Business Irish

Wednesday 7 December 2016

New tax laws to regulate profit transfer for overseas companies

Published 04/02/2010 | 05:00

THE Government will unveil measures today to regulate for the first time how companies transfer profits between this country and overseas.

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Sources say the Finance Bill will contain detailed legislation to regulate so-called transfer pricing, which gives foreign-based companies the means to reduce their tax bill by locating some operations here.

The laws follow pressure from the Revenue Commissioners who were embarrassed by the present lack of rules when negotiating tax treaties with foreign officials.

Ireland is one of the few countries in the Western World that does not have specific legislation on transfer pricing. The new legislation would help restore the country's tarnished reputation, a source said.

Complaints

The new legislation also follows complaints from other EU countries and US President Barack Obama's administration. The present tax code encourages large US companies to locate patents in Ireland even though much of the related intellectual capital originated elsewhere.

Software giant Microsoft owns a company called Round Island One, which is the country's most profitable company despite employing just a handful of people and being based in a Dublin solicitor's office.

While Microsoft has been operating in Ireland for years, other countries have been irked by a recent surge in multinationals setting up here to take advantage of the tax laws.

While the new laws are not likely to impose much on multinationals who already deal with the tax authorities back home, it will affect large Irish companies which do a lot of business overseas.

Domestic companies with fewer than 250 employees and sales of less than €50m are expected to be exempt.

Irish Independent

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