News Archives - Page 2 of 281 - Pat Carroll PCCO - Chartered Accountants & Tax Advisors

EU adds Seychelles, Cayman Islands, Panama to tax haven blacklist

European Union finance ministers added Panama, the Seychelles, the Cayman Islands and Palau to the EU’s blacklist of tax havens.

But Turkey got more time to avoid listing despite shortfalls, an EU document showed today. 

The list, which was set up in 2017 after revelations of widespread tax evasion and avoidance schemes, now includes 12 jurisdictions. 

Adding financial centres like the Cayman Islands and Panama marks a shift for the EU. 

Several reviews had left on the list mostly Pacific and Caribbean islands with almost no financial relation with the EU – drawing criticism for being too lenient on tax havens. 

The other listed jurisdictions are Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three US territories of American Samoa, Guam, and the US Virgin Islands. 

Those on the blacklist face reputational damages, higher scrutiny in their financial transactions and risk losing EU funds. 

The Cayman Islands, a British overseas territory in the Caribbean, was listed because investment funds based there do not reflect real economic activity on the archipelago, the document said. 

That could lead to investment vehicles being created solely to reduce taxes in other jurisdictions. 

The eastern African archipelago of the Seychelles was added to the blacklist because it has an “harmful preferential tax regime,” the EU document said. 

Panama, which is already blacklisted for money-laundering shortfalls by the Financial Action Task Force, a global watchdog, was added to the EU list because of shortcomings over exchanges of tax information. 

The Pacific island of Palau was blacklisted for similar reasons.

Turkey failed to execute automatic transfers of tax information with all EU states but was granted more time to fulfil its commitments, because it has adopted legislative changes to allow data sharing, the EU document said, confirming a Reuters report from last week. 

The decision irked Cyprus, an EU member state embroiled in a decades-long dispute with Ankara and with which Turkey is not exchanging tax data, EU diplomats said. 

A spokesman for Cyprus’s foreign minister declined to comment. 

Turkey also does not share tax data with Germany, France, the Netherlands, Belgium and Austria, the EU countries with the largest Turkish communities, diplomats said. 

Despite these shortcomings, which had been unresolved for years when a deadline lapsed in December, Ankara was given another year to begin data sharing with all 27 EU states. 

Two officials said the decision was taken for political reasons, despite the risk that this could undermine the EU listing process. 

“We should remain aware of the relevance of Turkey in many policy areas, which are important to us,” one diplomat said. 

The EU depends on Turkey to curb migration from the Middle East and Asia, but the relationship has soured over President Tayyip Erdogan’s crackdown on critics following a failed coup in 2016.

It has worsened over Turkey’s gas and oil drilling off the Cyprus coast.

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Number of employed people rose by 3.5% last year – CSO

The number of people in employment rose by 3.5% in the year to December, according to the latest figures in the Labour Force Survey from the Central Statistics Office.

The Labour Force Survey is the official source of data for employment and unemployment in Ireland.

A total of 2,361,200 people were in employment at the end of last year, up 79,900 on the previous year. 

Unemployment fell by 14.2% or 18,300 to 110,600 over the same period – the 30th quarter in a row where joblessness has declined on an annual basis.

The seasonally adjusted unemployment rate fell from 5% in the third quarter of last year to 4.7% in the fourth quarter, the CSO figures also showed.

The total number of people in the labour force in the fourth quarter of last year increased by 2.6% to 2,471,700 from the fourth quarter of 2018.

Employment growth was also recorded in all of the country’s eight regions.

The jobless rate stood at 4.8% at the end of January, recent CSO figures show.

The Minister for Finance and Public Expenditure and Reform Paschal Donohoe said the employment gains came despite a challenging year due to Brexit uncertainty and a slowdown in international markets.

“Total employment in 2019 rose by 65,000, a 2.9% increase on 2018, a growth rate seen for three straight years. The level of employment grew by 1,250 per week last year,” the Minister noted. 

He also said that the number of people at work reached another all-time high, with 2,350,600 people in employment in the fourth quarter last year.

