PAYE Settlement Agreement for 2024
It is getting close to that time of year when employers need to consider whether they are required to make an application to Revenue in relation to a PAYE Settlement Agreement (PSA) for 2024.
In October 2021, over 135 jurisdictions, as part of the Organisation for Economic Cooperation and Development’s (OECD’s) project to address tax challenges in the digitalised economy agreed to update the international tax system to introduce Global Base Erosion (GloBE) rules. These rules provide for a coordinated system of taxation intended to ensure large multinational enterprise (MNE) groups pay a minimum level of tax on the income arising in each of the jurisdictions where they operate. It does so by imposing a top-up tax on profits arising in a jurisdiction whenever the effective tax rate, determined on a jurisdictional basis, is below the minimum rate.
In December 2021, the OECD published the report Tax Challenges Arising from Digitisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar 2), outlining the scope of the GloBE rules, certain key definitions, and how they are intended to operate.
On 12 December 2022, the European Council confirmed that the EU reached a unanimous agreement on a Directive regarding the implementation of BEPS – Pillar Two: Global Minimum Effective Tax Rate rules. The Directive was required to be transposed into Member States’ national law by the end of 2023.
On 23 May 2023, the International Accounting Standards Board (IASB) issued International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12 to clarify the application of IAS 12 income taxes to income taxes arising from tax law enacted or substantively enacted to implement the GloBE rules.
On 19 October 2023, the Irish Government published Finance (No. 2) Bill 2023 which included proposed legislation for the implementation of the GloBE rules in Ireland. The Bill was signed into law on 18 December 2023 with the Irish GloBE rules coming into effect on 31 December 2023.
As the GloBE rules have now been enacted, impacted companies are subject to the disclosure requirements contained in the IASB’s amendment to IAS 12.
While the 15% effective rate legislation applies from 1 January 2024, accounting standards require the impact of the provisions to be addressed in the 2023 financial statements. The following are the required accounting disclosures for the year ending 31 December 2023:
Illustrated below is an example of how these disclosures may appear in the 2023 financial statements.
Impact of BEPS – Pillar Two on the company
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