Dáil Éireann Debate, Tuesday - 9 November 2021
260. Deputy Richard Boyd Barrett asked the Minister for Finance the projected budgeted revenue cost for the full year in 2022 arising from section 28 of the Finance Bill 2021 that inserts a new section 25A into the Taxes Consolidation Act 1997 with provisions relating to attribution of profits to a branch; and if he will make a statement on the matter. [54677/21]
Amharc ar fhreagraSection 28 of the Finance Bill 2021 provides for the application of an OECD-developed mechanism known as the “authorised OECD approach” or "AOA" for the attribution of income to a branch of a non-resident company operating in the State. This delivers on the commitment in the Update to Ireland’s Corporation Tax Roadmap which was published in January of this year.
The section provides that trading and certain other income of a branch is to be attributed by reference to transfer pricing principles and, for these purposes, the OECD’s guidance on the authorised OECD approach will apply.
The adoption of the authorised OECD approach brings our tax rules in line with international best practice. I held a public consultation earlier this year to outline the proposed adoption of the authorised OECD approach in the Irish tax code and received valuable stakeholder input.
In terms of costing it is anticipated that the introduction of this measure will be cost neutral. The new legislation will provide additional clarity and certainty to taxpayers in relation to the attribution of income to branches but is not expected to result in an additional exchequer yield. It was apparent from stakeholder engagement that many groups already use this approach when allocating profits to Irish branches.
It is anticipated that the authorised OECD approach, for the attribution of profits to a branch, will apply to accounting periods commencing on or after 1 January 2022.
