Weekly transfer pricing roundup – 12 June 2017

Last week was a very historic week for transfer pricing enthusiasts all around the world. 67 jurisdictions signed MLIs in line with the BEPS framework to reduce the opportunity for tax avoidance. The signing of the MLIs is likely to result in 1100 tax treaties being amended, which usually would take decades. Continue reading “Weekly transfer pricing roundup – 12 June 2017”

Weekly transfer pricing roundup – 20 Feb 2017

I see more and more articles on India’s secondary adjustment and maybe it should be amended before it is enacted. I am part of the camp that doesn’t believe a deemed loan is the most appropriate way to treat a secondary adjustment. The reason for this is that practically it is a nightmare, but maybe I should give India the benefit of the doubt and they may actually be able to pull this off?

As you will see below, more countries are introducing transfer pricing requirements and very soon everyone will have introduced some sort of transfer pricing regulations. I guess that means this blog will continue for a while, which is good news. Happy reading. Continue reading “Weekly transfer pricing roundup – 20 Feb 2017”

Weekly transfer pricing roundup – 5 December

5618300894_8e86b92fda_bSo it is already December. Normally I would expect things to calm down, but not in the transfer pricing world. Australia is awaiting comments just before the festive season on illicit transfers (or profit shifting) and other countries aren’t slowing down either to implement the BEPS action points and/or looking into getting additional revenue (see below for more).

Keep in mind, previously when reports referred to illicit transfers this was really only meant to capture illegal funds like drug money, but illicit transfers must be interpret much wider these days, including tax evasion (and maybe even tax avoidance).

Oh yes, last point, I am still looking for any contributions (contributors), if you are still not sure if you should write about your transfer pricing thoughts – do it.

Planned tax avoidance laws up for scrutiny (9News)

“Treasurer Scott Morrison has released for public scrutiny until December 23 draft laws which will provide scope for the Australian Taxation Office to identify large multinationals seeking to avoid tax by shifting profits.

It will also allow the commissioner of taxation to impose a penalty tax rate of 40 per cent on arrangements that are caught in breach of the rules…”

Transfer Pricing Behind Jump In UK Tax In Dispute (Tax-News)

“The amount of tax potentially underpaid by big businesses by shifting profits to other jurisdictions has increased by 60 percent in the last year, to GBP3.8bn (USD4.8bn), according to figures obtained by international law firm Pinsent Masons.

The figure is the “tax under consideration” by HMRC’s Large Business Directorate, being an estimate of the maximum potential additional tax liability across all open inquiries but before any investigations have been completed.

Pinsent Mason tax expert Heather Self said that the increase suggested HMRC has opened a significant number of new inquiries over the last twelve months, in particular into multinationals’ transfer pricing affairs. She suggested transfer pricing is becoming the single largest risk or source of potential tax inaccuracies for large businesses.

Tax risk management identified as top transfer pricing priority (CFO)

“Seventy-five percent of businesses identify tax risk management as their top transfer pricing priority, according to an EY report, In the spotlight: a new era of transparency.

Rising from 66% in 2013, the survey of 623 tax and finance executives across 36 countries reflects the striking impact of global calls for greater tax transparency on the boardroom agenda…

“A new era of tax transparency is driving monumental change throughout modern tax functions, and businesses need to begin gathering essential data to build a clearer and more optimized long-term strategy for transfer pricing,” says Peter Griffin, EY Global Transfer Pricing Leader.

