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Ireland Publishes Transfer Pricing Compliance Manual

by Jason Gorringe,, London

03 December 2012

Ireland's Revenue Commission has placed details online from its Revenue Operational Manual of how the body undertakes compliance monitoring of transfer pricing rules.

The details refer to provisions enacted into law by the Finance Act 2010, and apply to related-party trading transactions that were agreed on or after July 1, 2010.

The manual warns that "if an expense incurred by a trader in dealings with an associated person is greater than the arm's length price, or receipts are less than the arm's length amount, the trader’s profits will be understated for Irish tax purposes."

The monitoring process has an initial focus on a number of cases selected across the range of large companies. Those companies will be asked by letter to begin a transfer pricing compliance review. Based on the Revenue's risk assessment following this review an audit may follow, although the manual stresses that "it is important that the taxpayer should understand that Revenue considers the TPCR (Transfer Pricing Compliance Review program) to be a substantial compliance check in its own right and not normally a precursor to the conduct of a transfer pricing audit."

The companies will be asked to provide a report within three months. The report should contain details of: group structure; related-party transactions; and pricing structure and transfer pricing methodology. There should also be summaries of: the functions, assets and risks of the relevant parties; a summary list of documentation; and details of the basis on which arm's length pricing has been determined.

Transactions arranged prior to July 1, 2010 are regarded as "grandfathered arrangements," and will be allowed to continue if they meet certain requirements. An "agreement for future agreements" is not covered.

TAGS: compliance | tax | business | tax compliance | Ireland | law | group taxation | tax authority | multinationals | legislation | transfer pricing

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