports of The Co-operative Bank, which has a £1.5bn capital hole. A spokesman for the FRC said: “We are making enquiries into the Co-op’s financial reporting in accordance with our normal procedures and under the terms of the Accountancy Scheme…. In addition, the Bank has received certain enquiries from the Conduct Committee of the Financial Reporting Council in respect of the 2012 accounts. These enquiries relate to the disclosure in the 2012 annual report and accounts of the Bank’s regulatory capital position.” The Co-op Bank said it will co-operate with the enquiry. Its auditor, KPMG, declined to comment, but pointed out the investigation is not into the bank’s audits.
Deloitte given leave to appeal
Deloitte and its former partner Maghsoud Einollahi have been given leave to appeal part of the decision by the Disciplinary Tribunal that imposed a fine of £14m in relation to alleged failings in its advice on the acquisition of MG Rover by the so-called ‘Phoenix Four’. Leave to appeal was agreed in relation to ‘Project Aircraft’, which had involved the use of MG Rover tax losses, because it is unclear that the Phoenix Four relied on advice from Deloitte when making their decisions. Leave to appeal was refused in relation to ‘Project Platinum’, the sale of Rover Financial Services.
Tax planning falls
The number of tax planning schemes fell last year to the lowest level since HMRC introduced its ‘early warning mechanism’. HMRC was notified of 77 schemes in the year ending September, compared to 587 schemes notified in the first year of the Disclosure of Tax Avoidance Schemes programme in 2004/5.
‘Public sector needs strategic leadership’
There is a pressing need to strengthen strategic financial management in central government, according to an ACCA report, ‘The importance of strategic financial leadership in the UK public sector in a time of financial austerity’. There is a need for a cultural change in government to enable finance managers to have greater influence on decision-makers. Although public authorities anticipate further austerity up until 2020, strategic thinking about dealing with the next phase of austerity was largely under developed, says the report. The report was written for ACCA by Nottingham Business School.
New FRC director of accounting
The Financial Report Council has appointed Anthony Appleton, a BDO director, as its new director of accounting and reporting. Appleton has been a member of the FRC’s Accounting Council since May. Chris Hodge, who has been the FRC’s director of corporate governance since 2004, becomes executive director of strategy.
Transparency on company control
Details of the ownership and control of UK companies are to be made publicly accessible, David Cameron has announced. The move implements a commitment made at the G8 conference in June when he promised to establish a central registry of company beneficial ownership. The registry will contain information on individuals with an interest in more than 25% of a company’s shares or voting rights, or who otherwise control the way it is run. Details will be announced in the next few weeks.
ACCA members seek career progression
Career progression is a priority for ACCA members, with three quarters having set personal timetables to achieve career aspirations, according to an ACCA survey. The survey also reveals that ACCA members have significant multi-sector experience, with 63% having worked across sectors. Almost a third have changed jobs in the last year, with most of these doing so for the same employer. ACCA members who hold very senior positions are the most likely to have worked for different sectors. A third of members are considering starting their own businesses later in their careers.
KPMG creates ‘Innovation and Solutions Centre’
KPMG is to create 200 additional jobs in Leeds in a national Innovation and Solutions Centre. Location was based on access to skilled workers, including local universities’ graduates and undergraduates. KPMG has taken on a 28,500 square foot property in the centre of the city. The centre is part of a national programme by the firm of investment in technology innovation centres in different parts of the UK.
Lords investigates personal service companies
The House of Lords is investigating the impact of personal service companies. The investigation is being conducted by a new select committee established for that purpose. “During the course of this new inquiry, we will consider extent to which personal companies are used and the implications for tax, National Insurance and other wider issues, both from the point of view of workers and those who engage them,” said its chairman, Baroness Noakes.
Free accounting dictionary app
Accounting Dictionary, a new mobile app, had over 15,000 downloads in its first three months. The app was developed by Lancaster accountant Mark Ellis FCCA and builds on the successful www.accountingdictionary.org website. Mark said: “I set out to create an accessible collection of accountancy terms and abbreviations to assist students, accountants and finance staff, together with business owners trying to understand what accountants are talking about, or indeed anyone with an interest in finance.”
