Weekly transfer pricing roundup – 7 August

globe-868846_960_720Welcome to your latest transfer pricing round up, I hope you enjoy it. This week there has been a lot of finger pointing at multinational companies, again. Especially the tech industry with Facebook and Apple leading the charge. As mentioned last week, in South Africa we have received an amended draft in relation to transfer pricing documentation retention requirements, but this week I managed to actually digest the amended draft. See my blog post below or a more formal write up here.

Compulsory transfer pricing documentation requirements in South Africa

SARS has released the awaited update to its draft notice in terms of section 29 of the (South African) Tax Administration Act, 2011. I wrote a blog post about the previous draft notice in January 2016, if you need a quick refresher, click here.

There are important updates and changes in the amended draft notice which arguably means that the amended draft notice is now applicable to more taxpayers. The previous draft notice was only relevant for a taxpayer with a group consolidated South African turnover of R1 billion or more. Without going into detail on the definition of consolidated South African turnover, the R1 billion threshold was seen to be too burdensome on taxpayers that may not have material related party transactions (more on this later). This threshold changed and the amended draft notice’s threshold reads as follows…

Apple’s Profit Reporting A ‘Fraud,’ Nobel Laureate Joseph Stiglitz Says (Huff Post)

Nobel Prize-winning economist Joseph Stiglitz has called Apple’s profits a “fraud,” blaming weak U.S. laws for allowing the company to shift its tax burden to low-tax Ireland.

“Here we have the largest corporation in capitalization not only in America, but in the world, bigger than GM was at its peak, and claiming that most of its profits originate from about a few hundred people working in Ireland — that’s a fraud,” Stiglitz, a former head of the World Bank and an advisor to the Hillary Clinton presidential campaign, told Bloomberg TV this week

What Facebook And Apple Can Teach You About Transfer Pricing (Forbes)

Two interesting stories today about the intricacies of the international corporate taxation system. One concerns Facebook and the manner in which the IRS is questioning the basis upon which they did a transaction. The other is Joe Stiglitz going off on one about Apple and really not understanding the basic issues at all. Both are about transfer pricing, at least purportedly they are. And the correct answer here is that Facebook is at least being asked an interesting question (and obviously I have no idea what the answer is) while Stiglitz seems not to grasp the basics at all…

If Apple’s Irish tax loophole is a fraud, the whole tech industry is guilty (NetworkWorld)

Apple’s profits in Ireland are “a fraud,” said Nobel Prize-winning economist Joseph Stiglitz in an interview with Bloomberg Television’s Tom Keene. True it is, but almost every tech company uses the same loophole for which Stiglitz blamed the U.S. tax system.

Stiglitz said: “Our current tax system encourages companies to keep their money abroad, opens up a vast loophole through what is called the transfer-pricing system that allows them not only to keep their money abroad but, effectively, to escape taxation…

CBDT signs advance pricing agreement with Japanese firm (Business Standard)

The Central Board of Direct Taxes (CBDT) has entered into an APA with an Indian subsidiary of a Japanese trading company to foster a non-adversarial tax regime.

“Signing of this bilateral APA is an important step towards ascertaining certainty in transfer pricing matters of multinational company cases and dispute resolution,” said a statement issued here by the Finance Ministry under which the CBDTfunctions…

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