Apple, Apple and Apple. That sums up this week in transfer pricing terms. I am sure you would have heard about Apple’s tax bill ‘raised’ by the European Commission. This means a few things, such as, the European Commission won’t bow to pressure from the US, other firms with similar arrangements or structures should look closely at this as they may be next, can the European Commission dictate how a country should run its tax system, and much more. See some great articles on the matter below:
- Apple’s EU tax dispute explained (FT)
- Apple Found To Have Received Illegal Tax Benefits, Ordered To Pay $14.5 Billion In Back Taxes (Forbes)
- European Commission warns multinationals as Apple ordered to pay €13 billion in tax (The Conversation)
- Apple appeal against EU tax demand would break new ground (ETRetail)
There were some other updates worthwhile mentioning, see below:
“Facebook Inc. made headlines recently when court documents came to light showing that the IRS believes the company understated its U.S. income by billions of dollars.
Facebook says it could be looking at an additional $5 billion in federal corporate income taxes.
Microsoft Corp. is also embroiled in an Internal Revenue Service audit of its transfer pricing. The agency has suggested that the computer giant might have understated its income by more than $30 billion over the course of several years.
Numbers like these raise eyebrows, but they also skirt a seldom-asked question: When a multinational company shifts intangibles offshore, what does that mean for the U.S. states where they do business?
The answer seems to be: Big money losses that states can’t quite pin down and can’t fight very effectively.
“It’s hard to quantify what’s not coming in,” says Marshall Stranburg, deputy executive director of the Multistate Tax Commission. “States have a sense that there is something going on out there, but I can’t give you the magnitude of what we are talking about.” …”
Adjusting for the future: new transfer pricing rules could affect finance and royalty structures (Lexology)
“The UK has proposed deemed loan treatment for any advantage arising from a transfer pricing adjustment in excess of GBP1 million.
Businesses need to take immediate action to review structures where transfer pricing adjustments might be made to identify whether those adjustments are at risk of being treated as deemed loans, with imputed interest…”