COVID-19 what to consider from a transfer pricing perspective

Businesses are struggling to survive during the COVID-19 global pandemic and are considering many different options, especially around cash management. Transfer pricing should not be overlooked, and this is not only for compliance reasons. Transfer pricing can assist with alleviating some of the pressures that businesses are currently dealing with. Below is a summary of transfer pricing matters that should be on every multinationals (MNEs’) radar:

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Risk vs return and the effects of COVID-19

Craig Kirsten and I touch on Risk vs Return from a transfer pricing perspective during COVID-19. Please let us know your thoughts on the below in the comment section.

As COVID-19 wreaks havoc across the globe, a topic that is unlikely to have surfaced on the first page of a multinational entity (MNE) group’s red flag report is transfer pricing. That said, it will be the MNE groups who identify, confront, and mitigate material risks, including transfer pricing, that will navigate through the COVID-19 storm.

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What does the new financial transactions guidance provided by the OECD mean for you?

What is it all about?

More than 18 months after the publication of its non-consensus discussion draft on Financial Transactions (BEPS Actions 8 to 10), the OECD released its ‘final’ report on the transfer pricing of financial transactions on Tuesday 11 February 2020. The original draft left some 25 areas of disagreement, representing a non-consensus position of the OECD’s Committee on Fiscal Affairs. While those areas are largely resolved by the guidance, there remain some issues that have not been definitively addressed.

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South African transfer pricing regulations amended to amass taxpayers

The South African Draft Taxation Laws Amendment Bill (TLAB) has been released for comment. It has been a while since we’ve seen a material change to the transfer pricing regulations. The current inclusion of the “associated enterprise” definition into the transfer pricing regulations is welcomed as it aligns South African legislation to global standards.

The draft TLAB has not removed the connected person concept within section 31 but added the associated enterprise definition to the affected transaction definition. Therefore, a transaction, operation, scheme, agreement or understanding still has to fall within the four provided scenarios under section 31(1)(a), but now the persons in relation to the affected transaction can either be a connected person or an associated enterprise.

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IQR – Exclusive or Inclusive, that is the question

I have spoken a lot about the arm’s length range and when we should use a statistical tool such as the interquartile range (IQR) to derive an arm’s length range. But how do we calculate the IQR practically?

The easy answer is, Microsoft Excel or Numbers (for Mac) will do it for you, you just have to use the right formula. For Numbers this is a little easier as there is only one formula (=quartile) but for Excel users this can become a little more confusing as there are two formulas. Originally, Excel also only had one formula but now you have the option of either using =quartile.inc or =quartile.exc. The previous formula within Excel was equivalent to =quartile.inc, in case you were wondering.

So the questions are: Which formula should I use? Does it make a difference in the range? Will the tax authorities care?

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5618300894_8e86b92fda_bYou like this blog and would love to contribute but don’t know how. You have a great transfer pricing topic which you would like to research and discuss with other writers and a potential wider audience but you not sure how or where to start. You want to keep updated on a more proactive basis and share your knowledge with the community.

If any of the above resembles with you, please reach out to me. There are no monetary rewards here, but you would get your own profile which enables you to post your thoughts on www.transferpricing.co.za. We can also collaborate and/or co-author articles if you are not sure how to get started.

Dividends are considered a potentially affected transaction by SARS

I was reading the “How to complete and submit your country by country information” external guide published by SARS and came across the below.

For the purposes of calculating the value of a taxpayer’s annual aggregate (potentially affected transactions): Continue reading “Dividends are considered a potentially affected transaction by SARS”

Nigeria is ready for transfer pricing, are you?

Many of our readers have an exposure to transfer pricing risk in Nigeria, it being the largest African economy by GDP in 2017. So I thought I would share an update on Nigeria’s transfer pricing.

Nigeria has aligned its transfer pricing rules to the recommended approach in the 2017 OECD Guidelines. This includes the CBCR, master file and local file documentation approach as per Chapter V. What I wanted to highlight though is that the Federal Inland Revenue Services (FIRS) has also introduced other changes, including: Continue reading “Nigeria is ready for transfer pricing, are you?”

Oops, I didn’t get my DTA relief!

Hi there! A quick introduction before we get to business, my name is Shazia and I am the latest addition to the Transfer Pricing team at Grant Thornton. About 10 months back I saw the light and decided to join the TP community and I have not looked back since. Prior to joining Grant Thornton, I was at EY for 3 years where I successfully completed the tax trainee programme. This is my first stab at writing a post for a blog and I am glad to have you walk this journey with me… so here goes…

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Forex gains and losses a no brainer?

Hi all – given that this is my first blog on transferpricing.co.za, a short introduction may be apt. More importantly, given that this is my first blog EVER, please bear with me as I make the transition from formal writing to being BLOGGY. As far as intro’s go, I am a Partner at Grant Thornton in South Africa, heading up the Transfer Pricing practice. I have been consulting on tax matters since 2001, having spent the last 11 years at Grant Thornton and the earlier years at KPMG and EY. Prior to embarking on my tax consulting career, I spent 7 years “on the other side” working in cost and financial accounting and reporting environments the manufacturing and the financial services sectors. More to the topic, I have been involved in TP for 10 years and for so many reasons, love every minute of it…even when people think that a one-pager will suffice as a TP report or policy. Continue reading “Forex gains and losses a no brainer?”