Countries agree on proposals to fix digital economy taxation

OECD seeking input on digital economy taxation

While members of the Inclusive Framework on BEPS did not yet agree on the conclusions, they committed to work together to deliver a final report in 2020, with an update in 2019

Georgia ratifies BEPS MLI

Members of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) today adopted a work plan setting out a process for reaching a new global agreement on addressing tax challenges posed by the digital economy.

The work plan explores the technical issues relating to digital economy taxation to be resolved through the two main pillars.

Pillar 1

The first pillar will explore potential solutions for determining where tax should be paid and on what basis (nexus), as well as what portion of profits could or should be taxed in the jurisdictions where clients or users are located (profit allocation).

Three proposals have been articulated in particular: the user participation proposal, the marketing intangibles proposal, and the significant economic presence proposal.

These proposals allocate more taxing rights to the market jurisdictions in situations where value is created by a business activity through (possibly remote) participation in that jurisdiction that is not recognized in the current framework for allocating profits, the report notes.

Further, these proposals contemplate the existence of a nexus in the absence of physical presence, contemplate using the total profit of a business, contemplate the use of simplifying conventions (including those that diverge from the arm’s length principle) to reduce compliance costs and disputes, and would operate alongside the current profit allocation rules, the report adds.

Pillar 2

The second pillar pertains to the design of a system to ensure that MNEs pay a minimum level of tax. This pillar would provide countries with a new tool to protect their tax base from profit shifting to low or no-tax jurisdictions, and is intended to address remaining issues identified by the BEPS project.

The report confirms that members of the Inclusive Framework on BEPS agree that any rules developed under this Pillar should not result in taxation where there is no economic profit, nor should they result in double taxation.

While members of the Inclusive Framework on BEPS did not yet agree on the conclusions to be drawn, they committed to continue working together to deliver a final report in 2020 aimed at providing a consensus-based long-term solution, with an update in 2019, the report notes.

The work plan was approved during the May 28-29 plenary meeting of the Inclusive Framework on BEPS, which brought together 289 delegates from 99 member countries and jurisdictions and 10 observer organizations.

OECD Secretary General Angel Gurría said: “Important progress has been made through the adoption of this new ‘Programme of Work,’ but there is still a tremendous amount of work to do as we seek to reach, by the end of 2020, a unified long-term solution to the tax challenges posed by digitalization of the economy.”

“Today’s broad agreement on the technical roadmap must be followed by a strong political support toward a solution that maintains, reinforces, and improves the international tax system. The health of all our economies depends on it.”


The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also  regularly writes news stories about transfer pricing and international tax law. Alex is reachable at editor@transferpricingnews.com  

Delving into Hong Kong’s New Transfer Pricing Landscape

Delving into Hong Kong’s New Transfer Pricing Landscape

By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Principal, Transfer Pricing Services, SKP Group)


On July 4, 2018, Hong Kong’s Inland Revenue Department passed the country’s final Inland Revenue (Amendment) (No. 6) Bill 2017, (the Amendment Bill). 

This Amendment Bill (which became law on July 13, 2018) specified the documentary requirements from a transfer pricing perspective and also introduced measures to address various recommendations under BEPS Action Plans.Continue Reading

Hong Kong tax authority notes CbC reporting deadline details

Hong Kong tax authority notes CbC reporting deadline details

Hong Kong Inland Revenue Department has clarified that starting from April 2019, the Department will not accept voluntary filing of a country-by-country (CbC) report for an accounting period ended on or before March 31, 2018.Continue Reading

Manuel Koch joins transfer pricing specialist Questro’s Stuttgart office

Transfer pricing specialist Questro International has hired Manuel Koch as a Partner for the firm’s office in Stuttgart, Germany.

Koch brings significant experience of over ten years specialization in transfer pricing consulting. Koch has wide experience in international tax planning engagements for international corporates including holding and principal structures as well as Swiss finance branches and IP boxes.Continue Reading

Jill Weise to lead Duff & Phelps’ transfer pricing practice

Global advisory firm Duff & Phelps has announced that Jill Weise will succeed Michael Heimert as the Global Leader for the firm’s transfer pricing practice.

