Weekly transfer pricing roundup – 28 August

hands-1167620_960_720As you will have seen from previous roundups European countries have been very busy with transfer pricing audits and the US has picked up on that, especially in relation to US companies being audited in the EU. It was only a matter of time until governments would get into conflict over cross border tax issues with the new BEPS laws being introduced. It will be interesting to see where this goes and if other countries feel similar grievances. See the articles below.

It was only a matter of time until governments would get into conflict over cross border tax issues…

On another note, I will be giving a seminar on country-by-country reporting, master file and local file and was wondering if you have encountered any issues/concerns in practically implementing these that I could research to discuss during my case studies. Any thoughts are much appreciated. Happy reading and if you believe this blog adds value, please share it.

Poland: Increased number of transfer pricing audits, increased assessments (KPMG)

“A summary of the results of tax audits conducted in the first half of 2016 reveals an increase in the number of transfer pricing audits conducted in Poland. In the first half of 2016, the tax auditors made determinations imposing more than PLN 9.5 billion in additional tax assessments (compared to the previous year, an increase of 36.6%). Officials expect that by the end of 2016, the amount of total assessments will exceed PLN 20 billion (approximately U.S. $5.2 billion).”

US attacks power grab by Brussels over Apple tax probe (The Telegraph)

“The US has launched a stinging attack on Brussels’ tax investigations into Apple and other companies in an escalation of the transatlantic battle over alleged EU targeting of US multinationals.

In a last-ditch shot before Brussels announces the results of its lengthy investigation into Apple’s Irish tax affairs, the US Treasury accused the European Commission of trying to become a “supranational tax authority”…

US slams EU competition policies (EUObserver)

“The US has accused the European Commission of imposing unfair fines on US firms in competition cases and launching investigations that threaten to “undermine progress” in the global fight against tax avoidance.

In a white paper published on Wednesday (24 August) the US Treasury strongly criticises the EU executive’s investigations into Apple, Fiat Chrysler and Amazon over state aid and tax avoidance” …

Belgian companies must fulfil reinforced transfer pricing obligations (Lexology)

“As part of the BEPS implementing measures, the Belgian Law of 1 July 2016 introduces a set of new transfer pricing rules that apply to Belgian companies as from 1 January 2016 (see Articles 321/1 to 321/7 of the Belgian Income Tax Code – BITC). These new provisions aim to implement Action 13 of the BEPS action plan under Belgian law.

In a nutshell, from a practical perspective, the new regime completes and broadens the already existing regime regarding specific forms of Belgian companies or information that they must provide to the tax authorities in respect of their transfer prices (i.e., Master File, Local File, and Country-by- Country report). Failure to comply with these new rules is sanctioned by administrative fines (up to EUR 25,000 – to be further detailed by Royal Decree)” …

The U.K.’s Proposed Interest Restriction Rule—Too Much Too Soon? (BNA)

“The U.K. government has been consulting on a proposed “Interest Restriction” rule which will limit the amount of interest expense U.K. companies will be allowed to offset against their income for tax purposes (to 30% of their taxable earnings before interest, tax and amortization). The second consultation phase on the new rule having ended on August 4, the next steps are publication of draft legislation by the end of this year followed by the release of final legislation with Finance Bill 2017 to take effect next April.

It is not surprising that a range of key investor associations have expressed increasing alarm about the proposed introduction of these new limits on deductible interest. Investments in property development and in buying and turning around companies, for example, are usually highly leveraged as the high risk and high returns are expected to more than cover the cost of borrowing. Severely reducing the amount of interest which some investors will be allowed to deduct from their taxable income will increase the tax on their profits, reduce the returns on projects and cause the U.K. to lose the benefits of some of these investments—including some large infrastructure projects and much-needed housebuilding” …

What are your thoughts?

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