Transfer pricing dispute resolution
In recent times transfer pricing (‘TP’) has seen an increase in disputes both domestically and internationally. As a result of this Revenue has expanded its TP audit and Competent Authority resources.
EY can help you to understand your options, develop a strategy, and guide you through the steps to resolve TP disputes. We do this via:
Mutual Agreement Procedure (MAP)
The mutual agreement procedure (“MAP”) is a dispute resolution mechanism available to taxpayers in international tax disputes. The purpose of MAP is to efficiently eliminate double taxation without creating situations of double non-taxation. Its use is particularly effective in managing TP disputes where double taxation occurs as a result of an upward adjustment in one jurisdiction without any corresponding downward adjustment in another jurisdiction.
The Irish MAP can comprise of two stages. At a domestic level, the Irish Competent Authority may first evaluate if it can unilaterally resolve the issue. If the Irish Competent Authority cannot resolve the issue unilaterally, it will contact the Competent Authority of the other jurisdiction involved in order to resolve the issue by mutual agreement.
EY has a team of transfer pricing experts that can assist clients in all phases of the MAP process, including:
- Provision of guidance on how best to utilise the MAP process,
- Preparation of the initial MAP request,
- Preparation of robust transfer pricing analyses and documentation in respect of the intra-group transactions in question,
- Assistance in negotiations and settlement with the relevant Competent Authorities.
If you wish to discuss MAP or require assistance with an on-going MAP process, please feel free to contact the EY team listed here or your regular EY contact.
Correlative Adjustment
A correlative adjustment claim is one for an adjustment of profits under the terms of a double taxation agreement (“DTA”) which Ireland has in force with another country. The purpose of a correlative adjustment is to provide an Irish tax resident company with relief from double taxation that would otherwise result from an adjustment to an arm’s length amount, of the profits of an associated company which is tax resident in another country.
If a correlative adjustment claim is wholly or partly refused by Revenue, a company may request MAP assistance from the Irish Competent Authority, provided the request is within the time limit for a MAP request set out in the relevant DTA.
EY’s transfer pricing team can assist clients in respect of correlative adjustments by carrying out the following:
- Preparation of correlative adjustment claims,
- Preparation of robust transfer pricing analyses and documentation in respect of the intra-group transactions in question,
- Assistance in negotiations and settlement with the Irish Competent Authority,
- If required, MAP assistance.
Advance Pricing Agreement (APA)
An advance pricing agreement ("APA") is an agreement between one or more competent tax authorities and a taxpayer that governs the treatment, for tax purposes, of future transactions between associated taxpayers. Irish APAs can be bilateral or multilateral, whereby they involve the relevant foreign tax authority(ies) and the foreign taxpayer(s).
The APA process consists of a number of stages (1) Pre-filing, (2) formal APA application (3) evaluation of APA application and negotiation of APA (4) formal agreement and (5) annual reporting
An APA gives a group tax certainty in respect of the pricing of the covered transactions typically for a period of three or five years. In addition to tax certainty, the use of an APA can result in time and cost savings relative to a transfer pricing examinations by tax authorities, as well as freedom from penalty exposure.
EY has a team of transfer pricing experts that can assist clients in all phases of the APA process, including:
- Initial planning, including assessment of the proposed intra-group transactions and selection of the proposed transfer pricing method(s),
- Support at pre-filing meetings,
- Preparation of the information / documentation required as part of the APA application process,
- Assistance in negotiation with the Irish Competent Authority,
- Preparation of annual reports as specified in the APA.
If you wish to discuss APAs or require assistance with an on-going APA, please feel free to contact the EY team listed here or your regular EY contact.
