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New Transfer Pricing Rules in Ireland

25th October 2021

Ireland’s Finance Bill 2021, which was released on October 21, 2021, includes changes to transfer pricing regulations, anti-tax avoidance measures, and tax treaty ratifications. What it does not include, however, is changes to the corporate tax rate related to the OECD’s minimum tax proposal. Is it a big omission? Not really but given how Ireland held out on the global tax deal for so long, you can’t help but notice especially since the government did announce plans for a two-tier corporate tax: 15% for companies in the scope of the OECD agreement and its standard 12.5% for companies that aren’t. Still, the plan is slated to go into effect in 2023, so Ireland can always drop it into next year’s bill. As for transfer pricing, the bill adopts new permanent establishment rules, implementing the authorized OECD approach (AOA). Now, if a non-resident company has an entity that operates in Ireland, then it’s required to attribute profits based on the arm’s length principle. Anti-avoidance measures have also been updated to ensure that companies pay their fair share of tax. Ireland also included an exclusion from transfer pricing rules, in certain circumstances, on the calculation of non-trading income, and it revises the definition of “relevant person” in regard to transfer pricing arrangements to include suppliers or acquirers whose profits or losses would affect the company’s tax bill.