Weekly transfer pricing roundup – 25 September

tax-1351881_960_720Transfer pricing has been a hot topic for quite some time, I remember listening to many presentations in the last few years, and every year it is mentioned that TP is the current hot topic. That doesn’t seem to change. Our current Grant Thornton transfer pricing team has tripled in the last 7 months. If that is anything to go by, TP is by no means done being a hot topic. Herewith the latest TP news.

The EU state aid rules mean that companies cannot rely on advantageous tax schemes – multi-billion EUR claims against Apple (Lexology)

“It is not unusual that large corporate groups choose carefully where the company’s profit is to be taxed for the purpose of reducing the group’s total taxation. However, this norm has been challenged by the European Commission (the “Commission”), which in recent years has investigated how the Member States choose to tax multinational company groups from the perspective of state aid law. This may result in that the companies have to pay previously unpaid taxes…

The Commission’s decisions regarding repayment obligations for Starbucks and Fiat have been appealed and both Ireland and Apple are expected to appeal the Commission’s decision regarding the repayment obligation for Apple. Pending a final decision, Ireland must, in accordance with the Commission’s decision, recover the illegal state aid but can until further notice place the recovered amount in an escrow account. Due to the uncertainty regarding what the Tribunal and the ECJ will find in their judgments, companies that have received illegal state aid based on a tax ruling from a national tax authority, risk having to repay substantial amounts…”

If you read one article this week, let it be this one. I am still not sure how the Commission can dictate to a country what it has to do. It is mentioned in this article that: “This may seem surprising since the European Union does not have any authority to directly affect the Member States’ national taxation systems. The Commission justifies its investigations by stating that the tax schemes may negatively affect the competition on the EU’s internal market.” But which regulation/law would trump which one? I am still trying to find an article that discusses all this as I am sure there are a lot of legal matters to consider. Once successful I will obviously blog about it.

Saint-Amans to EU: Stick to Current Transfer Pricing Standard (BNA)

“The European Commission shouldn’t try to create its own transfer pricing standards in investigating whether companies received favorable tax treatment from governments in the European Union, the OECD’s top tax official said…”

This is a strong message from Pascal Saint-Amans. Hopefully we all agree so that I will still have a job in future but furthermore to provide some consistency. Yes, I mentioned consistency referring to transfer pricing.

BHP in $1bn fight with Aust tax office (SBS)

“BHP Billiton’s tax dispute with the ATO over its Singapore marketing hub has risen to $1 billion, even as its payments to governments in halved last year. BHP Billiton has vowed to fight a $1 billion claim by the Australian Taxation Office for taxes owed on Australian iron ore and other minerals sold through its controversial Singapore marketing hub…

BHP Billiton does not agree with the ATO’s position. We have objected to all of the amended assessments and intend to continue to defend our position, including by initiating court action if necessary,” the company said in its annual payments to governments report.

BHP, along with other multinationals including Rio Tinto, Apple and Google, has been under investigation for more than a year over the use of Singapore-based marketing hubs to allegedly reduce their tax bills…”

In the last few weeks there has been one tax dispute after another one. It makes you think whether BEPS has brought this all about or if this was already in the pipeline. I tend to think these all were in the making for many years (the years disputed are a give away), before BEPS, but now there is definitely less room to ‘hide.’ If we are already seeing all these tax dispute, is this going to increase or will BEPS with its new requirements assist taxpayers in managing their affairs to actually reduce tax disputes? Time will tell.

What are your thoughts?

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