KPMG wins Unilever audit
KPMG has been appointed the new auditor of Unilever, winning one of the world’s largest audit contracts. PwC previously conducted the audits, but was not allowed to participate in the competitive tender for the new contract. Unilever acted in anticipation of possible changes in law in the Netherlands that would enforce audit rotation. PwC had been Unilever’s auditor for 26 years.
Narrative reporting improves
There has been a significant improvement in the quality of narrative reporting by UK listed companies, a Deloitte survey has found. Nearly half of companies are disclosing figures on carbon emissions, in advance of a legal requirement. A fifth are reporting staff gender diversity numbers. There is also a big improvement in the reporting of risks and uncertainties. A mere 5% of companies were regarded as having done no more than provide a simple list of principal risks and uncertainties.
Accountants ‘must adapt to technologies’
Ten new technology developments will have a significant impact on the work of accountants, according to an ACCA study. To respond to technological advances, accountancies will need to develop new skills and competencies, says the report, ‘Digital Darwinism: thriving in the face of technology change’. Mobile access, big data, artificial intelligence and robotics, cyber security, educational technologies, cloud computing, electronic payment systems, virtual and augmented reality, digital service delivery and social media are, between them, expected to reshape the profession.
PwC wins Ladbrokes audit
Ladbrokes has appointed PwC as auditor, in place of EY. The company stated: “The decision was taken following a rigorous tender process and recommendation from the audit committee. The tender process was initiated in September 2013 as part of an ongoing emphasis on good corporate governance and best practice. Following formal proposals and presentations from a number of firms, PwC was successful in this process. The appointment is subject to shareholder approval at the 2014 Annual General Meeting to be held on 7 May 2014.”
Wilkins Kennedy expands
Wilkins Kennedy is to merge with CW Fellowes to form an enlarged Wilkins Kennedy firm that will now operate from 15 local offices. CW Fellowes’ nine directors and 70 staff move over to Wilkins Kennedy, which now has over 500 employees. Both firms were members of the IAPA international organisation.
KPMG warns on AI
Artificial intelligence will soon present a bigger fraud risk than employees, claims a KPMG report, ‘Profile of a Fraudster’. So called ‘seeker bots’ that infiltrate IT systems, self-replicate and learn from experience represent the biggest security challenge in the future, it argues. Hitesh Patel, KPMG’s head of forensic, said: “This is not science fiction, but a taste of things to come. We are already seeing highly trained hackers link up with the organised crime network and the faceless criminal is not far away.”
HMRC using ‘street view’
Google’s ‘Street View’ is being used by HMRC as part of investigations into undeclared economic activity. “We use ‘Google Earth’ occasionally when an enquiry is already well under way to check very basic lifestyle factors,’ said an HMRC spokesman. “It has only very limited application and interest for us and is very much a secondary low level tool”. Inspectors are also checking social media for signals of under-declarations of tax liabilities. A new HMRC IT system is being used to collate suspicions of individuals’ tax evasion.
Politics
Corruption warning for councils
Fraud and corruption are likely to increase in local government as a result of the abolition of the Audit Commission, warns anti-corruption NGO Transparency International. Its report ‘Corruption in Local Government: the mounting risks’ suggests there could be unintended consequences from the abolition at a time of other upheavals in local government. TI lists 16 pieces of legislative change that could increase the risk of corruption. It proposes that central government undertakes a corruption risk assessment, along with adopting stronger whistleblowing procedures.
FRC strengthens risk management governance
The Financial Reporting Council is proposing to strengthen the UK Corporate Governance Code relating to the management and reporting of risk. The FRC has also published supplementary guidance for directors. It is intended that amendments will not only improve the management of risks in listed companies, but also the communication to investors of the nature of those risks. The proposals bring together existing guidance on risk management and internal control with reforms to auditors’ going concern assessments, as recommended by Lord Sharman.
Cayman Islands signs information exchange
An automatic tax information sharing arrangement has been agreed between the UK and the Cayman Islands. This is the first such agreement between the UK and an Overseas Territory. The Crown Dependencies of the Isle of Man, Jersey and Guernsey signed similar agreements last year [2013]. The Cayman Islands have also agreed to be part of the G5 multilateral information sharing pilot involving the UK, France, Germany, Italy and Spain.
