Weekly transfer pricing roundup – 30 July

news-1074610_960_720We are seeing more and more activity in the transfer pricing world now that the BEPS project has been generally accepted by many different countries. Facebook is the latest MNE in the news. See below relevant links. Another news worthy event, the South African Revenue Service has released a second draft on transfer pricing documentation retention requirements. I will look at that a little more in detail and share my write up soon.

As always, let me know your thoughts.

Facebook Tax Bill Over Ireland Move Could Cost $5 Billion (Bloomberg)

Facebook Inc.’s future cash flows and results could suffer a major blow if it loses a battle over new U.S. tax liabilities related to the transfer of its global operations to Ireland in 2010.

The Internal Revenue Service delivered a notice of deficiency to the social media giant Wednesday for $3 billion to $5 billion, plus interest and penalties, based on the agency’s audit of Facebook’s transfer pricing, the company said in a regulatory filing Thursday. Facebook, which plans to challenge the notice in federal tax court, said its balance sheet could suffer if it’s held liable…

IRS Seeks More Information From Facebook on Irish Deal (BNA)

The IRS is seeking information from Facebook Inc. about its arrangements with third-party developers and investors to determine whether the social media giant grossly mispriced the transfer of intangibles to its Irish subsidiary in 2010, a filing in U.S. district court reveals ( United States v. Facebook, Inc., N.D. Cal., No. 3:16-cv-03777, amended petition 7/25/16 ).

The Internal Revenue Service filed an amended petition July 25 asking the U.S. District Court for the Northern District of California to enforce not seven summonses that Facebook officials have ignored.

According to the filing, company officials were summoned to meet with IRS auditors June 29 to produce “books, records, papers, and other data” in connection with an audit of the company’s transfer pricing. The officials failed to show and didn’t submit the requested documents by the deadline.

Chamber disputes veracity of Unctad under invoicing claim (Mining Weekly)

The Chamber of Mines of South Africa on Monday noted with concern the report published by the United Nations Conference on Trade and Development (Unctad) in which it was asserted that South Africa’s commodity exports were being under invoiced.

Prominent international news media have carried reports quoting Unctad as finding that, between 2000 and 2014, under invoicing of gold exports from South Africa amounted to $78.2-billion, or 67% of total gold exports…

China’s New Tax Form Zeroes in on Low-Tax Jurisdictions (BNA)

New rules requiring Chinese entities of multinational groups to report the effective tax rates of their overseas related parties might cause considerable risk to multinationals operating in China through principals in jurisdictions that offer favorable tax deals, a Shanghai economist said.

Glenn DeSouza, managing director of Transfer Pricing Management Consulting, said some jurisdictions with high headline tax rates offer breaks to major companies in exchange for commitments to provide jobs or other economic benefits. Form 14, included in the tax authority’s “Public Notice 42 Regarding Refining the Reporting of Related Party Transactions and Administration of Transfer Pricing Documentation,” will highlight these instances by requiring Chinese companies to report new information on their top five overseas related parties by value of transactions…

What are your thoughts?

This site uses Akismet to reduce spam. Learn how your comment data is processed.