This week in tax: EY announces post-Everest job cuts
EY feels the brunt of spending $600 million on the now-ditched ‘Project Everest’, while US lawmakers question the Japan deal on EV tax credits.
EY bosses in the US and UK have announced an expected round of job cuts and departures following the collapse of ‘Project Everest’.
The announcements were made in a phone call on Wednesday, April 12, to UK staff and in a memo seen by the FT that was sent to US partners on Tuesday, April 11.
Anna Anthony, UK managing partner for financial services at EY, confirmed to the FT that the failed break-up of the 390,000-person organisation incurred costs of $600 million (£480 million), including a $300 million spend on internal work done by EY staff.
The cuts are set to begin in July.
Despite spending $600 million on Everest, which would have split tax services between two new audit and consulting businesses, EY’s decision to abandon the project before incurring even more costs has been dubbed as “good news to a degree” by a senior UK partner talking to the FT.
EY’s cost estimate, had the project gone forward, was reportedly $2.5 billion plus bankers’ fees.
US lawmakers question Japan deal on EV tax credits
The US deal with Japan on tax credits for electric vehicle production has come under fire from critics in Congress, newspaper Roll Call reported on Monday, April 10.
Democratic Senator Joe Manchin argued that the US Treasury should stick to a strict interpretation of sourcing requirements as part of the EV tax credits regime. But this is at odds with the US-Japan deal that allows companies to claim tax credits on critical minerals processed in Japan.
The Inflation Reduction Act introduced the tax credits to increase domestic EV production to boost green industry. However, the sourcing requirements were designed to favour the use of US-sourced materials over foreign resources.
Several US allies, including France and Germany, have raised concerns that the tax credits will harm their own car manufacturing industries. The US government has made it clear it wants to address these concerns.
Report calls for EU fuel tax on fishing industry
European governments should extend fuel taxes to European fishing industries and increase their tax rates to reduce carbon emissions, according to environmental group Our Fish.
The EU subsidised the fishing industry by €15.7 billion ($17.3 billion) over a 10-year period, according to a report published by Our Fish on Wednesday, April 12.
Fishing emitted at least 56 million tonnes of CO2 between 2010 and 2020, the report claims. European fishing fleets are exempt from paying fuel taxes despite their high level of carbon emissions.
An extension of fuel taxes could raise as much as €681 million a year at 33 cents per litre, according to the report. It added that the EU could raise an estimated €1.4 billion a year if the levy was increased to 67 cents per litre.
Ireland’s finance minister expects OECD plan to reduce tax revenue
Corporate tax revenue may exceed 2022 receipts this year only to drop sharply once the global minimum tax rate is introduced, according to Irish Finance Minister Michael McGrath.
Corporate tax receipts may exceed last year’s record of €22.6 billion ($24.9 billion), McGrath told The Irish Times on Monday, April 10.
“It’s not possible to accurately estimate the impact until the final design elements are agreed,” added McGrath of the minimum rate.
The Irish government is set to impose a qualified domestic minimum top-up tax by 2024 to bring its corporate tax system in line with pillar two. This allows Ireland to maintain a 12.5% headline rate for most businesses, while a 15% rate is reserved for the largest companies.
Zimbabwe joins OECD tax information exchange forum
Zimbabwe joined the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes on Tuesday, April 11, making it the 167th member and the 36th African nation to join.
The move means that Zimbabwe will be subject to the standards of exchange of information on request and the automatic exchange of financial account information.
The measures are aimed at preventing offshore tax evasion and avoidance by allowing governments to share information and work collaboratively.
Next week in ITR
ITR will be following up on the news of EY Global cancelling ‘Project Everest’ following opposition from US partners. The global leadership may still want to find a deal to separate audit from consulting, but this will face the same obstacles.
We will also be looking at the potential ‘domino effect’ from the Australian draft bill to make public country-by-country reporting on a worldwide basis.
Readers can expect these stories and plenty more next week. Don’t miss out on the key developments. Sign up for a free trial to ITR.