“Ireland has faced and continues to face a highly uncertain macroeconomic situation with clear risks to our future economic growth, not least due to ongoing uncertainty associated with the future trading relationship with the UK,” Mr Donohoe said. 

“However we will face these challenges from a position of strength,” he added.

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Sterling maintains gains amid expectations government will spend more

Sterling was slightly weaker today, though it maintained some gains above $1.30, after having its best week in two months as investors priced in looser financial conditions under Britain’s new finance minister. 

Rishi Sunak was appointed on Thursday when incumbent Sajid Javid unexpectedly quit as Prime Minister Boris Johnson reshuffled his cabinet. 

Boris Johnson wants to increase spending on everything from infrastructure and police to health and education. 

Rishi Sunak has backed higher public spending, most recently speaking in support of multi-billion-pound transport projects. 

He is preparing to ease Britain’s fiscal rules in his first budget, as he comes under pressure from Downing Street to open the spending taps, the Financial Times reported last week. 

“Building expectations for looser fiscal policy are helping to boost optimism that the UK economy could outperform this year at least relative to downbeat expectations and other major economies,” said Lee Hardman, currency analyst at MUFG. 

“The positive impact on the pound from the improving outlook for the UK’s economy is outweighing the negative weight provided by continued concerns over the UK’s future trading relationships in the near-term,” Hardman said. 

A human resources group said jobs in Britain’s public sector look set to rise at the same pace as private sector jobs for the first time since 2008, reflecting an easing of government cuts in many departments. 

The pound was last trading down 0.2% at $1.3017, moving away from the recent low of $1.2873. Against the euro, the pound fell 0.3% at 83.29 pence.

UK consumers face higher prices and reduced availability of goods if the government fails to agree pragmatic solutions with the bloc on regulatory checks at ports in any post-Brexit deal, the retail industry’s lobby group warned today. 

Traders will be watching the February flash composite purchasing managers’ index data due on Friday, which could serve as a guideline to the Bank of England’s future monetary policy. 

The Bank of England left interest rates unchanged at 0.75% last month. Some market participants had expected the central bank to cut interest rates and loosen monetary policy. 

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Moody’s leaves Ireland’s credit-rating unchanged

Ratings agency Moody’s has reaffirmed Ireland’s credit-rating, but has highlighted a range of possible risks to the health of the Irish economy.

The organisation said it was keeping the Government of Ireland’s long-term issuer rating at A2.

The ratings on the country’s senior unsecured bond, progamme and commercial paper ratings have also been left unchanged.

Moody’s Investor Service also said the outlook remains stable.

The decision will come as a relief to those managing the country’s finances as it appears to face into a protracted period of uncertainty over the formation of a new Government following last weekend’s general election.

The agency said the key motivation for leaving the ratings as they were included the high wealth levels and rapid growth of the economy.

However, it said this is balanced against growth, volatility and vulnerability to external risks, including Brexit and shifts in global taxation rules.

“Although Moody’s cautions that GDP figures are inflated by the large presence of multinational corporations in the country, underlying domestic fundamentals remain strong, too,” it said.

“The Irish economy is highly competitive, which has enabled the country to attract sizeable foreign investment over the past five years.”

However, Moody’s also pointed to the elevated volatility that accompanies the presence of multinationals.

It also highlighted the susceptibility to external risks, including Brexit.

“Although not likely, a no-trade deal Brexit at the end of the transition period this year is the largest single risk to Ireland’s economic outlook, given strong trade and supply chain links,” it said.

“Supply chains are deeply integrated and would therefore face heavy disruption under a no-deal scenario at the end of the transition period which is scheduled for the end of this year.”

Changes to the global corporation tax regime also pose a potential danger, the report claimed.

“Moody’s does not expect that shifts in global taxation rules would materially weaken the existing stock of foreign direct investment in Ireland,” it said.

“Many multinationals have long-established businesses in Ireland and will likely continue to use the country as their base for exports to European and other markets. However, flows of new foreign direct investments could materially decline.”

