Dáil Éireann Debate, Wednesday - 17 June 2015
90. Deputy Paul Murphy asked the Minister for Finance his views on providing the Revenue Commissioners with powers to tackle transfer pricing that artificially boosts the profits of the Irish subsidiaries of multinational corporations; and if he will make a statement on the matter. [24163/15]
View answerSpecific transfer pricing legislation was enacted in Ireland in the Finance Act 2010 and there is an increasing focus by the Revenue Commissioners, as for tax authorities in other countries, on ensuring that multinational profits are not understated.
Transfer pricing law and practice across countries seeks to ensure that the profits of multinational companies are not understated in each of the countries concerned, and this may result in upward adjustments to profits for tax purposes. Where a country makes an upward adjustment to a multinational company's profits then the relevant treaty partner country will typically make a matching downward adjustment to the multinational company's profits, to the extent that it accepts that the upward adjustment made by the other country was in accordance with the arm's length principle.
This bilateral, tax treaty-based interaction addresses overstatements of profits by multinationals in one country as a corollary of examinations to identify and quantify understatements of profits in another country a multinational's profits will only be reduced in one country where they have been increased in another country. Transfer pricing law and practice does not provide for, or result in, unilateral downward adjustments to company profits, separate from matching adjustments under tax treaties, and it would be inappropriate to provide powers to unilaterally reduce the taxable profits of multinational companies.
