Government removes interest charged on warehoused tax debt

The interest rate on warehoused tax debt has been reduced to 0 per cent.

The decision will benefit more than 57,000 companies with tax outstanding since the Covid era.

In a parallel move on Monday, the Revenue said it would repay any interest companies had already paid since the 3 per cent annual interest charge was imposed on warehoused debt.

The Tax Debt Warehousing Scheme was introduced for businesses following the Covid-19 pandemic.

It aimed to help businesses with cash flow problems, by allowing them to defer paying some tax liabilities until they were in a position to address the debt.

Some €1.7 billion is currently owed under the scheme.

The move follows warnings from business lobby groups that demands for such taxes to paid could lead many small and medium-sized companies into insolvency.

“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,” Minister for Finance Michael McGrath said in a statement.