On Budget day, 7th December, the Minister for Finance announced that significant reforms will be made to the Relevant Contracts Tax (RCT) system to enhance its effectiveness, reduce opportunities for fraud and help decrease the administrative burden for businesses and Revenue. Details of the new system will be included in the Finance Bill 2011.
The current paper-based RCT system will be replaced by an electronic system, where principal contractors will be obliged to engage with Revenue online. The new electronic system will have three RCT rates: 0%, 20% and 35%. The rate that is applied to a subcontractor will depend on the subcontractor’s compliance record.
Revenue is currently developing the criteria for qualifying for each rate.
Key elements of the new scheme are:
Revenue hopes to introduce the new RCT system as soon as practicable in 2011 so that the new 20% rate can be provided to subcontractors who qualify. The broad framework of the proposal will be in the Finance Bill 2011 and will be followed by Regulations with the details. To underpin the implementation of these major changes to the RCT system, Revenue will engage with key stakeholders early in 2011.
For further information please contact Dylan Byrne
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