The document summarizes recent changes to international transfer pricing guidance over the past few months. It discusses the OECD's consultation on capping interest deductibility between 10-30% of EBITDA. It also discusses OECD consultations on profit splits and attributing profits to permanent establishments. Additionally, it notes that China has formalized value chain requirements into its transfer pricing regulations. The EC ruling on Starbucks created potential inconsistencies between the arm's length principle and EU state aid rules. The IRS Altera case and ongoing appeals regarding stock-based compensation are also summarized.
Companies are facing a proliferation of transfer pricing documentation demands. While the new requirements set out in the OECD’s Base Erosion Profit Shifting (BEPS) Action Plan will raise the bar still further, they could also provide the catalyst for the development of a more sustainable approach. http://bit.ly/1htg32Z
On your mark EU Financial Transaction Tax for asset managersKNOWitALL
TO GET READY FOR THE EU FINANCIAL TRANSACTION TAX FINANCIAL INSTITUTIONS ARE IN A RACE AGAINST TIME AND POLITICS!
The article reviews the progress of legislative developments regarding the Financial Transactions Tax proposed by 11 member states of the EU. Drawing from the industry’s experience of implementing similar transaction taxes it analyses impact from the perspective of the operational challenges posed and makes a case for considering these wider implications in time to ensure regulatory compliance.
This presentation by Miguel de la MANO, Executive Vice President of Compass Lexecon, was made during the discussion “Co-operation between Competition Agencies and Regulators in the Financial Sector: 10 years on from the Financial Crisis” held at the 64th meeting of the OECD Working Party No. 2 on Competition and Regulation on 4 December 2017. More papers and presentations on the topic can be found out at oe.cd/284.
These speaking points by Jean-Yves Art - Microsoft cover a presentation made during a roundtable discussion on Jurisdictional nexus in merger control regimes held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 15 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/jurisdictional-nexus-in-merger-control-regimes.htm
This presentation by the OECD Competition Division was made during a roundtable discussion on Public interest considerations in merger control held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 14 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/public-interest-considerations-in-merger-control.htm
Companies are facing a proliferation of transfer pricing documentation demands. While the new requirements set out in the OECD’s Base Erosion Profit Shifting (BEPS) Action Plan will raise the bar still further, they could also provide the catalyst for the development of a more sustainable approach. http://bit.ly/1htg32Z
On your mark EU Financial Transaction Tax for asset managersKNOWitALL
TO GET READY FOR THE EU FINANCIAL TRANSACTION TAX FINANCIAL INSTITUTIONS ARE IN A RACE AGAINST TIME AND POLITICS!
The article reviews the progress of legislative developments regarding the Financial Transactions Tax proposed by 11 member states of the EU. Drawing from the industry’s experience of implementing similar transaction taxes it analyses impact from the perspective of the operational challenges posed and makes a case for considering these wider implications in time to ensure regulatory compliance.
This presentation by Miguel de la MANO, Executive Vice President of Compass Lexecon, was made during the discussion “Co-operation between Competition Agencies and Regulators in the Financial Sector: 10 years on from the Financial Crisis” held at the 64th meeting of the OECD Working Party No. 2 on Competition and Regulation on 4 December 2017. More papers and presentations on the topic can be found out at oe.cd/284.
These speaking points by Jean-Yves Art - Microsoft cover a presentation made during a roundtable discussion on Jurisdictional nexus in merger control regimes held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 15 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/jurisdictional-nexus-in-merger-control-regimes.htm
This presentation by the OECD Competition Division was made during a roundtable discussion on Public interest considerations in merger control held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 14 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/public-interest-considerations-in-merger-control.htm
This presentation by the OECD Competition Division was made during a roundtable discussion on Commitment Decisions in Antitrust Cases held at the 125th meeting of the OECD Competition Committee on 17 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/commitment-decisions-in-antitrust-cases.htm
This presentation by Allan FELS AO (Professor, University of Melbourne, Monash & Oxford and former Chair of the Australian Competition and Consumer Commission) was made during the session on Competition in public markets held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/28n
This presentation by John Davies Freshfields was made during a roundtable discussion on Public interest considerations in merger control held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 14 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/public-interest-considerations-in-merger-control.htm
This presentation by CUTS’ SG Pradeep S Mehta was made during Break-out Session 2: Enforcement in the framework of the discussion on “Overcoming adversity and attaining success: Small and developing competition agencies” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/sda.
