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Facing more scrutiny than ever, multinational companies are devoting a growing amount of resources to transfer pricing (TP) policy in a bid to avoid damaging court cases

Companies Redouble TP Efforts Over Dispute Fears
Tuesday, September 24, 2019

Dramatic changes on the horizon for Ireland’s transfer pricing laws

Ireland’s transfer pricing regime looks set to significantly change from 1 January 2020, nine years after its introduction. The Irish Government has outlined several areas for potential change, the full details of which will become clear when the country’s 2019 Finance Bill is published this November.

The Irish Department of Finance recently held a consultation on transfer pricing and looks set to make the first fundamental changes to its regime since its introduction in 2011. Once announced in the budget, these changes will be introduced in the country’s Finance Bill and most likely made effective from 1 January 2020. The changes being suggested are as follows:

  • The removal of the SME exemption which currently exempts SMEs from the transfer pricing legislation
  • Irish transfer pricing rules do not currently extend to non-trading transactions (so loans etc fall outside the regime), this provision could also be changed to include all transactions
  • There was grandfathering provisions for arrangements entered prior to 1 July 2010, when Ireland first introduced transfer pricing, which are set to be abolished.
  • Ireland’s transfer pricing legislation had been based on the 2010 OECD guidance so this will be updated to refer to the 2017 OECD guidance
  • More formal requirements around local and master file documentation are expected to be announced.  

Speaking on the proposed changes, Brendan Murphy, Tax Director at Baker Tilly in Ireland said: “The inclusion of SMEs and non-trading transactions within the transfer pricing regime will see the reform potentially effecting a lot of Irish businesses.

“We would hope that the changes allow for some form of exemption for SMEs in particular around domestic transactions and perhaps a lower threshold of documentation being required for SMEs given the costly nature of full transfer pricing reviews. However, we will have to wait and see what unfolds in three weeks’ time”.

For information on how these changes will affect your business, contact our transfer pricing specialists.  

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