Mr. Rónán Hession:

As I am probably closer to a layman than an expert, I will try to do so using simple language and the Revenue officials can add to my commentary if there is anything I have missed. Broadly speaking, this is about transactions within a group or in other words, the manner in which related companies transact between themselves. Under OECD rules this should happen on an arm's-length basis. In other words, if the Deputy and I are companies in the same group we should transact as if we are on the open market such that we cannot artificially set prices in a way that distorts the tax result. That is the purpose of the transfer pricing rules. The OECD sets these rules internationally. Arising out of the base erosion and profit shifting, BEPS, project there are new guidelines in place as to how this should be done. Ireland has committed to importing these rules into its domestic law. Mr. Seamus Coffey considered this issue in the context of his review. While this was not an issue that necessarily caught the headlines when the review was published, Mr. Coffey makes very important recommendations on it, including the need to meet the new OECD standards and on the scope of our transfer pricing rules. There are some areas where the transfer pricing regime in Ireland does not currently apply, for example, in respect of passive-investment income. It also does not apply to SMEs or to transactions before 2010, which is when transfer pricing was introduced in Ireland for the first time. Seamus Coffey makes the point that not only do we need to modernise our transfer pricing regime, we need to broaden it and that given the complexities, we should consult on the issue. This will form part of the process that runs until the end of January. He also states, however, that we should not unduly delay in introducing those changes and that by the end of 2020, we should have made these changes.

Perhaps one of the Revenue officials might like to add to what I have said.