On 5 September 2018, Ireland’s Department of Finance released Ireland’s Corporation Tax Roadmap setting out the future of Ireland’s corporation tax regime. The Roadmap reflects feedback to a consultation on recommendations for consideration which were made by independent expert Seamus Coffey in his Review of Ireland’s Corporation Tax Code.
The Roadmap details Ireland’s adoption of measures that all Member States are required to adopt under the European Union (EU) Anti-Tax Avoidance Directive. As expected, Ireland intends to adopt ATAD measures in line with the Directive but not to go beyond its requirements.
The Roadmap measures include updating Ireland’s transfer pricing regime to current international best practice standards under OECD transfer pricing guidelines from 1 January 2020. Detailed implementation measures to be included in Finance Bill 2019 are to be subject to a consultation which will launch in early 2019.
In the analysis below Sharon Burke considers steps that businesses should take to review a range of matters in your business including:
- the potential effect on the attribution of profits between group members where the 2017 OECD Guidelines apply under Ireland’s transfer pricing regime,
- the impact on attribution of profits from intra group lending and from holding real property or intangible assets if Irish transfer pricing was extended to non-trading transactions,
- current Irish group holding arrangements to understand the tax profile and nature of arrangements conducted by foreign subsidiaries. This includes the activities and people functions performed in Ireland which are linked to the assets and business risks of low taxed subsidiaries to consider whether the profits of those subsidiaries might be currently taxed in Ireland under the proposed CFC framework,
- the impact of timing of deductions for the financing expense and capital allowances if your business makes significant capital investment in either tangible or intangible assets,
- existing intra group arrangements (whether related to interest, royalties or other business transactions) that involve hybrid arrangements which will be subject to new rules from 1 January 2020. Have you considered the impact on group payment flows and the effective tax rate of adopting arrangements not in scope?