This presentation by Bruce LYONS, Professor of Economics and Deputy Director of the ESRC Centre for Policy, University of East Anglia was made during the roundtable discussion on geographic market definition held during the 124th meeting of the OECD Working Party No. 3 on Co-operation and Enforcement on 28 November 2016. More papers and presentations on the topic can be found out at www.oecd.org/daf/competition/geographic-market-definition.htm
HDG - Base Erosion & Profit Shifting (BEPS) - Conceptual Analysis & Country b...Hitesh Gajaria
How Tax Authorities are Globally Coming Together to Combat the Digital Disruption
World's Largest Cab Co ... Owns No Cabs! - (Uber)
Largest Accommodation Provider .... Owns No Real Estate! (Airbnb)
World's Most Valuable Retailer .. Has No Inventory!
World's Largest Movie House ... Owns No Cinemas! (NetFlix)
Most Popular Media Owner .. Creates No Content! (Facebook)
Tax management within multinational enterprises (MNEs) has never been more challenging. 'Getting to grips with the BEPS Action Plan' is the latest Grant Thornton report exploring the OECD’s planned overhaul of the international tax system, what it means for businesses and how they can prepare.
This presentation by Randoph Tritell - US FTC was made during a roundtable discussion on Jurisdictional nexus in merger control regimes held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 15 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/jurisdictional-nexus-in-merger-control-regimes.htm
This presentation by the Austrian Competition Authority was made during Break-out Session 1: Advocacy in the framework of the discussion on “Overcoming adversity and attaining success: Small and developing competition agencies” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/sda.
This presentation by the World Bank was made during Break-out Session 3: Creating Legitimacy in the framework of the discussion on “Overcoming adversity and attaining success: Small and developing competition agencies” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/sda.
This presentation by Johannes Erlandsson from the Swedish Competition Authority was made during the discussion “Safe harbours and legal presumptions in competition law” held at the 128th meeting of the OECD Competition Committee on 5 December 2017. More papers and presentations on the topic can be found out at oe.cd/21v.
This presentation by Mario Umaña of the Inter-American Development Bank was made during Break-out Session 1: Advocacy in the framework of the discussion on “Overcoming adversity and attaining success: Small and developing competition agencies” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/sda.
Transfer Pricing Forum: Transfer Pricing for the International Practitioner, ...Matheson Law Firm
Joe Duffy, Partner in the Tax Group, and Kathryn Stapleton, Solicitor in the Tax Department, co-wrote the Ireland section for Transfer Pricing Forum: Transfer Pricing for the International Practitioner, September 2016.
BEPS: Action #1 - Addressing the tax challenges of the digital economyAlex Baulf
No new taxes or recommendations unique to the digital economy were suggested by the Organisation for Economic Co-operation and Development (OECD) but the door is still open for unilateral safeguard actions.
This presentation by the OECD Competition Division was made during a roundtable discussion on Commitment Decisions in Antitrust Cases held at the 125th meeting of the OECD Competition Committee on 17 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/commitment-decisions-in-antitrust-cases.htm
This presentation by Allan FELS AO (Professor, University of Melbourne, Monash & Oxford and former Chair of the Australian Competition and Consumer Commission) was made during the session on Competition in public markets held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/28n
This presentation by John Davies Freshfields was made during a roundtable discussion on Public interest considerations in merger control held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 14 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/public-interest-considerations-in-merger-control.htm
This presentation by CUTS’ SG Pradeep S Mehta was made during Break-out Session 2: Enforcement in the framework of the discussion on “Overcoming adversity and attaining success: Small and developing competition agencies” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/sda.
