Weekly transfer pricing roundup – 22 May 2017

Chevron decided to appeal the AUD340 million transfer pricing ruling in relation to its financial arrangement between the US and Australia. The previous ruling is now going to the High Court and I look forward to the drama that will unravel. The ATO already started looking at other taxpayers for similar arrangements and even published some draft guidance on what is high or low risk. But more about that below.

And also just a quick reminder about our transfer pricing seminar tomorrow (23 May 2017) on services. See more info here and register.

APA & MAP Country Guide 2017 (DLA Piper)

DLA Piper took the time to create this APA & MAP country guide, so I think you should click on the link and check it out.  “The guide contains information including:

  • The acceptance criteria and collateral issues that may be taken into account when considering the appropriateness of an APA
  • The application filing process
  • Post-agreement compliance requirements
  • Country statistics
  • The double taxation treaty networks of each country
  • Other relevant information relevant to filing an APA application”
Australia Issues Post-‘Chevron’ Advice on Related-Party Debt (BNA)

“The Australian Taxation Office will be coming after more large companies for their cross-border related-party financing, and the agency explained what businesses can do to avoid penalties.

The ATO issued guidelines May 16 on cross-border related-party financing, which specialists say might result in some taxpayers changing existing arrangements, even when they consider them to be legal…”

The ATO may have been a little too quick with all of this considering Chevron is taking this on appeal. Then again the guidelines are not new rules or safe harbours and they do not assist in interpreting the current transfer pricing laws. In a nutshell this means, the taxpayer can still structure his loan as he sees fit as long as it is arm’s length. However, there are additional compliance costs for high risk transactions. Even though these high risk transactions may be arm’s length the ATO is obviously trying to get taxpayers to change their loan arrangement so that they fall within the low risk category by making it easier (and cheaper from a tax compliance perspective). 

Brazil: CbC reporting obligation for FY 2016 clarified (Deloitte)

“The Brazilian tax authorities published guidance (Declaratory Act Number 30 (ADE 30)) on 5 May 2017 that contains the new manual for filing the corporate income tax return (ECF).

ADE 30 addresses the filing of a country-by-country (CbC) report for fiscal year (FY) 2016. Resident ultimate parent entities and Brazil constituent entities that potentially are required to comply with Brazil’s filing requirements must submit a CbC report with their corporate income tax return for the year (for FY 2016, the return/CbC report are due on 31 July 2017)…

Brazil constituent entities of multinational groups in which the UPE falls into one of the situations above must notify the Brazilian tax authorities by completing field 7 of the W100 Registry (a field that identifies the entity responsible for filing the CbC report) by choosing option 1, “Multinational Group released from an obligation to file a CbC report.” In addition, in Registry 300 (Additional Comments), the entity must include the fiscal period of the group, which will provide further information to the tax authorities…”



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