Review Of Ireland's Corporation Tax Regime

Author:Mr Turlough Galvin, Matthew Broadstock, Christian Donagh, Joe Duffy, Aidan Fahy, Shane Hogan, Alan Keating, Catherine O'Meara, Mark O'Sullivan, Kevin Smith, Gerry Thornton and John Ryan

Ireland's Minister for Finance (the "Minister") welcomed the results of the independent review of Ireland's corporation tax regime (the "Review") issued on 12 September 2017: "I welcome the emphasis given in the Review to the importance of certainty, which is core to our corporate tax offering. Our 12.5% corporation tax rate remains the bedrock of our competitive corporation tax regime and that is not going to change."

In addition to recognising the importance of certainty in the Irish tax code, a number of recommendations were made on foot of the Review:

Reintroduce an 80% cap on the level of tax amortisation that may be claimed in respect of intellectual property (''IP'') acquired by Irish taxpayers - currently under Irish law the cost of IP acquired by a company may be written off against taxable profits either in accordance with the IP amortisation in the financial statements or on a straight line basis over 15 years.  Under the recommendation, taxpayers claiming the relief would be permitted to relieve a maximum of 80% of annual taxable profits.  If the measure is introduced certain companies whose tax amortisation equals or exceeds their taxable income would become subject to tax.  The change would also result in the relief being spread-out over a longer period.  It is possible that this change could be included in this year's Finance Bill (expected next month) and applied from 1 January 2018.    Update Ireland's transfer pricing rules and incorporate the 2017 OECD guidelines - this recommendation was not surprising following Ireland's active participation in the OECD's base erosion and profit shifting project.  Currently, Irish transfer pricing rules apply to arrangements entered into on or after 1 July 2010.  It has been recommended that arrangements entered into before that date and that are still in place should become subject to transfer pricing.  Other recommendations made on transfer pricing included extending the rules to non-trading transactions (such as IFLs).  It has also been proposed that in advance of making any changes to Ireland's transfer pricing rules, the matter should be opened for public consultation.  Finally, it is recommended that transfer pricing changes are made no later than the end of 2020.   Ireland should consider moving to a territorial tax system - Ireland is one of the few OECD countries that taxes companies on a worldwide basis.  While a comprehensive unilateral credit mechanism is provided for...

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