Weekly transfer pricing roundup – 17 July

News-media-standardsNothing like an OECD Tax Talk to keep us going through the week. If you missed the OECD Tax Talk on 12th July you can find a recording and the slideshow here. If you have read the previous OECD releases you may already be aware of most of the topics but the new criteria for countries being labelled as non-cooperative tax jurisdictions and the new deadlines for future releases are interesting. The new deadlines are:

  • Discussion draft – Interest deductions in the banking and insurance sectors, 28 July
  • Discussion draft – Branch mismatch arrangements, week of 8 August
  • Public consultation – Attribution of profits to PEs and revised guidance on profit splits, 11- 12 October

I am still going through the profit split discussion draft and contemplating if this really makes the profit split more user friendly or not. Should I ever decide I will write a separate blog post on that. Herewith some more news for the week, let me know your thoughts.

Stop saying ‘double non-taxation’ (BNA)

It’s time to stop saying “double non-taxation.” Yes, I know what you’re trying to invoke, but there’s no way to keep it from sounding silly—or worse, like something out of 1984.

I also know what you’re going to say: that “untaxed income” doesn’t capture the full meaning, for two reasons. One, “double” refers to two tax authorities, neither of whom is taxing the income from a particular cross-border transaction. Two, “double non-taxation” is a way of turning “double taxation”—formerly the paramount concern of the OECD—on its head, reflecting the new world order after the BEPS plan. (For non-tax types, BEPS refers to the Organization for Economic Cooperation and Development’s plan to stamp out “base erosion and profit shifting.” Clear as mud? I’ll explain below.)…

Oracle, Sony, HP report possible reductions in tax reserves (BNA)

Oracle Corp., HP Inc., Sony Corp. and other large technology companies reported that amounts held in reserve for potential tax assessments may decrease over the next year due to changes in the status of international taxation and transfer pricing issues.

The companies were among nine reporting significant transfer pricing issues, or the resolution of those issues, to the Securities and Exchange Commission in June. An alphabetised list follows…

ArcelorMittal group firm wins transfer pricing litigation in Romania (Business Review)

Judges at Romania’s High Court decided to maintain the cancellation of administrative acts issued by the inspection body with the consequent cancellation of tax loss decrease worth RON 5.6 million for one of the firms within the ArcelorMittal group, said professional services firm EY Romania, which worked on this case with Radu si Asociatii SPRL, the corresponding law firm of EY Romania…

OECD sets criteria for labeling countries as “non-cooperative” tax jurisdictions, previews coming tax guidance (MNE Tax)

At the G20’s behest, the OECD has identified objective criteria for determining if a country is “non-cooperative” tax jurisdiction with respect to tax transparency, Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, said during a July 12 OECD webinar. OECD officials also discussed plans to release further tax and transfer pricing guidance.

Saint-Amans said that under the OECD’s proposed scheme, to be presented to the G20 for its consideration at an upcoming meeting, developing countries that do not have financial centers would never be considered non-cooperative. Other countries would avoid the label if they meet two of the following three criteria…

Corporate tax minimisation costs governments $US1 trillion says accounting insider (ABC News)

The big four accounting firms have been branded as aggressive, unethical, and accused of “perpetrating the greatest tax crimes in history” by a leading corporate tax authority.

At least $US1 trillion in tax revenue is lost worldwide, and $50 billion in Australia, as a result of aggressive tax minimisation schemes established by the four giant firms who audit the books of nearly all the world’s major companies, said George Rozvany, a 32-year veteran of the corporate tax industry…

China Seeks to Grab Bigger Slice of Global Tax Pie (BNA)

China’s State Administration of Taxation radically expanded tax reporting requirements for multinational companies operating in China, imposing a value chain analysis that will cause more of a company’s global profit to be taxed in China.

The SAT’s “ Public Notice 42 Regarding Refining the Reporting of Related Party Transactions and Administration of Transfer Pricing Documentation ,” effective Jan. 1 and posted on the SAT’s website July 12, adopts the Organization for Economic Cooperation and Development’s recommendations on transfer pricing documentation, requiring a country-by-country reporting template, master file and local file.

Africa’s tax gap needs fixing – Gordhan (IOL)

Finance Minister Pravin Gordhan said yesterday that illicit financial flows, tax evasion and transfer pricing were major contributors to South Africa’s and Africa’s tax gap…

What are your thoughts?

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