Minister for Finance Michael McGrath has announced that the interest rate on tax debt frozen since the pandemic has been cut to 0%.
The Revenue Commissioners have also indicated that they will take a flexible approach to repayments which will allow for pay back arrangements spanning more than five years.
There is still €1.72 billion in tax owed by businesses under the Tax Debt Warehousing scheme introduced at the height of the Covid-19 pandemic when trade was severely disrupted.
Businesses must now engage with Revenue before 1 May to draw up a plan to pay this money back.
However, they won’t face a 3% interest rate on the debt any longer and an extended pay back period might be possible without any initial downpayment.
This will be done on a case-by-case basis and companies that already paid interest of 3% will be refunded.
Minister McGrath said this will enable viable businesses to trade while allowing them to reduce the frozen tax debt in a manageable way.
The latest figures show that €1.72bn was warehoused for 57,435 businesses at the end of last month.
Almost 70% was for amounts less than €5,000 and the bulk of the debt (€1.47bn) was warehoused by 5,265 customers, who have outstanding balances greater than €50,000.
“This Government is acutely aware of the ongoing cost pressures faced by businesses and is determined that viable businesses are given every chance to succeed in a challenging trading environment.
“I will be bringing forward the necessary legislation to give effect to this and Revenue has confirmed that it will implement the 0% on an administrative basis in the meantime,” Minister McGrath said.
Sinn Féin’s Pearse Doherty said this will provide a welcome lifeline for many businesses, but the Government must now give more detail on the Cost of Business scheme announced on Budget day.
Labour Finance Spokesperson Ged Nash said the move is a pragmatic one that recognises the challenges facing businesses.