Ms Cora O'Brien:

I know the case to which the Deputy refers. The issue which is the subject of the inquiry and the ruling given to the particular multinational seems, from media reports, to relate to transfer pricing. This goes to the heart of the issues we need to be discussing in terms of general principles. Transfer pricing is a way of setting a price between legal entities in the same group to make sure that where there is no market value for something, it is pinned as close as possible to what a market value would be. That is a huge part of what the BEPS project is about. In fact, five of the reports due next year on the BEPS will deal with transfer pricing issues, including intangibles, interest, risk and capital, transfer pricing documentation and so forth. There is certainly an issue around the rules of transfer pricing that need to be looked at.

Regarding advance opinions, as we refer to them in the profession, this is a situation where one has a set of circumstances and is seeking clarification from Revenue. This is an option open to any Irish taxpayer, large or small, corporate or private. One outlines one's circumstances to Revenue, sets out what one intends to do, how one intends to treat income and work out one's tax and asks Revenue whether it is in agreement.

To be clear, it is not a binding ruling. If for example, the taxpayer sets out a set of circumstances and then it turns out that he or she does not abide by the circumstances or something changes, the Revenue Commissioners are not bound by that ruling and are perfectly entitled if they wish to take it as a case and argue the point. We do have advance opinions but they are not the same as binding rulings. It is an administrative practice that arises in most countries and it is intended to try to bring certainty to somebody who wants genuinely to get something right and does not want to have an audit in a few years and a look back and find he has applied the wrong ratio or the wrong price. The Revenue Commissioners are trying to give a person some certainty that he is in the right ballpark and is doing things the right way.