This presentation by Bruce LYONS, Professor of Economics and Deputy Director of the ESRC Centre for Policy, University of East Anglia was made during the roundtable discussion on geographic market definition held during the 124th meeting of the OECD Working Party No. 3 on Co-operation and Enforcement on 28 November 2016. More papers and presentations on the topic can be found out at www.oecd.org/daf/competition/geographic-market-definition.htm
HDG - Base Erosion & Profit Shifting (BEPS) - Conceptual Analysis & Country b...Hitesh Gajaria
How Tax Authorities are Globally Coming Together to Combat the Digital Disruption
World's Largest Cab Co ... Owns No Cabs! - (Uber)
Largest Accommodation Provider .... Owns No Real Estate! (Airbnb)
World's Most Valuable Retailer .. Has No Inventory!
World's Largest Movie House ... Owns No Cinemas! (NetFlix)
Most Popular Media Owner .. Creates No Content! (Facebook)
Tax management within multinational enterprises (MNEs) has never been more challenging. 'Getting to grips with the BEPS Action Plan' is the latest Grant Thornton report exploring the OECD’s planned overhaul of the international tax system, what it means for businesses and how they can prepare.
This presentation by Randoph Tritell - US FTC was made during a roundtable discussion on Jurisdictional nexus in merger control regimes held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 15 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/jurisdictional-nexus-in-merger-control-regimes.htm
This presentation by the Austrian Competition Authority was made during Break-out Session 1: Advocacy in the framework of the discussion on “Overcoming adversity and attaining success: Small and developing competition agencies” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/sda.
This presentation by the World Bank was made during Break-out Session 3: Creating Legitimacy in the framework of the discussion on “Overcoming adversity and attaining success: Small and developing competition agencies” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/sda.
This presentation by Johannes Erlandsson from the Swedish Competition Authority was made during the discussion “Safe harbours and legal presumptions in competition law” held at the 128th meeting of the OECD Competition Committee on 5 December 2017. More papers and presentations on the topic can be found out at oe.cd/21v.
This presentation by Mario Umaña of the Inter-American Development Bank was made during Break-out Session 1: Advocacy in the framework of the discussion on “Overcoming adversity and attaining success: Small and developing competition agencies” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/sda.
Transfer Pricing Forum: Transfer Pricing for the International Practitioner, ...Matheson Law Firm
Joe Duffy, Partner in the Tax Group, and Kathryn Stapleton, Solicitor in the Tax Department, co-wrote the Ireland section for Transfer Pricing Forum: Transfer Pricing for the International Practitioner, September 2016.
BEPS: Action #1 - Addressing the tax challenges of the digital economyAlex Baulf
No new taxes or recommendations unique to the digital economy were suggested by the Organisation for Economic Co-operation and Development (OECD) but the door is still open for unilateral safeguard actions.
Compartilho o artigo escrito em coautoria com Ramon Tomazela Santos no qual abordamos um panorama geral sobre preços de transferência no Brasil, publicado em "The Transfer Pricing Law Review - Steve Edge and Dominic Robertson (Ed.)". Confira a íntegra:
With a number of important recent and upcoming developments in the OECD's international tax work, we invite you to join the OECD's Centre for Tax Policy and Administration (CTPA) for the latest tax update. Topics include:
- The BEPS Project: Outcomes from the inaugural meeting of the Inclusive Framework on BEPS, including the latest discussion drafts and progress on implementation.
- The upcoming G20 Tax Policy Symposium.
- The months ahead: Our work programme, and how you can be involved.
Addressing international corporate tax evasion an analysis of the oecd acti...Florian Marchal
This presentation aims to describe the issue around the international tax standards which are not adapted to the ongoing changes in the economy, creating loopholes and opportunities for base erosion and profit shifting. Such issue is currently being tackled and is taking place in a context where the OECD established the BEPS action plan.
This work is based around the following research question: Is the BEPS initiative an appropriate approach to harmonize the international tax system and consequently reduce base erosion and profit shifting?
Director: Professor Jean-Pierre De Laet
Assessor and jury president: Professor Pascal Minne
Bloomberg Tax - Transfer Pricing Forum - The NetherlandsNavita Parwanda
The Summer 2019 Issue of the Transfer Pricing Forum issue contains country insights on “Taxation and digitalization of the economy” and forms an interesting update on the progress so far from 23 geographically spread out nations. The TP forum was showcased at the IFA London Congress in September 2019.