Barnett formula ‘short changing England’
Councils in England lose £4bn a year because grant is unfairly allocated to the UK’s devolved nations, argues the Local Government Association. Funding is provided to Scotland, Wales and Northern Ireland under the so-called ‘Barnett Formula’, based on population size and density. The LGA says English councils would receive substantially more if grant allocations were based on objective needs assessments. It is also unfair, argues the LGA, that the formula does not take into account devolved nations’ greater capacity to raise other sources of income.
EU accounts concerns
The European Union’s accounts for 2012 have been signed-off by the European Court of Auditors (ECA), but the auditors expressed concern that the accounts still fail to fully comply with European legislation. The ECA said there should now be a rethink of EU spending rules and recommended simplifying the legal framework. It wants EU programmes to focus more on achieved value than on expenditure. There was an error rate on spending of 4.8% in 2012, up from 3.9% in 2011.
RoW
Deloitte criticised over Africa tax advice
African nations have lost hundreds of millions of dollars in tax revenues because of tax avoidance advice provided by Deloitte, claims ActionAid. It says a Deloitte report suggested companies structure businesses in Mauritius to reduce tax liabilities in other African countries, including Mozambique – one of the world’s poorest nations. A Deloitte spokeswoman responded: “It is wrong to describe applying Double Tax Treaties, such as the treaty between Mauritius and Mozambique, as tax avoidance…. Any discussion of tax treaties by tax professionals would typically be around the technical and administrative aspects of the treaties and not an expression of favour of any particular country at the expense of any other country.”
Rise of Islamic finance in Africa
Islamic banking is on the rise in Africa and could generate billions of dollars of investment into badly needed energy and other infrastructure projects in the continent, the 2nd Annual Islamic Banking Summit Africa has been told. The conference attracted more than 350 participants in Islamic finance. With around 400 million Muslims in Africa, the continent is seen by many bankers in the Middle East as highly suited for investment via Islamic bonds, sukkuk. Nigeria, Senegal, Gambia and Sudan have all recently issued sukkuk bonds. Other countries – including South Africa, Kenya, Morocco and Tunisia – are expected to do the same.
EY and KPMG merge in Denmark
EY and KPMG are to merge their operations in Denmark. The joint new company will use EY’s name, operating as part of the EY Nordic organisation. The two businesses will remain separate until they are given regulatory approval to merge. Erik Mamelund, regional managing partner for EY Nordics said that the proposed merger “builds on both EY and KPMG’s strong capabilities”, but that the firms could not say more pending regulatory consideration.
Grant Thornton expands
Grant Thornton is expanding in Japan, Italy Paraguay, Bangladesh and Ethiopia, following a series of mergers and acquisitions. In Japan, Grant Thornton merged with Kasumigaseki Audit Corporation, formerly part of Baker Tilly Japan, and in Italy, Ria Grant Thornton merged with Prauditing Srl, formerly part of the Moore Stephens network. Grant Thornton Paraguay doubled in size by merging with a local former Baker Tilly member firm. A joint venture with Howlader, Yunus & Co created a new office in Bangladesh. Grant Thornton firms in Oman and Yemen merged with Ethiopia’s A.W. Thomas to create a firm in Ethiopia.
EU accounts concerns
The European Union’s accounts for 2012 have been signed-off by the European Court of Auditors (ECA), but the auditors expressed concern that the accounts still fail to fully comply with European legislation. The ECA said there should now be a rethink of EU spending rules and recommended simplifying the legal framework. It wants EU programmes to focus more on achieved value than on expenditure. There was an error rate on spending of 4.8% in 2012, up from 3.9% in 2011.
Accountants ‘must adapt to technologies’
Ten new technology developments will have a significant impact on the work of accountants, according to an ACCA study. To respond to technological advances, accountancies will need to develop new skills and competencies, says the report, ‘Digital Darwinism: thriving in the face of technology change’. Mobile access, big data, artificial intelligence and robotics, cyber security, educational technologies, cloud computing, electronic payment systems, virtual and augmented reality, digital service delivery and social media are, between them, expected to reshape the profession.
