The Irish Minister for Finance published a report entitled 'Review of Ireland's Corporation Tax Code' (the "Report") on 12 September 2017. The Report was compiled by an independent expert, Mr Seamus Coffey, who was appointed in October 2016 to review Ireland's corporation tax code. The Report makes a number of recommendations to modernise Ireland's domestic transfer pricing rules (the "TP Rules").
Existing Transfer Pricing Framework
Transfer pricing was introduced into the Irish tax code in 2010. The key features of the TP Rules are as follows:
The TP Rules apply to trading transactions only (ie, they do not currently apply to passive or capital transactions); The TP Rules determine arm's-length pricing based on the 2010 OECD transfer pricing guidelines; The TP Rules do not apply to transactions agreed before 1 July 2010; The TP Rules do not apply to small and medium enterprises ("SMEs") (ie, an enterprise with less than 250 employees and either (i) turnover below 50 million or (ii) assets less than 43 million, on a group basis); and The TP Rules require relevant taxpayers to prepare on a timely basis such records as may reasonably be required to determine whether the taxpayer's trading income has been computed in accordance with the TP Rules. Proposed Changes
The Report makes a number of recommendations which will, if adopted, significantly alter the application of the TP Rules. In particular, the recommendations will expand the scope of application of the TP Rules and will enhance the administrative burden imposed on taxpayers subject to the TP Rules. The recommendations made by the Report are as follows:
The TP Rules should be amended to incorporate for the application of the 2017 OECD transfer pricing guidelines into domestic Irish law; The application of the TP Rules should be expanded to apply to transactions agreed before 1 July 2010; The expansion of the application of the TP Rules to SMEs should be considered; The expansion of the application of the TP Rules to non-trading transactions, including...