TRANSFER PRICING: GENERAL OVERVIEW
WHAT ARE THE MAIN CHARACTERISTICS OF TRANSFER PRICING LAW AND POLICY IN YOUR JURISDICTION?
Ireland introduced formal transfer pricing legislation for the first time in 2010. The Finance Act 2010 introduced a new transfer pricing regime in Ireland for accounting periods commencing on or after 1 January 2011, for transactions the terms of which were agreed on or after 1 July 2010.
Broadly, the transfer pricing rules require domestic and international transactions between associated persons to be entered into at arm's length. Where an arrangement between associated entities is made otherwise than at arm's length, an adjustment can be made to the Irish company profits. An adjustment is only made where income is understated or expenses are overstated.
The transfer pricing rules only apply to trading activities. This is a key characteristic of the transfer pricing rules that is quite unusual. The meaning of "trading" in this context is discussed under Question 3.
The transfer pricing legislation specifically provides that the transfer pricing rules must be construed in accordance with the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2010.
WHAT HAVE BEEN THE MAIN DEVELOPMENTS OF SIGNIFICANCE FOR TRANSFER PRICING LAW AND PRACTICE IN YOUR JURISDICTION IN THE PAST 12 MONTHS?
The Organisation for Economic Co-operation and Development (OECD) final reports on base erosion and profit shifting (BEPS) are having a significant impact on international tax policy in Ireland. A formal advance pricing agreement (APA) programme has been introduced by the Irish Revenue Commissioners (Irish Revenue) to enhance certainty and transparency for taxpayers with multi-jurisdictional operations. In addition, the legislative framework required to implement country-by-country reporting has been established and enacted, with effect from 1 January 2016. The updated OECD guidelines on transfer pricing have also been incorporated into Irish legislation. In June 2016, the Irish Revenue released guidance containing frequently asked questions and answers in connection with the interpretation of legislation and regulations on country-by-country reporting in Ireland. This guidance has been updated periodically, most recently in December 2016.
In July 2016, Ireland launched a formal regime in respect of bilateral and multilateral APAs. In the past...