Deloitte fined $2m
Deloitte has been penalised $2m for permitting a suspended auditor to participate in its public company audit practice. The firm violated the Sarbanes-Oxley Act and PCAOB rules in allowing the individual to perform activities as an associated person while subject to a PCAOB suspension. Deloitte has also been required to improve its systems to prevent any repetition.
African Union adopts IPSAS
The African Union has adopted IPSAS, beginning with the 2013 financial year, and has begun training staff in their use. Expected benefits, said the AU, will include improved accountability, a clearer overview of the organisation’s activities and performance, greater transparency of use of donors’ resources, greater credibility, improved programme management and harmonisation of financial reporting across the AU.
Accountants are boring, say Russians
Only being a security guard is regarded as more boring than accountancy, according to a poll in Russia conducted by recruitment agency Superjob.ru. As most security guards are men and most Russian accountants are women, accountancy can be ranked in public perception as women’s most boring job choice. However, perceptions can be flawed. Being Russia’s President was also near the top of the list for boring jobs.
PwC invests in CEE
PwC is investing $60m in the Central and Eastern Europe region over the next three years. Funds will be provided by PwC UK and is intended to attract leading talent from elsewhere and to pay for secondments of specialist partners and directors from across PwC’s global network. Michael Kubena, CEO of PwC CEE, explained: “As our markets mature, our clients are demanding more from us and we will need to bring more to the table if we want to retain and build on our number one market position.”
Russia, Belgium and New Zealand warned over corruption
The OECD has warned Russia, Belgium and New Zealand to do more to tackle bribery and corruption. Russia has yet to fully implement the OECD’s Anti-Bribery Convention, despite adopting it in April 2012. In a separate OECD report, Belgium was told that it has devoted “a flagrant lack of resources” to the enforcement of anti-bribery laws. Meanwhile, New Zealand has been told by the OECD not to be complacent and increase its efforts to detect, investigate and prosecute foreign bribery.
Malawi risks aid over corruption
Malawi will lose aid from the European Union, the International Monetary Fund and the UK government unless it tackles corruption more effectively. All three have suspended aid over claims that Malawi’s government has not properly investigated an alleged multi-million dollar fraud against the country’s treasury. While the government and its new finance minister Maxwell Mkwezalamba – a former African Union economic commissioner – have pledged to root out the problem, the EU says it has no confidence that the government and its national audit office have the capability to do this.
Deloitte takes on 55 Middle East partners
Deloitte has taken on an additional 55 partners in the Middle East, some through promotion and others by recruitment. Omar Fahoum, chairman and chief executive of Deloitte in the Middle East, said: “In the Middle East, in fiscal year 2013, we hired over 550 professionals, a large proportion of whom are Arab nationals, young men and women, from all countries in the region…. We also admitted and promoted over 55 partners, directors and principals with high level of technical and advisory expertise to serve and advise our clients in the region in meeting their strategies.”
Sierra Leone agrees public finance reform
Sierra Leone has agreed a three year extended credit facility worth nearly $100m with the IMF, alongside a program of substantial public finance reform. The IMF said the economic program of reforms would create macro-economic stability. It said that tight monetary policy and a stable exchange rate had led to lower inflation and reduced food prices, but that further reforms were required including fiscal consolidation, the maximisation of tax revenues, improved spending controls and the reduction of debt.
Russia improves tax efficiency
Russia is making big steps forward in tax collection, according to the latest Paying Taxes report from PwC, the World Bank and the International Financial Corporation. In the last two years Russia has moved from 105th to 56th place in the table of countries with the most effective tax collection systems. Russia’s Federal Tax Service says the improvement owes much to the adoption of electronic tax filing and businesses using electronic invoicing systems.
Jarvis reappointed EBA advisor
ACCA special adviser Professor Robin Jarvis has been reappointed to the European Banking Authority’s Banking Stakeholder group. The EBA aims to achieve an effective and consistent prudential regulation and supervision across European banks. Professor Jarvis said: “The stakeholder group exists to establish dialogue and consultation across the many bodies involved in the work of the EBA. Of course, the accountancy profession has a huge part to play here.”
