The cat is finally out of the bag. SARS released a public draft notice that requires taxpayers to file their transfer pricing master file and local file with the tax return. The threshold is set at R100mil of total aggregate cross border related party transactions. This is lower than thresholds introduced in Europe but in line with the previous documentation retention requirements, which came into effect 1 October 2016. As always make sure you consider all thresholds throughout the countries you operate in, to make sure you are compliant around the world (same is true for CBCR). Continue reading “Weekly transfer pricing roundup – 05 June 2017”
Chevron decided to appeal the AUD340 million transfer pricing ruling in relation to its financial arrangement between the US and Australia. The previous ruling is now going to the High Court and I look forward to the drama that will unravel. The ATO already started looking at other taxpayers for similar arrangements and even published some draft guidance on what is high or low risk. But more about that below. Continue reading “Weekly transfer pricing roundup – 22 May 2017”
Not surprisingly, Chevron slammed the Australian ruling against its loan arrangement. The ruling will have consequences for Chevron’s other projects which use debt financing and as such Chevron may take the ruling on appeal (I think I have mentioned this now every week but this time Chevron actually said they are thinking about it too). The adjusted interest rate from the ruling must also have Continue reading “Weekly transfer pricing roundup – 08 May 2017”
The Chevron case is still discussed in many articles around the world. This Chevron article provides more of a technical analysis of the case and even though a long read, it is a good read. It touches on many aspects that should be considered when pricing a cross border related party loan, such as:
- Should the borrower’s credit rating be analysed on a stand-alone basis? Spoiler alert, the case concluded that it should not, but there are countries where the tax authorities would look at the borrower in isolation (just a heads up)
- Should a comparable loan arrangement be exactly the same or is there some flexibility?
- How should the lender be treated in a loan arrangement?
- How much impact does a guarantee have on pricing in a loan arrangement?
- Should the currency be AUD or USD for the loan arrangement? This is interesting and arguably Chevron won this argument as the court agreed to AUD. A USD loan would arguably carry a lower rate which would have made an adjustment easier for the ATO.
This week saw the Australian Tax Office (ATO) winning an important battle against the war on multinationals not paying their fair share of tax in Australia. Chevron will have to pay approx. AUD300mil to AUD340mil in taxes, interest and penalties to the ATO. I tried to simplify the case in a few bullet points below (let me know how I did): Continue reading “Weekly transfer pricing roundup – 24 April 2017”