The Finance Bill 2015 (the “Bill”) was published on 22 October 2015 and will give legislative effect to the measures announced by the Minister for Finance in Budget 2016. The Bill outlines full details of the Country by Country Reporting (“CbCR”) and is expected to be enacted into law in December of this year.
Bearing in mind that the final paper on the OECD’s Base Erosion and Profit Shifting (BEPS) project was published in October 2015, it is unsurprising that the measures announced in Budget 2016 have a strong focus on BEPS compliance. The Minister for Finance believes that Ireland is well positioned for the post BEPS world.
The “Update on Ireland’s International Tax Strategy” was published as part of the Budget documents and reaffirms the Irish government’s commitment to the 12.5% corporation tax rate. Ireland’s corporation tax rate will be unaffected by the BEPS project.
CbCR is an important part of the OECD’s BEPS action plan. It involves the reporting of revenues, profits, taxes, assets and other information to the “home country” tax authority of a group on a country by country basis.
Accordingly, the Bill contains provisions concerning CbCR and it confirms that the Irish Revenue will issue regulations setting out further details on CbCR in due course.
An Irish headquartered multinational enterprise (“MNE”) with annual consolidated group revenue in excess of €750 million will be required to provide the Irish Revenue with information for each jurisdiction in which the MNE Group operates. CbCR will apply for fiscal years commencing on or after 1 January 2016 and it must be filed no later than 12 months after the end of the fiscal year to which the report relates.
The introduction of CbCR will highlight to foreign tax authorities, instances where Ireland is being used as a conduit and where the “Double Irish” structure is being used. Consideration should be given to the potential for the media to access certain information. Although existing Double Irish structures may continue in existence until 2020, companies concerned about potential negative publicity, may wish to consider winding down such structures before the CbCR regime is fully introduced. Such companies should then try to structure their operations in such a way as to avail of Ireland’s onshore tax regime (including the new KDB regime).