Ireland
RSA calls in PwC
PwC has been appointed to conduct a comprehensive review of RSA Insurance’s Irish operations, including its claims and finance functions and revenue recognition practices. It will also review the business’s reporting controls. RSA announced that pending the outcome of the review, it was suspending its chief executive Philip Smith, its chief finance officer Rory O’Connor and its claims director Peter Burke. Days later Philip Smith resigned, rejecting any suggestion of wrongdoing or error on his part. Apparent anomalies were discovered in the accounts during a routine internal audit. PwC was due to report back to RSA’s main board before the end of 2013, but prior to AB going to press.
KPMG recruits 330
KPMG will recruit 330 people this year for new roles in audit, tax and advisory, to fill 60 senior and 270 graduate trainee positions in its Dublin, Belfast, Cork and Galway offices. Shaun Murphy, managing partner, said: “Signs of domestic growth and Ireland’s continued reputation as the location of choice for foreign direct investment mean that the demand for our services is growing in a number of areas.” EY announced in September that it intends to recruit 80 new staff to executive positions and will be looking for over 160 graduates this year.
Ireland ‘best for business taxes’
Ireland’s tax system is the most efficient in Europe and is the sixth most effective in the world, according to the latest PwC/World Bank ‘Paying Taxes’ report. The assessment is based on the level of bureaucracy and administrative burden imposed on taxpayers. Where Irish businesses spend an average 80 hours a year dealing with taxes, in Germany the average is 218 hours. The report found that Ireland has an effective corporate tax rate of 12.3%, compared to an average 12.9% in the EU and 16.1% globally.
Local government reform ‘may increase business costs’
Chambers Ireland warns that local government reform may increase business costs. Seán Murphy, Chambers Ireland’s deputy chief executive, said: “We have concerns about areas where town councils are to be abolished and replaced by municipalities to be integrated into county councils which have higher rates….. Local Government reform is very welcome. For many years it has been the business community that has shouldered the responsibility for funding local services through the rates system. Reform must ease this burden rather than add to it.”
Exports on rise
Most Irish exporters report a rise in sales last year – but most also report no improvement in access to finance. Exporters used a growth in overseas markets to compensate for weak domestic demand, according to the Export Ireland Survey, 2013, conducted by the Irish Exporters Association and Grant Thornton. Some 62% of exporters reported a growth in exports during 2013, against 58% reporting an increase in 2012. Almost 80% expect export growth this year. But 62% of exporters reported that access to finance did not improve in 2013.
Danske withdraws
Danske Bank is withdrawing services to small firms and personal customers. The bank said it will
“refocus its business in Ireland towards its corporate and institutional clients, where the Bank’s international reach, market leading technology and specialist advisory services gives Danske Bank a competitive edge”. It has stopped offering personal and business banking products to new customers.
Ireland tackles ‘no domicile’ loophole
Ireland is to change company residence rules to eliminate opportunities for companies to become ‘stateless’ in terms of tax residence and liabilities. The commitment was made in the ‘Ireland’s International Tax Strategy’ document, published by the Department of Finance. The change will be included in the Finance Bill, being considered by the Oireachtas. The strategy also supports an extension of country-by-country reporting and pledges to assist developing countries increase domestic tax revenues through international action to clamp down on tax avoidance.
Welcome for Budget CGT relief
There was a strong welcome by business representative bodies to the announcement in Budget 2014 of Capital Gains Tax roll over relief for reinvestments by entrepreneurs and small firms. The Small Firms Association’s chairman AJ Noonan said this “will play a key role in contributing to growth”. It also welcomed the retention of the 9% rate for the hospitality sector and an increase in the cash receipts VAT threshold to €2m from May. But it expressed unhappiness with increases in excise duties.
Northern Ireland councils ‘are slow payers’
Northern Ireland’s district councils have been criticised by the Chief Local Government Auditor, Louise Mason, for their slow payment record, which she says damages local firms that provide goods and services to councils. Councils perform worse than other public bodies, she says. While 81% of council bills are paid within 30 days, only 37% of bills are paid within ten days. She also expressed concern about councils’ procurement practices and competencies.