Weise has nearly 25 years of expertise in transfer pricing. She previously served as the firm’s transfer pricing practice leader for North America.
  Continue Reading

Indian tax authority sets new CbC reporting deadline for US subsidiaries

Indian tax authority sets new CbC reporting deadline for US subsidiaries

By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)


In India, the 2016 Finance Act introduced a three-tiered transfer pricing documentation regime with a view to aligning the Indian transfer pricing documentation rules with Action 13 of the OECD’s base erosion and profit shifting (BEPS) project.

Accordingly, Indian subsidiaries of multinational groups were required to comply with new “master” and “local” files requirements and a new country-by-country reporting requirement from the 2016-17 financial year.Continue Reading

Transfer pricing expert Mark Madrian joins Valentiam Group

Transfer pricing expert Mark Madrian has joined Valentiam Group as a Partner in the firm’s West Coast practice.

Madrian has advised clients on complex cross-border transfer pricing and other international tax issues. He was recently recognized as a Leading Transfer Pricing Adviser by Legal Media.
Continue Reading

Saudi tax authority publishes draft transfer pricing bylaws

Saudi tax authority publishes draft transfer pricing bylaws

By Anas Salhieh  (Senior Tax Executive, Al Tamimi & Company, Riyadh, Saudi Arabia)


Saudi Arabia’s General Authority for Zakat and Income Tax has published for public comments draft transfer pricing bylaws as part of the Kingdom of Saudi Arabia’s commitment to the OECD’s base erosion and profit shifting (BEPS) project.Continue Reading

BEPS MLI to enter into force in Australia in January 2019

BEPS MLI to enter into force in Australia in January 2019
From January 1, 2019, the BEPS MLI will operate to modify six of Australia’s 44 bilateral tax treaties. These include tax treaties with France, Japan, New Zealand, Poland, the Slovak Republic, and the UK.Continue Reading

Gibraltar provided illegal tax benefits to MNEs: EU Commission

EU Commission says Gibraltar provided illegal tax benefits to MNEs

Gibraltar must recover unpaid taxes of around EUR100m from companies that benefited from the corporate tax exemption regime for interest and royalties as well as from the five tax rulings.Continue Reading

OECD issues second peer review report on BEPS Action 5

OECD issues second peer review report on BEPS Action 5

The OECD has made 60 jurisdiction-specific recommendations on issues such as improving the timeliness of the exchange of information and ensuring that exchanges of information are made with respect to preferential tax regimes that apply to income from intellectual property.Continue Reading

Bulgaria introduces new interest limitation and CFC regimes

Bulgaria introduces new interest limitation and CFC regimes

By Elizabeth Sidi (Senior Tax Consultant, PwC, Bulgaria) 

Bulgaria is introducing new interest limitation rules and a new controlled foreign corporation regime from January 1, 2019. 

Continue Reading

Indian tax authority undergoing ratification process for BEPS MLI

Indian tax authority undergoing ratification process for BEPS MLI

Important process of ratifying the BEPS MLI is on. In 2019-2020, the provisions will come into effect, says Akhilesh Ranjan.

Continue Reading

New Agreement between Ireland and Malta to counteract the ‘Single Malt’ tax structure

New Agreement between Ireland and Malta to counteract the ‘Single Malt’ Structure

By Catherine O’ Meara (Partner, Matheson, Dublin) and Brian Doohan (Senior Associate, Matheson, Dublin)

On November 27, 2018, Ireland’s Finance Minister Paschal Donohoe announced the details of a Competent Authority Agreement between Ireland and Malta (Agreement). The clear aim of the Agreement is to end what is referred to as the “Single Malt” tax structure.Continue Reading

Belgium publishes draft transfer pricing guidance for public comments

Belgium publishes draft transfer pricing guidance for public comments

By Bram Markey (Director, Transfer Pricing, PwC Belgium)

The Belgian tax authority has issued a draft Circular on the 2017 update to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.Continue Reading

India, Hong Kong tax treaty to take effect from April 2019

India, Hong Kong tax treaty to take effect from April 2019

The tax treaty provides for a low withholding tax rate of five percent for dividend payments. Interest, royalties, and fees are subject to a low withholding tax rate of ten percent.Continue Reading

BDO Melbourne Gets New Tax Partner in Michael Smith

Michael Smith has joined BDO Melbourne’s transfer pricing team as a partner.

