New Relevant Contracts Tax (RCT) System FAQs
- How will the new system differ from the current one?
- When will the new RCT system start?
- What rates of RCT apply in the new system?
- Will I have to re-register with Revenue for the new RCT system?
- Who will be affected by the changes?
- Is the scope of RCT being extended under the new provisions?
- Should the principal get proof of identity of the subcontractor?
The current paper-based system will be replaced by an electronic system where all interactions between the principal contractor (principal) and Revenue will be by electronic means. There will be no paper RCT forms in the new system. Further details are provided below.
The new RCT system will start on 1 January 2012.
In the new system, there will be three rates: 0%, 20%, 35%. Subcontractors who satisfy the current criteria for a C2 card will qualify for the 0% rate. In certain limited cases, subcontractors will be placed at 35% e.g. subcontractors who are not registered with Revenue or where there are serious compliance issues to be addressed. All other subcontractors will be eligible for the standard 20% rate.
Subcontractors who are registered for RCT in the current system will automatically be registered for RCT in the new system.
All principals who are registered for RCT in the current system will automatically be registered for RCT in the new system if they are registered for ROS. Principals should therefore register for ROS as soon as possible. If assistance is required, they should contact the ROS Helpdesk at 1890 201 106 or email email@example.com.
Principals engaging a tax advisor/agent/bookkeeper to prepare their RCT returns should ensure that their tax advisor/agent/bookkeeper is aware of these upcoming changes and is registered for ROS.
All resident and non-resident contractors coming within the RCT system are affected. This includes principals and subcontractors in the Construction, Forestry and Meat Processing Sectors. Further details on how principals and subcontractors will be affected are outlined separately below.
No. Contractors who are currently within the scope of RCT will remain so, while those outside RCT will also remain so.
Yes. A principal should establish the identity of any subcontractor engaged on a relevant contract. Obviously in most cases of ongoing contracts all parties are well known to each other and there is no issue. However, there have been instances of identity fraud and misrepresentation in the sector. It is a principal’s responsibility to take due care in ensuring the proper identity of all subcontractors engaged, from insurance, health and safety, employment and tax perspectives. This can be demonstrated through retention of copies of proof of identity. If a principal has not taken due care, he/she may be liable to RCT at 35% on any payments made to subcontractors with false identities.
If you have a query about the new system that is not addressed in these FAQs, please email us at: eRCTInfo@revenue.ie