It also took into account the country’s return to a fiscal surplus, though it pointed out that debt levels are still high relative to peers and there are risks around the concentration of revenue from particular sources.

“Despite the rapid increase in public investment, Moody’s expects that the budget balance will remain in small surplus over the coming years, as sustained growth in revenue and contained current spending allow for a robust increase in capital expenditure,” it claimed.

“Small budget surpluses in the coming years would allow for a continued decline in the debt burden. While the composition of the future government is uncertain, our base case is that the next government will not embark on a major shift in fiscal policy that would reverse declines in the debt trajectory.”

However, it pointed to concerns about the possible over reliance on corporation tax as a revenue source.

“Revenue is more volatile than in other countries due to the large presence of multinational corporations, and the government has done little to address the growing reliance on corporate income tax,” it claimed.

Moody’s also says that while the risk to the Irish banking sector has largely receded, it continues to “drive susceptibility to event risk together with political risk and external vulnerability risk”.

It said it has also kept the National Asset Management Agency’s A2 backed issuer rating, its short-term issuer and commercial paper ratings unchanged as those ratings are aligned with the sovereign.

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Oil prices rise 1% and remain on course for weekly gain

Oil prices rose today and were on track for their first weekly gain since early January as investors bet the economic impact of the coronavirus would be short-lived and hoped for further Chinese central bank stimulus to tackle any slowdown. 

Brent crude was up 57 cents or 1% at $56.91 a barrel this morning It has risen 4.4% since last Friday, its first weekly increase in six weeks. 

US West Texas Intermediate (WTI) was 48 cents or 0.9% higher at $51.90 a barrel, up 3.2% for the week. 

More than 1,350 people have died from the coronavirus in China, which has disrupted the world’s second largest economy and shaken energy markets. Brent has fallen 15% since the beginning of the year. 

However, market sentiment improved as factories in China started to reopen and the government eased its monetary policy. 

The World Health Organization also reassured traders by saying the big jump in China’s reported cases reflected a decision by authorities to reclassify a backlog of suspected cases, and did not necessarily indicate a wider epidemic. 

Some officials and analysts were still hopeful that the demand impact would remain limited to China. 

US Energy Secretary Dan Brouillette told Reuters the coronavirus epidemic in China has had a marginal impact on energy markets and is unlikely to dramatically affect oil prices even if Chinese demand falls by 500,000 barrels per day. 

The International Energy Agency (IEA) said that first-quarter oil demand is set to fall versus a year earlier for the first time since the financial crisis in 2009 because of the coronavirus outbreak. 

In response to the demand slump, the Organization of the Petroleum Exporting Countries (OPEC) and its allied producers, a grouping known as OPEC+, are considering cutting output by up to 2.3 million barrels a day.

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Exports reached record levels of €152 billion last year – CSO

The country’s export levels reached record levels last year, according to the latest figures from the Central Statistics Office. 

More than €152.5 billion worth of goods were exported last year, an increase of 8.5% on 2018 and the highest total on record. 

The CSO noted that the largest category of exports was medical and pharmaceutical products. Exports of these accounted for 33% of all exports, or €49.655 billion last year, an increase of €3.454 billion on 2018. 

The CSO also said today that a total of €89.2 billion worth of goods were imported last year – a fall of 3% on 2018. 

That left the country with a trade surplus of almost €63.4 billion, 30% bigger year on year. 

The CSO said that during the year exports to Britain fell by 4% to €13.524 billion, with the country now representing around 8.8% of sales, down from almost 10% in 2018. 

The largest product categories exported last year were food and live animals, and chemicals and related products.

Meanwhile, imports from the UK last year rose by 2% to €18.746 billion, which meant there was a trade deficit of €5.221 billion with the UK. 

The biggest product categories imported last year were machinery and transport equipment and food and live animals.

Today’s figures show that the EU accounted for 48% of total exports in 2019, an increase of 3% on 2018. 

Exports to non-EU countries were valued at €79.972 billion in 2019, an increase of 14% on 2018’s total exports. 