The Country report from the Netherlands focuses on practical questions posed by guidance and case law, including some practical recommendations.
Anatomy of Intangible Transfer Pricing Scheme, With A Focus on Corporate Rest...taxguru5
"Amidst the OECD's inclusionary efforts, many issues remain unresolved, particularly when it comes to the transfer of intangibles for the specific purpose of bus"
TaxGuru is a platform that provides Updates On Amendments in Income Tax, Wealth Tax, Company Law, Service Tax, RBI, Custom Duty, Corporate Law , Goods and Service Tax etc.
To know more visit https://taxguru.in/income-tax/anatomy-intangible-transfer-pricing-scheme-focus-corporate-restructurings.html
Anatomy of Intangible Transfer Pricing Scheme, With A Focus on Corporate Rest...taxguru5
"Amidst the OECD's inclusionary efforts, many issues remain unresolved, particularly when it comes to the transfer of intangibles for the specific purpose of bus"
TaxGuru is a platform that provides Updates On Amendments in Income Tax, Wealth Tax, Company Law, Service Tax, RBI, Custom Duty, Corporate Law , Goods and Service Tax etc.
To know more visit https://taxguru.in/income-tax/anatomy-intangible-transfer-pricing-scheme-focus-corporate-restructurings.html
Dear Readers,
We are pleased to present TransPrice Times for the first fortnight of June 2016.
In this bulletin, OECD continues to propose key inputs and seeks to incorporate major issues and amendments relating to Action 8-10 (Transfer Pricing), Action 13 (CbC reporting) and Action 15 (Multilateral Instruments) of the BEPS Project.
Further, some key issues in the Indian litigation revolving around use of multiple year data, attribution of profits and marketing intangibles are addressed.
We hope you find this newsletter both timely and useful, and we look forward to your feedback and suggestions to improve it further. You can write to us at akshaykenkre@transprice.in
Happy Reading!!!
Dear Readers,
We are pleased to present TransPrice Times for the first fortnight of June 2016.
In this bulletin, OECD continues to propose key inputs and seeks to incorporate major issues and amendments relating to Action 8-10 (Transfer Pricing), Action 13 (CbC reporting) and Action 15 (Multilateral Instruments) of the BEPS Project.
Further, some key issues in the Indian litigation revolving around use of multiple year data, attribution of profits and marketing intangibles are addressed.
We hope you find this newsletter both timely and useful, and we look forward to your feedback and suggestions to improve it further. You can write to us at akshaykenkre@transprice.in
Happy Reading!!!
Transfer Pricing for the International Practitioner, by Julien Monsenego, Tax...Alexandra Moulinneuf
1. What are the main sources of transfer pricing controversy (transfer pricing audits and disputes) in your jurisdiction – e.g., characterization, choice of method, choice of comparables, comparability adjustments, related party agreements and
re-characterization, operation of the transfer pricing policies? Do auditors receive instruction to focus on these areas, or are they main sources of controversy because auditors focus on them by themselves?
2. Do transfer pricing controversies arise more often in certain businesses or industries than in others; and if so, do you see this as being related to the industry’s treatment of the main sources you outlined above, or for some other reason?
3. Are any recent or proposed changes in national statute, case law or guidance (perhaps as a reaction to the BEPS project) generating or expected to generate new transfer pricing controversy?
4. What do you see as the best ways of avoiding controversy – e.g., doing more thorough functional analysis, benchmarking, making comparability adjustments, ensuring that there are detailed transfer pricing agreements or other documentation, or formal or informal agreement with the tax administration?
5. What are the options for achieving a successful outcome of controversy – e.g., settlement through negotiation, alternative dispute resolution, litigation, invoking MAP at an early stage, PA with a roll-back? In your jurisdiction, what are the practical advantages or drawbacks from any of these?
6. How can greater certainty be achieved about the future treatment of transfer pricing arrangements – e.g., APAs, improving the documentation, changing the policies, improving the ways the policies are operated?
Unitary Taxation with a Global Formulary Approach as a Realistic and Appropriate Option for Developing Nations: A China Case Study
This is a Presentation by Kerrie Sadiq
(project funded by the ICTD)
Similar to Summer 2016 Transfer Pricing Briefing (20)
How can hospitalist programs manage the ongoing shift to value-based care, along with operating costs and the challenges of managing, recruiting and retaining high-quality physicians? Read the report to find out.
