Global Tax Alert | 14 September 2017

Ireland publishes Independent Review of Irish Corporate Tax Code

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Executive summary

Ireland’s Minister for Finance and Public Expenditure and Reform has published the Independent Review of the Irish Corporate Tax Code (Independent Review) carried out by Mr. Seamus Coffey.

The recommendations and findings of the Independent Review will be considered by the Irish Government. Budget 2018 will be announced on 10 October 2017 with legislative proposals for 2018 published shortly thereafter. It will be noted that many of Mr. Coffey’s recommendations reference changes in the medium term and do not therefore necessarily require legislation effective in 2018.

Publishing the Review on 12 September 2017, Minister Donohoe said: I welcome this comprehensive review which presents an overall positive message for our corporate tax code. The Review provides a clear road map and timeframe for Ireland to implement important international reforms.

The Review points to the sustainability of our current corporate tax receipts to 2020, which is very positive. I welcome the emphasis given in the Review to the importance of certainty, which is core to our corporate tax offering. Our 12.5% corporation tax rate remains the bedrock of our competitive corporation tax regime and that is not going to change.

The consultation process recommended in the Review is important if we are to reduce uncertainty and have better-informed policy making. I intend to launch this consultation process on Budget Day.

This Alert summarizes the report’s key recommendations.

The review was completed by Mr Seamus Coffey, a leading economist. EY engaged extensively with Mr. Coffey in carrying out his review.

Detailed discussion


An independent review of the Irish corporate tax code was announced in late 2016.1 The review was delivered to the Minister on 30 June 2017. EY actively engaged in the consultation which was an important element of the independent review.

The Terms of Reference (i.e., the goals) of the Review are reproduced in full below:

  • “[A]chieving the highest international standards in tax transparency, including in the automatic exchange of information on tax rulings with other relevant jurisdictions, having regard to benefits which may accrue to developing countries from enhancing global tax transparency;
  • [E]nsuring that the corporation tax code does not provide preferential treatment to any taxpayer;
  • [F]urther implementing Ireland’s commitments under the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting (BEPS) project to tackle harmful tax competition and aggressive tax planning;
  • [D]elivering tax certainty for business and maintaining the competitiveness of Ireland’s corporation tax offering; and
  • [M]aintaining the 12.5% rate of corporation tax”

Key recommendations in the Independent Review

Maintaining the 12.5% Rate

The terms of reference expressly cite maintaining the 12.5% tax rate. As part of the decision to launch the review, the Government provided that ”the review will exclude any possibility of a change to the 12.5% corporation tax rate.”


Ireland is required to implement the provisions of the European Union (EU) Anti-Tax Avoidance Directive (ATAD) into domestic law with certain provisions to be effective in 2019.

Mr. Coffey recommends that a detailed consultation process occurs on ATAD implementation. This echoes EY’s stated position in our engagement with Mr. Coffey. There are a number of important policy choices available to Ireland under the Directive that can help maintain Ireland’s competitiveness and minimize the impact of the transition process for both business and Revenue. He also recommends consideration of moving to a territorial system of taxation in the context of the controlled foreign corporation rule required by the ATAD or alternatively simplifying Ireland’s current credit system.

The Minister has endorsed Mr. Coffey’s recommendation of consultation on the implementation of the provisions of the ATAD into Irish law.

Transfer Pricing

The 2010 OECD Transfer Pricing Guidelines (TPG) are enshrined into Irish law.

The Independent Review recommends that the recently finalized 2017 OECD TPG, incorporating recommendations in BEPS Actions 8–10 and the documentation requirements of Action 13, should be implemented into domestic law by 2020.

Mr. Coffey has also recommended that Irish transfer pricing rules are extended to non-trading transactions where it would reduce the risk of aggressive tax planning. He also recommends considering extending transfer pricing rules to small and medium enterprises and aligning the documentation requirements for capital transactions with those applicable to trading transactions. These recommendations raise the possibility of additional cost for business in restructuring existing arrangements, many involving third parties, and ongoing compliance. Mr. Coffey also recommends the repeal of grandfathering for transactions entered into prior to the adoption of the 2010 TPG into Irish law.

Notably, Mr Coffey recommends detailed consultation in this area which again echoes EY’s stated point of view.

Tax Depreciation on Intangible Assets

Mr. Coffey has recommended the reintroduction of an annual 80% cap on the quantum of tax depreciation (and associated interest deductions) available for intangible assets. If enacted, this would reverse a change made effective in 2015. Through 2014 up to 80% of the taxable profit derived from the intangible assets qualifying for tax depreciation could be sheltered annually with any excess carried forward.

The recommendation is silent as to the effective date of any change or indeed transition measures (e.g. grandfathering or phased introduction).

This proposal has been well flagged to business. Such a change would assist in protecting the existing corporation tax base in the context of anticipated continuing acquisition of intangible assets by Irish companies as part of a process of alignment of ownership of intangible assets with operational substance in response to the implementation of the BEPS recommendations. EY has written to the Minister suggesting a number of improvements to the existing regime to be considered alongside Mr. Coffey’s recommended change of law in this area.

International Dispute Resolution

The Independent Review recommends enhancement of the resources of the Revenue Commissioners to deal with international dispute resolution.

This is an important recommendation to facilitate the effective and efficient support to investors in dealing with Advance Pricing Agreement processes, Mutual Agreement Procedures and in due course Binding Arbitration.

Other Key Recommendations

The Independent Review recommends specific actions in the areas of preferential treatment (including State aid) and transparency:

  • Scrutiny of proposed measures to meet OECD and EU standards on preferential treatment
  • Supporting the EU Directive on mandatory disclosure in line with OECD recommendations
  • Passage of the Taxation and Certain Other Matters (International Mutual Assistance) Bill through Dáil and Seanad Éireann should be facilitated

Mr. Coffey also states that there is a strong rationale for another review of Ireland’s corporation tax code following the implementation of Ireland’s commitments under the OECD/G20 initiative. EY agrees strongly with this statement particularly in the context of maintaining the competitiveness of Ireland’s regime.

Other key points

The Independent Review concludes that Ireland’s corporate tax receipts are sustainable through 2020.

It is also noted that Ireland has reached the highest standards with regard to tax transparency. This has been further confirmed by the recent awarding to Ireland by the OECD’s Global Forum of the highest international rating on tax transparency and exchange of information.


1. See EY Global Tax Alert, Ireland appoints independent expert to review Irish corporate tax code, dated 13 October 2016.

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Ireland), Dublin
  • Joe Bollard
    +353 1 4750 555
Ernst & Young (Ireland), Cork
  • Frank O’Neill
    +353 21 480 5700
Ernst & Young (Ireland), Limerick
  • John Heffernan
    +353 61 319 988
Ernst & Young (Ireland), Waterford
  • Paul Fleming
    +353 51 872 094
Ernst & Young (Ireland), Galway
  • Paraic Waters
    +353 91 57 5501
Ernst & Young LLP, Irish Tax Desk, New York
  • James Burrows
    +1 212 773 6125
Ernst & Young LLP, Irish Tax Desk, San Jose
  • Karl Doyle
    +1 408 947 4977
Ernst & Young LLP, FSO Irish Tax Desk, New York
  • Siobhan Dillon
    +1 212 773 5626

EYG no. 05165-171Gbl