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06 September 2018 Ireland publishes Corporation Tax Roadmap On 5 September 2018, Ireland's Minister for Finance and Public Expenditure and Reform (the Minister) published Ireland's Corporation Tax Roadmap incorporating implementation of the European Union (EU) Anti-Tax Avoidance Directives (the ATADs) and recommendations of the Coffey Review1 (the Roadmap). (T)he confluence of the OECD BEPS outcome and the most significant US tax reform in recent history is likely to lead to significant changes in the structure of multinationals over the next number of years. The programme of changes set out in this Roadmap will see Ireland remaining on a sustainable path for growth and investment in this rapidly-changing international tax environment. We will continue to participate in the necessary adaption of the international tax system to reflect how present day revenue systems can work effectively in a complex, integrated, globalized modern economy of which Ireland stands part. In all of this we will continue to foster economic activity in Ireland, the EU and beyond by adapting and evolving our corporate tax regime, while maintaining our key 12.5% rate, and ensuring that we continue to have a regime that is transparent, sustainable and legitimate. The Roadmap lays out the next steps in Ireland's implementation of the various commitments made in EU Directives, the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) reports and recommendations from the Coffey Review.
The timing of that legislation will be determined following further consultation with the European Commission concerning Ireland's position that national targeted rules are equally effective to the ATAD interest limitation rule. Ireland has asserted, and remains of the view, that it is entitled to a derogation from the introduction of the ATAD interest limitation rule until the beginning of 2024 (unless BEPS Action 4 is declared a minimum standard by the OECD in which case the rule must be implemented at the start of the following calendar year). However, work has commenced to examine options to bring forward transposition of the ATAD rule into Irish law. The earliest date of introduction could be in Finance Bill 2019 and at the latest the end of 2023. A public consultation is planned for Q3 of 2018 which will be linked to the consultation on the ATAD anti-hybrid rules. Legislation that is compliant with the ATAD exit tax rules will be introduced to take effect no later than 1 January 2020. Ireland's view is that no further action is required to implement the ATAD provisions in this area given the robustness of Ireland's existing GAAR. Legislation to introduce CFC rules will be included in Finance Bill 2018 and will be in effect from 1 January 2019. A feedback statement will be published in Q3 2018 to respond to views expressed in responses to the Coffey Review/ATAD consultation on CFC rules and to set out possible approaches for the implementation of an Option B methodology within Irish law. Legislation will be introduced in Finance Bill 2019 to bring into effect the first tranche of anti-hybrid rules from 1 January 2020. Further legislation relating to anti-reverse hybrid provisions will be introduced subsequently effective 1 January 2022. Launch of a consultation on the anti-hybrid provisions and interest limitation rule is planned in Q3 of 2018. The consultation will be open for a period of 12 weeks. Legislation will be introduced in Finance Bill 2019 to update Ireland's transfer pricing rules with effect from 1 January 2020. The update is expected to include adoption of the 2017 OECD Transfer Pricing Guidelines into Irish law. It is intended to launch a public consultation to consider the transfer pricing recommendations contained in the Coffey Review, namely:
This transfer pricing consultation may also include consideration as to whether any additional changes are needed to Ireland's tax code to ensure that transfer pricing rules are fully effective in ensuring tax is paid where value is created and do not facilitate the transfer of profits to jurisdictions other than where value creating activity takes place. It is intended that a public consultation will be launched in early 2019 seeking further input on the alternative options of moving to a territorial regime or conducting a substantial review and simplification of the existing rules for the computation of double tax relief. We welcome that the Minister signaled consultations in relation to CFC, the interest limitation and anti-hybrid rules, transfer pricing and the possibility of moving to a territorial regime or simplifying the foreign tax credit regime. EY has consistently highlighted the benefits and importance of consultation. We also welcome the commitment to the 12.5% rate and a transparent, sustainable and legitimate regime. As noted above, EY will be active participants in the consultation processes and will work with our clients, Government and other stakeholders on these important issues. The Roadmap provides further clarity to the timing of introduction of key changes to the Irish corporation tax code. This allows multinational companies (MNCs) to update their impact assessments and provides a clear timeline for consideration of possible responses to those changes. MNCs should also consider participation in the various consultation processes signaled in the Roadmap. 1 The Coffey Review was an independent review of Ireland's corporation tax code published in September 2017. See EY Global Tax Alert, Ireland publishes Independent Review of Irish Corporate Tax Code, dated 14 September 2017.
Document ID: 2018-6048 | ||||||||||||||||||||||||||||
