Weekly transfer pricing roundup – 16 October

5856708903_294549a95a_bYou know a lot has happened in a transfer pricing week when the blog post is close to 1,000 words. I tried to summarise the weeks news below by quoting certain sections only, but for some articles this may not do them justice. Happy reading.

Ireland: The Apple Case: An Irish Perspective (Mondaq)

This is a great article that provides the different viewpoints on the Apple case. If you have time I suggest to read the full article by clicking on the link above, for those of us in a rush, I have quoted the Irish tax position from the article below.

“While Ireland taxes Irish resident companies on their worldwide profits, non-Irish resident companies are only subject to corporation tax on the income attributable to their activities in Ireland. Ireland’s approach in agreeing the tax rulings was to tax Apple under the applicable Irish rules which required that the two Apple companies be taxed in Ireland on the basis of the income generated by their Irish branches only. As the remainder of the income of those companies was not generated by their Irish branches, it was not subject to tax in Ireland.

Transfer pricing rules and the “arm’s length principle” as set out in the OECD’s Transfer Pricing Guidelines were introduced in Ireland in 2010, almost two decades after the 1991 ruling, and three years after the 2007 ruling. Ireland also unilaterally amended its corporate tax residence rules in October 2013 to address a mismatch between the tax rules in Ireland and other jurisdictions (principally the US) which had resulted in so-called “stateless” companies. However, the Commission’s decision is effectively forcing Ireland to levy back taxes on the basis of current rules which were not in force in Ireland at the time that the arrangements in question were in place. The retroactive nature of the decision will be a key ground of any appeal…”

Wayne Swan doubles down on BHP tax evasion accusations (The Sydney Morning Herald)

“Former treasurer Wayne Swan has doubled down on his allegations that BHP Billiton has been evading taxes for more than a decade and misleading the government about it.

Following up on comments first made using parliamentary privilege on Wednesday night, Mr Swan has gone after the mining giant in the public sphere, accusing it of profit shifting to avoid paying taxes to the Australian government…

Mr Swan said in Parliament on Wednesday that BHP had been “gaming the system” by using aggressive transfer pricing – shifting profits out of Australia to a Singaporean marketing hub – denying the Australian government $5.7 billion in tax revenue. On Thursday morning he repeated the claim outside of Parliament…”

UN tax committee to consider major updates to transfer pricing manual, model tax treaty (MNE Tax)

“The UN Committee of Experts on International Cooperation in Tax Matters (Committee) has released several reports in advance of its annual meeting, slated for October 11–14 in New York, revealing that significant changes to the UN’s transfer pricing manual and model tax treaty are under consideration.

A revised version of the United Nations Practical Manual on Transfer Pricing for Developing Countries, to be presented for consideration and approval at the meeting, will have a new format, according to a report of the subcommittee developing the manual.

The chapters have also undergone “significant updating” to take into account global tax issues, such as the G20/OECD base erosion profit shifting (BEPS) plan output. Moreover, new chapters on cost contribution arrangements, intragroup services, and intangibles will be added to the revised transfer pricing manual, the subcommittee said…”

Transfer Pricing Function Benchmarking Survey 2016 (TP Minds)

“Earlier this year, we asked esteemed transfer pricing professionals from across the globe to partake in a new survey, tackling the intricacies of BEPS implementation, budget allocation with transfer pricing and much more…”

Singapore: The IRAS releases guidance on CBCR (IRAS)

IRAS has released guidance on CBCR in Singapore. Follow the link above for the full e-tax guide. In a nutshell:

“Singapore will implement CbCR for Singapore MNE groups from FY 2017 onwards [Financial years starting 1 January 2017].

Broadly, CbCR will be required for a MNE group in relation to a financial year (the first such year being FY 2017), where: (a) The MNE group is a Singapore MNE group; (b) The consolidated group revenue in the preceding financial year is at least S$1,125 million; and (c) The MNE group has subsidiaries or operations in at least one foreign jurisdiction…”

ECOWAS Member-States Take Stock of Transfer Pricing in the Region (Front Page Africa)

“The Economic Community of West African States (ECOWAS), the Federal Inland Revenue Service (FIRS) and the World Bank Group will co-host the first Transfer Pricing Regional Meeting for ECOWAS Member States in Abuja, Nigeria from October 11-13, under the European funded Improved Business and Investment Climate in West Africa Project…

The transfer pricing component of this project is an example of the World Bank’s initiative to support domestic resource mobilization by helping countries to protect their corporate tax base from profit shifting…”

US, Mexico agree to transfer pricing framework for maquiladoras (MNE Tax)

“The US IRS today announced agreement with Mexico on a transfer pricing framework for US multinational enterprises that have maquiladora operations which, if applied in a unilateral advance pricing agreement (APA) with Mexico’s Servicio de Administración Tributaria (SAT), will be accepted by the US as arm’s length.

Maquiladoras are Mexican companies that operate as contract manufacturers of foreign manufacturers, importing material and duty free and tariff free and exporting assembled or manufactured goods.

The new agreement updates and expands a 1999 agreement between the US and Mexico, and seeks assist in the resolution of about 700 pending unilateral APA requests…”

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