So it is already December. Normally I would expect things to calm down, but not in the transfer pricing world. Australia is awaiting comments just before the festive season on illicit transfers (or profit shifting) and other countries aren’t slowing down either to implement the BEPS action points and/or looking into getting additional revenue (see below for more).
Keep in mind, previously when reports referred to illicit transfers this was really only meant to capture illegal funds like drug money, but illicit transfers must be interpret much wider these days, including tax evasion (and maybe even tax avoidance).
Oh yes, last point, I am still looking for any contributions (contributors), if you are still not sure if you should write about your transfer pricing thoughts – do it.
“Treasurer Scott Morrison has released for public scrutiny until December 23 draft laws which will provide scope for the Australian Taxation Office to identify large multinationals seeking to avoid tax by shifting profits.
It will also allow the commissioner of taxation to impose a penalty tax rate of 40 per cent on arrangements that are caught in breach of the rules…”
“The amount of tax potentially underpaid by big businesses by shifting profits to other jurisdictions has increased by 60 percent in the last year, to GBP3.8bn (USD4.8bn), according to figures obtained by international law firm Pinsent Masons.
The figure is the “tax under consideration” by HMRC’s Large Business Directorate, being an estimate of the maximum potential additional tax liability across all open inquiries but before any investigations have been completed.
Pinsent Mason tax expert Heather Self said that the increase suggested HMRC has opened a significant number of new inquiries over the last twelve months, in particular into multinationals’ transfer pricing affairs. She suggested transfer pricing is becoming the single largest risk or source of potential tax inaccuracies for large businesses.
“Seventy-five percent of businesses identify tax risk management as their top transfer pricing priority, according to an EY report, In the spotlight: a new era of transparency.
Rising from 66% in 2013, the survey of 623 tax and finance executives across 36 countries reflects the striking impact of global calls for greater tax transparency on the boardroom agenda…
“A new era of tax transparency is driving monumental change throughout modern tax functions, and businesses need to begin gathering essential data to build a clearer and more optimized long-term strategy for transfer pricing,” says Peter Griffin, EY Global Transfer Pricing Leader.
“Adapting to this new reality will be key to executing effective and compliant transfer pricing. With 73% of survey respondents still monitoring transfer pricing results on just a quarterly or annual basis, it is clear that a significant step change still needs to take shape…”