Relevant Contracts Tax and the telecommunications sector

22 October, 2019

Companies operating in the telecom sector should consider their obligation to register and operate Relevant Contracts Tax (RCT) in relation to payments made to subcontractors. 

Given the broad scope of RCT, it is important that companies in the telecom sector are aware of:

  • when RCT should be operated, and 
  • have adequate controls and processes in place to manage RCT compliance.

Why are telecom companies obliged to operate RCT?

Companies operating within the telecom sector who carry out the installation, alteration or repair in or on any building or structure of systems of telecommunications are Principal Contractors.

For RCT to apply, the person making the payment must be a “Principal Contractor”, as defined in legislation.  Such companies therefore have an obligation to operate RCT on payments made to subcontractors for works falling within the definition of “construction operations”. 

What are the common pitfalls for companies operating in this sector?

In our experience, most RCT penalties arise for companies operating in the telecom sector due to a failure to recognise when an obligation to operate RCT exists.

Most commonly, this is because of:

  • telecom companies not being aware that they are “Principal Contractors” and have an obligation to operate RCT;
  • Procurement not being aware of RCT rules – Failure to recognise that a contract is within the scope of RCT at the time that a contract is entered into;
  • Failure to recognise the broad scope of works within the scope of RCT - For example, failure to recognise that ongoing works to own premises are within the scope of RCT.

What are the repercussions if RCT is not operated correctly?

Companies that do not operate RCT correctly may be faced with costly RCT settlements. As such, it is important that the relevant stakeholders within an organisation have the skills needed to manage RCT. 


Download the PDF below to find out more about how your organisation can avoid costly settlements by operating RCT correctly.

Contact us

Emer O'Sullivan

Director, PwC Ireland (Republic of)

Tel: +353 1 792 6695

Elaine O'Rourke

Senior Manager, PwC Ireland (Republic of)

Tel: +353 1 792 5098

Jim Kinahan

Senior Manager, PwC Ireland (Republic of)

Tel: +353 1 792 8641

Emily Bourke

Senior Manager, PwC Ireland (Republic of)

Tel: +353 1 792 6796

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