On 9 November 2015, the Irish Revenue issued a manual regarding the role of the Irish competent authority in resolving international tax disputes and ensuring the correct allocation of taxable profits to Ireland.
Mutual agreement procedures (“MAP’s”) and advance pricing agreements (“APA’s”)
Revenue’s role in negotiating MAP’s and APA’s is critical as it demonstrates Ireland’s commitment to resolving international tax disputes in an open and transparent manner. Due to the potential significant impact on the Irish tax base from MAP adjustments, a robust examination of each case is essential to ensure the correct allocation of profits between Ireland and treaty partners.
In an effort to obtain certainty with respect to their transfer pricing arrangements, MNE’s are increasingly seeking the certainty of an APA. At present, Revenue accepts bilateral APA requests on an ad hoc basis, typically in situations where a treaty partner has agreed to enter into a bilateral APA negotiation. Formalizing the procedures with respect to bilateral APA’s would demonstrate that Ireland is committed to implementing an APA programme in accordance with international best practice.
Arbitration
Business and other stakeholders have pushed for mandatory binding MAP arbitration as a way to reduce uncertainty and double taxation. A significant number of countries (including Ireland) have indicated their willingness to seek to implement mandatory, binding arbitration.
In order to ensure that Ireland’s position is represented as effectively as possible at arbitration, it is timely to consider selecting a new panel of individuals to represent Ireland in arbitration.
Key considerations/ Actions
The items listed below set out Revenue’s key aims and objectives with respect to the competent authority function:
- In the context of MAP negotiations, ensure the correct allocation of profits to Ireland.
- Continue to ensure that Revenue has a sufficiently resourced and experienced competent authority team to deal with the inventory of MAP and APA cases.
- Scope and evaluate the introduction of a formal bilateral APA programme.
- Ireland to work with the interested group of countries with respect to the introduction of mandatory binding arbitration.
