Weekly transfer pricing roundup – 24 June

What an announcement this morning with Brexit. Nonetheless, the transfer pricing world carries on. Here is the latest roundup:

newsInbound Distributors Target of IRS Transfer Pricing Campaign (BNA)

The Internal Revenue Service has launched a “campaign” targeting possible transfer pricing noncompliance by inbound distributors, an official said—the first word on a specific campaign under a new structure for the Large Business & International Division.

…Cheryl Teifer, director of field operations for the IRS Transfer Pricing Practice, said June 9 the agency is conducting a campaign looking at inbound distributors in five states, with that number expected to grow to 10 states by the end of the year. In general, these are U.S. distributors of a foreign parent’s goods. The pricing of those goods is under scrutiny by the IRS…

Importers Can’t Rely on Transfer Pricing to Satisfy Customs (BNA)

Multinationals that rely on transfer pricing studies to support the prices they report on customs invoices could be making trouble for themselves, practitioners say.

Many companies are unaware that the requirements for customs valuation are very different from the rules for setting the proper transfer price…

IRS on Pricing Intangibles: It’s the Economics, Stupid (BNA)

An IRS official says there is little in new OECD transfer pricing guidelines that conflicts with long-standing U.S. regulations under tax code Section 482.

The bottom line is that the economics of a transaction must make sense economically. That is the very definition of an arm’s-length price…

Brexit from a transfer pricing perspective

…Ignoring the economics above, other taxes such as import duties and VAT will be much more concerning for multinationals. Should there be a Brexit, I believe that the UK would maintain the arm’s length principle, meaning that transfer pricing in the UK will remain the same. Especially since the UK is part of the G20/G7. This at least would be some good news.

Hong Kong To Participate In BEPS Project As Associate (Global Tax News)

Hong Kong has accepted the OECD’s invitation to participate in the BEPS project as an Associate alongside other nations, the Government said on June 20.

As an Associate, Hong Kong will participate on the remaining standard-setting under the BEPS project and review and monitor measures implemented from the BEPS package. It will support the review of the four BEPS minimum standards, on harmful tax practices, tackling tax treaty abuse, country-by-country reporting, and improvements to cross-border tax dispute resolution mechanisms.

Brexit: tax implications for business (TPweek)

If the UK votes to leave the EU the country may be able to draft its own tax and TP legislation…

Belgium to implement formal transfer pricing documentation and country-by-country reporting requirements (EY)

The Belgian Government has approved new draft legislation to effectively implement country-by-country reporting (CbCR) and introduce formal transfer pricing documentation requirements in Belgium. On 2 June 2016, the draft legislation was submitted to the Belgian Parliament and is expected to be approved in the coming weeks.

The draft legislation is generally in line with the three-tiered approach of Action 13 of the OECD BEPS project. If the Belgian Parliament approves this legislation, qualifying Belgian companies and establishments will have to comply with these new requirements for financial years starting on or after 1 January 2016…

Tax experts tip government on new transfer pricing law (The New Times)

As government prepares to implement a new transfer pricing policy on July 1, experts have called on the Rwanda Revenue Authority (RRA) to clarify how it will be administered. Tax experts say the methodology that will be used to conduct transfer pricing audits is not clear, adding that there is also lack of skilled manpower, among others…

Nigeria’s transfer pricing regulations automatically updated? (Lexology)

…Per Regulation 11 (b), the Regulations will now be interpreted in line with the updated OECD TP Guidelines. With this, the Federal Inland Revenue Service (FIRS), Nigeria’s revenue authority, need not issue formal amendments or introduce new Regulations before the OECD TP Guidelines apply, although it is expected that it will…

Irish tax authority introduces formal bilateral advance pricing agreement program (MNE Tax)

Irish Revenue has today released guidelines establishing a formal bilateral advance pricing agreement (APA) program to provide certainty for multinational corporation transfer pricing arrangements.

While Ireland has entered into bilateral APAs in the past, reporting that eight such agreements were in force as of November 2015, the new guidelines formalize the process…

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