The US was the largest export destination in 2019, accounting for 31% of total exports.

Meanwhile, Ireland imported €52.97 billion worth of goods from the EU in 2019, representing 59% of total imports. This was a decrease of 3% on 2018.

Imports from non-EU countries totalled €36.218 billion, a fall of 4% on 2018.

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Euro zone GDP slows as expected in fourth quarter

Euro zone economic growth slowed as expected in the last three months of 2019 as gross domestic product shrank in France and Italy compared to the previous quarter.

But employment growth picked up more than expected, official estimates showed today. 

The European Union’s statistics office Eurostat said GDP in the euro zone expanded 0.1% quarter-on-quarter in the three months from October to December, as announced on January 31.

This gave a 0.9% year-on-year gain – a downward revision from the previously estimated 1% growth. 

The quarterly growth rate slowed compared to the 0.3% expansion in the third quarter because of a 0.1% contraction in the second biggest economy France and a 0.3% contraction in the third biggest Italy. 

Growth in Germany, the biggest euro zone economy, stagnated. 

Eurostat also said that euro zone employment rose 0.3% quarter-on-quarter in the last three months of 2019 for a 1% year-on-year gain. 

Economists polled by Reuters had expected a 0.1% quarterly rise and a 0.8% annual increase. 

Separately, Eurostat said the euro zone’s trade surplus with the rest of the world was €23.1 billion in December, up from €16.3 billion a year earlier.

This brought the total for the whole of 2019 to €225.7 billion, up from €194.6 billion in 2018.

Adjusted for seasonal factors, the trade surplus was €22.2 billion in December, up from €19.1 billion in November as exports rose 0.9% on the month and imports fell 0.7%.

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EU leaves euro zone growth forecast unchanged for this year and next

The European Commission has today kept its economic forecast for moderate euro zone growth for this year and 2021. 

But it raised slightly its projection for inflation, noting the spread of the coronavirus was the key downside risk. 

In an interim outlook for gross domestic product (GDP) growth and consumer inflation for the 19 euro zone countries for 2020 and 2021, the Commission said growth in the euro zone would remain at 1.2% this year and next, as in 2019. 

“The outlook for 2020 and 2021 is unchanged as more positive developments are counterbalanced by negative events elsewhere,” the Commission, the EU’s executive, said. 

Inflation is likely to accelerate slightly, the Commission said, because of the likelihood of higher oil prices and the effect of higher wages passing through to core prices. 

The Commission raised its forecast for consumer price growth to 1.3% in 2020 and 1.4% in 2021 from 1.2% and 1.3% respectively predicted last November. 

The European Central Bank wants to keep inflation below, but close to 2% over the medium term, and has been buying government bonds on the secondary market to inject more cash into the banking system and stimulate lending. 

“Still, domestic price pressures are expected to build up only slowly as firms are likely to continue tolerating lower profit margins,” the Commission said. 

The EU executive said that while the first phase of a trade deal between the US and China helped reduce risks to some extent, the spread of the Wuhan coronavirus was now the main threat to the growth forecast. 

“The baseline assumption is that the outbreak peaks in the first quarter, with relatively limited global spillovers. The duration of the outbreak, and of the containment measures enacted, are a key downside risk,” the Commission said. 

“The longer it lasts, the higher the likelihood of knock-on effects on economic sentiment and global financing conditions,” it added. 

The Commission also said that while trade relations between the EU and Britain, which left the bloc on January 31, were governed by the transition period agreement until the end of the year, there was “considerable uncertainty” as to what trade deal, if any, would be in place from the start of 2021.

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New sources of tax needed to fund pensions – OECD

The Paris-based Organisation for Economic Cooperation and Development has said that Ireland’s population will age more rapidly than most other countries over the next 40 years.  

In a survey on the Irish economy published this afternoon, it also warns that future changes to international corporate tax rules could lower the attractiveness of Ireland to foreign direct investment. 

The OECD conducts major surveys of member countries every two years. Today’s report on Ireland highlights some of the challenges facing the economy. 

