Weekly transfer pricing roundup – 19 June 2017

Now that all the excitement of the signing of the MLIs is over, what does that mean? The OECD states that 67 countries have signed the MLI with an additional nine countries having expressed their intent to sign. The OECD expects another 25 – 30 countries to sign. This means there will be approximately 100 countries that have signed up to these MLIs shorty. This is in line with the 99 countries that have signed up for the Inclusive Framework. The signed MLIs will modify approximately 1,100 tax treaties to implement the following four action points: Continue reading “Weekly transfer pricing roundup – 19 June 2017”

Weekly transfer pricing roundup – 18 September

Always consider local country rules and practices when doing transfer pricing!

Having been away from home you do start missing the little things, like your bed or home cooked food. Those of you who follow me on twitter already know, I have been at an international TP conference and learnt a lot of things. If I had to give you the most important bits in one sentence: Always consider local country rules and practices when doing transfer pricing. It seems obvious, but I don’t think everyone is doing it. There were many eye opening stories, and I would have expected some of them to be out of Africa, but they are actually out of Europe. For example, Italian tax authorities prefer a certain benchmarking study software (and might not accept other software), Russia may need some adjustments to its IFRS numbers (which is interesting for both tested parties and comparables) or even though most countries in Eastern Europe know about the OECD, these may not always blindly accept them (for example low value-adding services). European countries, similarly to other countries also have logistical issues, for example translation of transfer pricing documentation and so forth.

I received your comments re my next topic, and to those of you who took their time, it is much appreciated. I am trying to make this blog relevant and at the same time learn from my research. So yes, I am being a little selfish. I will try finish this in the next week or two.

Now to the purpose of this blog post:

ATO investigates 35 e-commerce multinationals for sending income offshore (The Canberra Times)

“Thirty-five e-commerce companies are under review or audit by the Australian Taxation Office for routing income through low-tax nations such as Singapore to avoid paying tax locally.

The move comes as more companies challenge the ATO’s right to tax their profits by appealing directly to international tax authorities…”

What is interesting here is that the following companies were listed: Apple, Microsoft, Google, Uber and Airbnb. I wonder if the US will now also ask Australia to stop only investigating US companies. To be fair, I have not seen the full list.

Trump’s tax plan calls for deemed repatriation of overseas profits (MNE Tax)

“US presidential candidate Donald Trump’s revamped tax plan, unveiled today, reiterates his earlier call for a deemed repatriation of all corporate profits held offshore at a one-time tax rate of 10 percent.

“We will bring back trillions in business wealth, and this is wealth that is parked overseas,” Trump said during at speech at the Economic Club of New York…”

Looks to me like everyone is after Apple’s cash pile.

Africa Loses $14B Annually In Tax Evasion, Undermines Growth Of Economies (AFK Insider)

“African countries lose billions of dollars in tax evasion schemes, which are undermining the growth of economies on the continent, scaring away investors and creating unequal opportunities across the continent.

The continent, which is the least developed globally, loses about $14 billion in tax evasion annually, according to a report published by Oxfam…”

This article is based on older articles and I just wanted to show it here to ask the question, how did we get to the USD14 billion? The Oxfam article also refers to USD170 billion and USD50 billion. I have not seen evidence of these numbers but they are referenced a lot. They are also used very loosely and I am not sure if this refers to pre-tax revenue or actual cash? Not saying this is not an issue, but the amount divided by 54 countries (for Africa), times approx. 30% tax rate (for pre-tax numbers) over say 5 years all of a sudden becomes much less. The number will still be a big number, but nowhere near the billions referenced.

Costa Rica: Transfer pricing return, procedures are finalized (KPMG)

And what would the roundup be without another country requiring transfer pricing documentation.

“A resolution (Resolución No. DGT-R-44-2016) has been published in the official gazette to finalize the rules concerning the filing of an annual transfer pricing return in Costa Rica…”

Weekly transfer pricing roundup – 1 July

15641898450_deb45cce3c_bThis week has been a lot of traction on CBCr with the US confirming it will be doing it, and the OECD releasing additional guidance on CBCr. Happy reading.

OECD releases guidance on the implementation of country-by-country reporting (OECD)

Following the endorsement of the BEPS Package by G20 Leaders in November, the focus has now shifted to ensuring a consistent implementation, including of the new transfer pricing reporting standards developed under Action 13 of the BEPS Action Plan. To that aim, the guidance released today sets out:

  • Transitional filing options for MNEs that voluntarily file in the Parent jurisdiction;
  • Guidance on the application of CbC reporting to investment funds;
  • Guidance on the application of CbC reporting to partnerships; and
  • The impact of exchange rate fluctuations on the agreed EUR 750 million filing threshold for MNE groups.

Advertising, marketing tax may come back to haunt MNCs (ET Brand Equity)

The revenue department has challenged a judgment favouring a taxpayer on advertising, marketing, and (sales) promotion (AMP) expenses in the Supreme Court, which could potentially open a can of worms for many multinationals regarding a transfer pricing issue, assumed to be resolved…

Costa Rica: Update On Costa Rica’s Regulation For Annual Transfer Pricing (Mondaq)

Earlier this month, the Costa Rican General Direction of Taxation released draft rules for annual transfer pricing for public consultation. Originally enacted in 2013, Decree 37898-H protects the principle of ‘free competition.’

Costa Rica’s transfer pricing rules follow guidelines set by the OECD…

European Commission publishes decision on Netherlands’ state aid to Starbucks (Out-Law.com)

The European Commission has published the non-confidential version of its 2015 decision on state aid granted to Starbucks by the Netherlands.

The decision gives details of the Commission’s investigation into the Netherlands’ tax and transfer pricing rules, and its reasons for deciding that the country’s APA with Starbucks constituted illegal state aid…

U.S. Finalizes Country-By-Country Tax Reporting Rules — Are Companies Ready To Comply? (Forbes)

The U.S. Treasury Department and IRS released final rules today that will require large U.S. multinational corporations to file annual reports containing detailed, country-by-country income tax filing information for each country in which they do business.

The move, which was the subject of a good deal of controversy between several members of Congress and Treasury Secretary Jack Lew, aligns U.S. corporate tax policy with the global guidelines proposed by the OECD in its BEPS project…

36 non-OECD, non-G20 countries join BEPS international tax effort (MNE Tax)

Thirty-six countries and jurisdictions that are neither OECD nor G20 members have joined the framework to implement the OECD/G20 BEPS project to combat multinational tax avoidance, and 21 more are expected to join in the coming months, according to a June 30 OECD announcement.

The commitment means that the countries have agreed follow OECD/G20 BEPS minimum standards, namely, to add language to their tax treaties to prevent treaty shopping; join OECD/G20 agreements on country-by-country reporting for transfer pricing; limit benefits of intellectual property or other preferential tax regime based on an agreed method that requires substantial activity; and fully implement the mutual agreement procedure (MAP) in their tax treaties by resolving MAP cases within an average of 24 months, funding MAP administration, and ensuring that qualified taxpayers have access to MAP. The countries must also pay a fee to participate…