Update on the OECD inclusive Framework on BEPS
The OECD’s two-pillar solution to address the tax challenges arising from the digitalisation of the economy is continuously evolving.
Domestic exemption from transfer pricing rules
It should be noted that trading transactions remain subject to transfer pricing rules. Finance Act 2021 rewrites s835E TCA1997, introducing a version of the legislation that appears to address some of the unintended consequences arising from the application of transfer pricing rules to certain Irish-to-Irish transactions for periods starting on or after 1 January 2022. Additional clarifying provisions are included to assist in the interpretation of the legislation. The updated legislation disapplies the basic transfer pricing rules in certain non-trading contexts, for the party to an arrangement who meets the conditions to be considered an eligible person under the legislation and where an eligible person is one party to a transaction involving two qualifying persons.
The following conditions must be met by the supplier and acquirer in order to be considered to be a qualifying person: -
There are also some enhanced anti-avoidance provisions in the updated version of s835E TCA1997 which require consideration.
Although there is an element of continued ambiguity, this version of the legislation should provide entities with a greater degree of confidence in the appropriateness of relying on the exemption for domestic transactions for chargeable periods beginning on or after 1 January 2022.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars corporate tax team below:
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