Ireland’s government on September 12 released a report recommending significant changes to the countries’ corporate tax and transfer pricing rules.
The report, prepared by Seamus Coffey, an independent expert appointed to conduct the review, makes several recommendations to bring Ireland’s tax code in line with international standards. The terms of reference for the review precluded any possibility of a change to Ireland’s headline 12.5% corporation tax rate.
The report recommends that Ireland adopt the 2017 OECD transfer pricing guidelines to incorporate OECD/G20 base erosion profit shifting actions 8, 9, and 10 into Irish legislation, following consultations.
It also suggests that Ireland consider extending its transfer pricing regime to non-trading transactions and to small and medium size entities. The current exclusion from the transfer pricing rules for arrangements in place prior to July 1, 2010, should be ended, the report says.
The report also recommends that Ireland consider a move to a territorial tax system, following consultations, or consider simplifying the calculation of foreign tax credits.
Further, it recommends the reintroduction of an 80% cap on tax depreciation of capital expenditure incurred on the acquisition of intellectual property that can be set off against IP income.
The report’s recommendations will be the subject of a public consultation to be launched on October 10.
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