“Adapting to this new reality will be key to executing effective and compliant transfer pricing. With 73% of survey respondents still monitoring transfer pricing results on just a quarterly or annual basis, it is clear that a significant step change still needs to take shape…”

Weekly transfer pricing roundup – 10 June

What is the latest in the transfer pricing world? See below:

Romania joins countries leading BEPS plan implementation to fight MNE tax avoidance (MNE Tax)

The Romanian government, on June 2, announced that it will join countries working on the next phase of the OECD/G20 base erosion and profit shifting (BEPS) project as an associate, developing standards and monitoring the implementation of BEPS international tax measures, which are designed to combat multinational corporation tax avoidance…

HMRC investigations into transfer pricing down 15% (Economia)

The number of HMRC investigations into high-value big companies suspected of using transfer pricing to avoid tax has fallen by 15% in a year, according to UHY Hacker Young

The research found that HMRC opened 391 transfer pricing reviews in the year ended 31 March 2015, down from 450 in 2013/14…

Ahmedabad gets special bench for international taxation (The Times of India)

Ahmedabad: The Income Tax Apellate Tribunal (ITAT) of Ahmedabad is getting a new bench to hear cases on matters of international taxation. This will be the third bench of international taxation in the country, with Delhi and Mumbai already having one each…

EU State aid probe into tax rulings extends to group financing companies, TNMM use (MNE Tax)

The EU Commission on June 3 released a working paper identifying several categories of Member State transfer pricing rulings that raise potential State aid concerns because they sanction profit allocations that deviate from the arm’s length standard…

…The paper identifies particular concern with APAs that use the TNMM with operating expenses as an indicator. “Where the TNMM is used, operating expenses are often retained when the taxable base is determined as a mark-up on a performance indicator. In some cases, it seems that this choice of operating expenses as a performance indicator is made systematically, without necessarily representing the commercial value of the functions of the company”…

EU Competition Arm to Stick To OECD Transfer Pricing Guidelines (LexisNexis)

Despite concerns that the European Commission wants to reinvent the OECD’s transfer pricing guidelines, EU Competition Commissioner Margrethe Vestager recently reassured the OECD that the EU will continue to follow the guidelines…

BEPS Will Raise Taxes and Cost Worldwide (Taxation)

Mid-sized international businesses around the world are afraid that upcoming international tax rules will hike their taxes, increase compliance costs, and interfere with their business strategies…

Draft German tax law adopts low threshold for transfer pricing master file, combats MNE tax avoidance (MNE Tax)

The German Finance Ministry on June 1 released a draft law proposing further measures combating multinational profit shifting, including implementation of transfer pricing documentation and country-by-country reporting and exchange of tax rulings. The proposal is notable because it will likely require the filing of a master file by a majority of German multinationals…

The German draft law also includes a provision to implement OECD recommendations regarding the master file (new article 90 para 3 fiscal code (AO)). The master file is to be submitted upon request to the tax authorities by multinational groups that, in the previous year, had turnover exceeding €100 million (USD 136 million). A multinational group is defined as two or more connected/related companies in different countries or one company that has at least one permanent establishment in another country…

Cyprus team to negotiate revisions in tax treaty with India (livemint)

A delegation from Cyprus is expected to visit India soon to negotiate changes to its double taxation avoidance agreement (DTAA) with India.

Cyprus has agreed to give India the right to tax capital gains similar to the provision in the revised India-Mauritius tax treaty, but wants to be removed from an Indian blacklist, said two government officials who did not want to be identified…

U.K. Tax Official Sees No Substitute for Transfer Pricing (BNA)

Mike Williams, director of business and international tax with Her Majesty’s Revenue and Customs, was a keynote speaker June 8 at an international tax conference co-sponsored by Bloomberg BNA and Baker & McKenzie LLP.

“There are aspects to transfer pricing that need to be improved, updated to make it fit for purpose,” Williams said.

“I think the message I want to leave with you is I am a critical friend of transfer pricing,” he said. While there are aspects to transfer pricing that need to be improved, it is still the best method to allocate profits of a multinational group among the countries where it does business, Williams said.

“A core advantage of the way it works is that, having divvied up the profits, it is then up to individual countries to decide whether and at what rate to tax the profits that are attributed to them—and that is important in terms of sovereignty. By dividing the profits between countries in a sensible way, it enables countries to exercise their sovereignty in a way that benefits them…”