Capital Markets Insights – Late Fall 2018Duff & Phelps
What’s been an increase in growth and acquisition-related financings and recapitalization transactions? Read the fall edition of Duff&Phelps’ Capital Markets Insights.
Read Duff & Phelps’ detailed synopsis of the latest news and publications issued by France’s AMF affecting the asset management industry during the third quarter of 2018.
Healthcare Services Sector Update – October 2018Duff & Phelps
healthcare m&a advisory, best performing sectors in healthcare, healthcare services industry, m&a advisors in healthcare industry, Healthcare Services Index
In this edition of Regulatory Focus, the experts in Duff & Phelps round up the latest news and publications issued by the Financial Conduct Authority. Read more
Medical Device Contract Manufacturing Update – Fall 2018Duff & Phelps
The global medical devices contract manufacturing market was valued at $70 billion in 2017, and is forecasted to increase to $115 billion in 2022, a compound annual growth rate (CAGR) of 9.5%. Read the Medical Device Contract Manufacturing Update Report for market trends impacting the contract manufacturing organizations (CMO).
The Duff & Phelps cost trend update is now available for both the Construction Cost and Equipment Cost indices. This trend update dates back to 2015 and shows how the last four years has been relatively stable for construction after a decade of volatility, while the equipment cost indices continues to show moderate year-on-year changes. Please be reminded that these indices are just average indicators of change and they are not absolutes. Duff & Phelps advises that after five to seven years, you should establish a new replacement cost basis by using a qualified valuation professional. Please contact Brad Schulz at Duff & Phelps to discuss establishing a new replacement cost basis.
In this edition of Regulatory Focus, the experts in Duff & Phelps round up the latest news and publications issued by the Financial Conduct Authority. Read more
Hedge Fund and Private Equity Fund - Structures, Regulation and Criminal RisksDuff & Phelps
Duff & Phelps Managing Directors Ann Gittleman and Norman Harrison discussed structures, regulation and criminal risks in hedge fund and private equity fund at the Annual FBI conference in Washington, D.C. Read more in this report.
Food and Beverage M&A Landscape - Summer 2018Duff & Phelps
M&A deal activity in the food and beverage industry remains active, with more than 270 deals closed over the last twelve-month (LTM) period ended July 31, 2018. Mega-sized deals continued to make headlines, with several North American transactions closing at multibillion values since our Spring 2018 report. The largest transaction seen was the merger between Keurig Green Mountain Inc. and Dr. Pepper Snapple Group, at a value over $25 billion. Other large transactions include, Conagra Brands’ $10.9 billion acquisition of Pinnacle Foods Inc., a manufacturer and distributor of branded convenience food products in North America, as well as General Mills’ acquisition of Blue Buffalo Pet Products, Inc., a natural pet food company for $8.0 billion.
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
1. 16 5 August 2016 |
www.taxjournal.comInsight and analysis
Shiv Mahalingham
Duff & Phelps
Shiv Mahalingham is managing director,
transfer pricing at Duff & Phelps European
transfer pricing team. He assists clients to manage transfer
pricing issues in line with the commercial needs of the
business. Email: shiv.mahalingham@duffandphelps.com;
tel: 07787 433275
This update sets out a summary of key changes to
international transfer pricing guidance, regulations
and case law that have occurred in the past few months.
OECD consultation on interest deductibility
On 11 July, the OECD issued a discussion draft setting
out recommendations for capping interest deductibility
in an effort to limit excessive interest payments used
in tax avoidance (see bit.ly/29v2joS). This is critical
to transfer pricing policy, as groups will not want to
enter into complex transactions and economic support
analysis if there is going to be a base cap on the level of
deductions available.
z The cap will be based on a fixed-rate ratio, capping
deductions at 10% to 30% of EBITDA. The discussion
draft also explores the following important areas:
z approaches to calculate a group’s net third party
interest expense;
z a definition of group EBITDA; and
z approaches to deal with the impact of losses on the
operation of the group ratio rule.