While it notes the economy has been performing strongly, the OECD said more must be done to make domestic companies more productive and skilled in technology. 

It said the high share of foreign-owned firms here is a “great asset” but it is also a risk. 

The OECD also warned that changes to international tax rules could make Ireland less attractive to investment from abroad and lead to lower tax revenues. 

It noted that over the next 40 years our population will age at a faster rate than most other OECD countries. 

In order to pay for the pensions and healthcare this will demand, it said that new sources of tax will have to be found and public spending will have to better managed. 

It also suggested that property taxes should be regularly revalued and that budget planning in health needs to improve.

The think-tank also suggested that property taxes should be tweaked to encourage more development in regional centres to counter Dublin’s dominant position in the economy. 

Today’s report also cautioned that Ireland stands particularly exposed to Brexit risks. 

It noted that the UK is an important trading partner, particularly in agriculture and food, and a vital land bridge for the majority of Irish exports that are bound for Europe. 

“Exports of machinery, equipment, chemicals and tourism to the UK have stagnated or fallen since the 2016 UK referendum on EU membership, and any re-imposition of customs and border controls would hurt flows of goods to EU destinations,” it warned.

The latest OECD survey on Ireland projects GDP growth at 6.2% in 2019, then at still solid rates of 3.6% in 2020 and 3.3% in 2021. 

“Ireland’s open economy has helped it emerge stronger from the crisis, yet the country is very exposed to external factors,” commented the OECD’s chief conomist Laurence Boone.

“Fiscal prudence will be vital with health and pension costs set to rise just as the economy faces disruption from Brexit and a potential drop in corporate tax receipts,” the economist said

“This is a crucial time for Ireland and the focus for the incoming government should be to keep the economy on a solid track,” she added.

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House prices grow at slowest rate in six years – CSO

Residential property prices posted their lowest annual growth in over six years in December, increasing by 0.9% after prices in Dublin fell for a fifth month in a row. 

This is according to the latest figures from the Central Statistics Office today. 

House prices have stabilised over the last year having increased sharply for five years after a crash just over a decade ago.  

Prices fell 0.6% month-on-month and are 17.5% below the 2007 peak nationally, the Central Statistics Office said.

Today’s figures show that Dublin residential property prices decreased by 0.9% in the year to December. House prices in the city fell by 0.6% and apartments decreased by 1.8%. 

The highest house price growth in Dublin was seen in Fingal at 2.9%, while Dun Laoghaire-Rathdown saw a fall of 6%.

Meanwhile residential property prices in the rest of the country rose by 2.8% in the year to December, with house prices up by 2.8% and apartments by 2.6%. 

The region outside of Dublin that saw the largest rise in house prices was the Border at 6.7%, while at the other end of the scale the Mid-East saw a 0.6% rise.

The CSO said that households paid a mean price of €295,714 for a home in the 12 months to December.

Unsurprisingly, the mean price of €439,418 in Dublin was the highest in any region or county. 

Dún Laoghaire-Rathdown had the highest mean price in the Dublin region at €602,651, while South Dublin had the lowest at €362,755. 

Outside of Dublin, the CSO said the Mid-East was the most expensive region, with a mean price of €302,816. 

Wicklow was the most expensive county in the Mid-East region, with a mean price of €358,203.

The Border region was the least expensive region in the year to December 2019, with a mean price of €145,377. Leitrim, in the Border region, was the least expensive county, with a mean price of €120,805. 

The CSO said that in the year to December, 45,276 household dwelling purchases were filed with Revenue. 

Of these, 31.9% were purchases by first-time buyer owner-occupiers, while former owner-occupiers bought 52.6% of the homes. The rest (15.5%) were bought by investors. 

Revenue data also showed there were 1,482 first-time buyer purchases in December, an increase of 7.2% on the 1,382 recorded the some month in December 2018. 

These purchases were made up of 522 new dwellings and 960 existing dwellings. 

A lack of affordable housing and sky-high rents were central issues in a national election at the weekend.

All major parties pledged to help increase housing supply in the next government, which may take weeks to form.

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