Dáil Éireann Debate, Tuesday - 16 October 2012
186. Deputy Richard Boyd Barrett asked the Minister for Finance the amount of extra taxation that has come to the State as a result of the introduction of transfer pricing rules in the Finance Act 2010. [44301/12]
View answerFinance Act 2010 introduced transfer pricing legislation in order to clarify the law in this area in Ireland and to confirm the role of the arm’s-length standard in setting transfer prices. The arms-length standard has been promulgated by the OECD and is already incorporated in Ireland’s double taxation treaties. The transfer pricing provisions are set out in Part 35A of the Taxes Consolidation Act 1997 and require, inter alia, that companies have records available to enable an assessment of whether the transfer prices being used have been set in accordance with the statutory requirements. The need to set transfer prices is an everyday reality for the companies concerned, given that the majority of cross-border transactions occur within multinational groups, rather than between multinational groups. The recent provisions have clarified the requirements under Irish law in relation to this normal aspect of a multinational group’s business, bringing a renewed focus among the companies concerned to ensuring that pricing conforms to the arm’s-length standard and that the required records are available. While compliance with the provisions will be monitored and consequent adjustments to income and tax payable may arise, the purpose of the Finance Act 2010 provisions is to provide a clear statutory statement of the requirements in this area.
With regards to increased taxation following the introduced of these rules, it is too early to say if this has been the case. I am informed by the Revenue Commissioners that the transfer pricing rules introduced in the Finance Act 2010 apply for accounting periods beginning on or after 1 January 2011. Accordingly, the first annual corporation tax returns affected are for the year ended December 2011 and were due for filing in September 2012. The Deputy should be advised that compliance with the provisions will be monitored. As with any other rules in relation to the computation of income for tax purposes, should any adjustments to income, resulting in additional tax, prove necessary, these will be made.