Recommended actions
Whilst this is an onerous requirement on groups, it
does recognise situations in which companies might
take on large amounts of debt for commercial/non-tax
reasons. In the UK, we have already witnessed banks
holding back finance due to the uncertainty around
leaving the EU; and it is likely that intra-group finance
will need to increase for many groups. Establishing a
commercial trail to support why transactions are entered
into is becoming increasingly important when defending
transfer pricing relating to those transactions.
Note that whilst purist economists will not be
happy with the proposals, safe harbours can reduce the
administrative burden on groups in many situations.
These should be factored into cost benefit analysis
associated with particular financing options.
It is important for impacted groups and industries
(especially real estate, financial services and
infrastructure industries, where EBITDA is not
necessarily an accurate measure of liquidity) to feed
into the discussion process. Responses should be sent by
email to interestdeductions@oecd.org in Word format,
by no later than 16 August 2016.
OECD consultations on profit splits and the
attribution of profits to permanent establishments
On 4 July, the OECD issued discussion drafts relating
to profit splits and the attribution of profits to
permanent establishments (see bit.ly/2aAvW95 and bit.
ly/2aAuTGk).
Attribution of profits to PEs
The recommendations are to align attribution principles
with BEPS action items 8–10 and new guidance in
relation to transfer pricing. There are revised concepts/
guidance relating to:
z ‘regular conclusion’ of contracts;
z anti-fragmentation rules; and
z the principal purpose test.
Profit splits
The recommendations are to improve understanding of
when this method should be preferred and how best it
should be applied. There is a discussion of the following
important items:
z references to profits should apply equally to losses;
z splitting actual profits versus anticipated profits;
z ex ante versus ex post and information reasonably
known/foreseen;
z factoring in uncertainty;
z value chain specifics;
z unique situations (including intellectual property);
and
z choice of allocation keys/factors.
Recommended actions
The attribution discussion draft includes some useful
examples that may help groups to assess risk and could
be applied as a cross check to existing transactions.
The profit split guidance is helpful. Although most
groups do not use this as a primary transfer pricing
method, the guidance will be of use to those groups
which need to corroborate/test their primary method of
transfer pricing.
Interested parties are invited to send their comments
on the discussion drafts by 5 September 2016 by email to
transferpricing@oecd.org.
China formalises value chain requirements into
transfer pricing regulations
On 13 July, the China State Administration of Taxation
(SAT) formalised tax reporting requirements for
multinational companies operating in China, imposing
a value chain analysis (as set out in the September 2015
circular) that may cause more of a company’s profits to
be taxed in China. Some key departures from the OECD
guidance are as follows:
z concept of DEMPEP for intellectual property (the
Briefing
Quarterly transfer pricing
briefing: Summer 2016
Speed read
The major changes to transfer pricing over the last few months
relate to OECD discussion drafts on profit splits and interest
deductions that could alter the manner in which groups are
financed and structured across borders. The recent EC ruling
relating to Starbucks has created a potential inconsistency
between the arm’s length principle and the EU state aid rules.
China has formalised value chain requirements into transfer
pricing regulations. In the US, separate bodies of law professors
have set out arguments purporting that the Tax Court ruling in
the Altera Corp case was wrongly decided.
2. | 5 August 2016 17
www.taxjournal.com Insight and analysis
existing DEMPE functions being development,
enhancement, maintenance, protection and
exploitation, and the additional ‘P’ being promotion;
z a push for location savings/specific advantages;
z value chains to consider assets, costs, sales and total
headcount per division/location; and
z ‘direct’ versus ‘indirect’ economic benefit.
Recommended actions
Groups will have to prepare local transfer pricing files
by June 30 following the year during which the related
party transactions occur. The differences in treatment
with OECD should be respected and render China one
of the ‘first tier’ countries, along with India, Germany
and Italy, that are high risk in terms of transfer pricing
challenge.
EC ruling on the arm’s length principle
On 27 June, the European Commission published
the non-confidential version of its final decision
of 21 October 2015 ruling relating to the state aid
investigation into the advance pricing agreement
granted to Starbucks. The ruling has created a potential
inconsistency between the arm’s length principle
and the EU state aid rules. It was a matter of time
before this issue arose in the international regulatory
framework, with advance pricing agreements providing
an important tool in tax certainty weighed against tax
administrations being criticised for offering agreements
on taxation to encourage investment.
