The Department of Finance published a Feedback Statement on Ireland’s Transfer Pricing Rules. This statement is in response to submissions made under the public consultation earlier this year. The Feedback Statement sets out proposed legislative changes being considered for Finance Bill 2019. The new provisions could apply from 1 January 2020.

According to the Feedback Statement, the main proposed legislative changes are:

• Incorporate the 2017 OECD Transfer Pricing Guidelines in Irish legislation. Section 835D of the Taxes Consolidation Act 1997, provides that the basic rules on transfer pricing are to be construed in accordance with OECD guidelines.
• Bring arrangements, the terms of which were agreed before 1 July 2010, within the scope of transfer pricing rules for chargeable periods commencing from 1 January 2020.
• Introduce enhanced transfer pricing documentation requirements from 1 January 2020.
• Bring SMEs within the transfer pricing rules where the total consideration for the related-party cross-border transaction is more than €1 million or the value of assets is more than €25 million. Transfer pricing documentation requirements for SMEs will be tailored depending on their size, with an exemption from transfer pricing documentation requirements for small enterprises and reduced and simplified transfer pricing documentation requirements for medium enterprises. Commencement of this provision will be subject to Ministerial Order.
• Extend transfer pricing rules to non-trading transactions. Certain domestic transactions will continue to be outside the scope of the rules.
• Extend transfer pricing rules only to capital transactions above a certain material threshold, for example €25 million.
• The application of transfer pricing principles in connection with the attribution of profits to branches will be considered at a later stage.

Under the auspices of CCAB-I the Institute has responded to the Department of Finance feedback statement on Ireland’s Transfer Pricing rules. In its response the Institute outlined that it is difficult to envisage how the proposed extension of transfer pricing rules to the Medium Enterprise sector are necessary or justifiable. The response also called for clarity and certainty for taxpayers on a number of items proposed in the feedback statement.