The European Commission ruling
relating to Starbucks has created a
potential inconsistency between the
arm’s length principle and the EU state
aid rules
The commission acknowledged that the ruling
assessing the amount of royalty payments paid from
the UK to the Netherlands, in which the payments were
received as a tax deductible royalty, may differ from
the OECD interpretation for similar transactions. (This
is particularly affected by whether failure to adhere
to the arm’s length principle created an unfair market
distortion; and may constitute a different analysis to that
required under the OECD model tax convention.) The
ruling went so far as to state:
‘for any avoidance of doubt, the arm’s length principle
that the Commission applies in its state aid assessment
is not that derived from article 9 of the OECD Model
Tax Convention, which is a non-binding instrument
… [The arm’s length principle is] a general principle
of equal treatment in taxation under the EU’s binding
treaty.’
Recommended actions
Whilst the EC ruling has raised some issues around
consistency, agreements with tax administrations
(whether formal advance pricing agreements or
informal discussion with tax inspectors) will continue
to be an important tool in achieving certainty. However,
there is no substitute for a commercially chosen, non-
aggressive and well documented transfer pricing policy
that does not draw scrutiny from tax administrations.
IRS Altera case and ongoing challenges/appeals
My first transfer pricing this year (see Tax Journal,
5 February 2016) set out the court decision and petition
filed in Altera Corp v Commissioner (TC docket no.
31538-15), challenging the IRS decision on the issue of
whether stock-based compensation (SBCs) should be
included in a cost sharing arrangement.
The company filed its petition on 18 December 2015,
noting that the IRS based the income adjustments not
on 2003 regulations, but on temporary and permanent
cost sharing regulations adopted in 2009 and 2011,
respectively. Altera argued that the requirements of all
versions of the regulations are essentially the same and
are invalid on the same grounds; and the Tax Court
ruled that Treasury erred in promulgating the regulation
because it failed to consider stakeholder commentary that
unrelated parties never share the cost of SBC. Its failure to
explain why it disregarded that evidence, the court said,
violated the Administrative Procedure Act.
On 1 and 5 July, separate bodies of law professors set
out arguments purporting that the Tax Court was wrong
and that the above mentioned cost-sharing regulation is
reasonable under the IRS commensurate-with-income
standard. In tax code section 482, which governs
transfer pricing, they said.
Recommended actions
Many groups are not including SBCs in cost sharing
anymore (and have adjusted FY 2014 filings where they
could avoid a secondary adjustment). Most point to
the economic substance of agreements, stating that the
parties only shared SBC’s because the regulations said
they were required to as a basis for application in FY
2014. Many other groups are amending agreements with
effect from FY 2015 to reflect this.
Certain groups have attempted to take a financial
statement benefit for any potential clawback, as well as
for the current year, but many have elected not to take
a financial statement benefit. It is up to each group to
review and to articulate its position on a consistent and
reasonable basis. Some groups have excluded SBC’s from
management charges (and applied the comparability
standard, changed the mark-up basis and removed SBCs
from the cost base).
What to look out for in the next few months
On occasion, tax administrations release unpopular
‘summer’ regulations/guidance that can catch the industry
off guard if one is focused on much needed holidays. So
keep one eye on the stream of alerts and articles that are
still being generated (and have safe travels). ■
For related reading visit www.taxjournal.com
X Quarterly transfer pricing briefing: 2015/16 (Shiv Mahalingham,
3.2.16)
X 20 questions on state aid and tax (Jonathan Hare, Stephen Morse
& Peter Halford, 24.2.16)
X 30 questions on BEPS (Jill Gatehouse & Susanna Brain, 29.10.15)
X Tax deductibility of corporate interest: the new consultation
(Daniel Head & John Monds, 19.5.16)
X BEPS: Preventing the artificial avoidance of the permanent
establishment status (Alison Lobb, 29.10.15)
X BEPS: Interest deductions and other financial payments (Charles
Yorke, 29.10.15)