Smith has nearly 20 years’ of transfer pricing experience from around the world. He has worked in London, New York, and Sydney.   Continue Reading

India, China Sign Tax Treaty Protocol to Implement BEPS Minimum Standards

India, China Sign Tax Treaty Protocol to Implement BEPS Minimum Standards

India has signed a Protocol to amend its tax treaty with China.

The Protocol incorporates changes required to implement tax treaty-related minimum standards agreed under the base erosion and profit shifting (BEPS) project.
Continue Reading

Transfer Pricing Regime in Panama: Present and Future

Dealing with cases that have potential transfer pricing implications in Panama requires a high level of expertise in the realm and an extended experience in cases where the common OECD practices are not applicable (Panama is not a member of the OECD).

Panama’s transfer pricing regime constitutes a hybrid insofar as OECD Transfer Pricing Guidelines are concerned. While the OECD Transfer Pricing Guidelines cannot be applied directly, they could be relied upon for interpreting rules provided they are not in conflict with the Panamanian Tax Law. Thus, a transfer pricing study undertaken by one experienced in non-OECD tax jurisdictions – such as www.transferpricing.com.cy – is recommended.Continue Reading

EU Joint Transfer Pricing Forum Issues Recommendations on Multilateral Transfer Pricing Audits

EU Joint Transfer Pricing Forum Issues Recommendations on Multilateral Transfer Pricing Audits

By Bram Markey (Director, Transfer Pricing, PwC Belgium)

The EU Joint Transfer Pricing Forum has published a report, which aims to address the lack of guidance on bilateral and multilateral transfer pricing audits.
Continue Reading

Global Solution Needed to Tax Digital Economy: DIGITALEUROPE

Global Solution Needed to Tax Digital Economy: DIGITALEUROPE

DIGITALEUROPE, which represents the digital technology industry in Europe, has called upon governments to negotiate a comprehensive, global, long-term tax solution at the OECD-level to address the tax challenges of the digital economy.
Continue Reading

Google, Facebook to Appear Before EU Tax Committee

Google, Facebook to Appear Before EU Tax Committee
European Parliament’s Special Committee on Tax Avoidance (TAX3) is going to hold a hearing on November 27 with representatives from the Kering Group, Google, and Facebook.
 

The aim of the hearing is to assess the progress made by these multinational enterprises in the implementation of the base erosion and profit shifting project.Continue Reading

Ireland Consulting on Corporate Anti-Tax Avoidance Measures

Ireland Consulting on Corporate Anti-Tax Avoidance Measures

On November 14, 2018, Ireland’s Department of Finance published for public comments a consultation document on the hybrid mismatch and interest limitation measures to be introduced as part of the implementation of the EU Anti-Tax Avoidance Directives (ATAD and ATAD2).
Continue Reading

Transfer Pricing Compliance in China: Preventing Disputes is Key

China’s colossal economy and its predominant role within the global market result in the emergence of an increasing interest towards China’s transfer pricing regime. Since China is not a member of the OECD, any transfer pricing endeavor goes far beyond the classic transfer pricing practices, though.Continue Reading

Transfer Pricing Regulation in Albania and Recent Developments

Transfer Pricing Regulation in Albania and Recent Developments

By Erinda Xhaferraj (Tax Manager, PwC, Albania) and Edland Graci (Transfer Pricing Senior Associate, PwC, Spain)

The amendment in 2014 of Albania’s Income Tax Law and the release of the Transfer Pricing Instruction introduced changes that are of importance to Albanian taxpayers performing cross-border transactions. For the first time taxpayers were faced with a complex and sophisticated legislation, which required the application of arm’s length in intra-group transactions.Continue Reading

OECD Seeks Input on MAP Peer Reviews of Further Eight Jurisdictions

OECD Seeks Input on MAP Peer Reviews of Further Eight Jurisdictions

The OECD is seeking taxpayers’ input for the seventh round of base erosion and profit shifting (BEPS) Action 14 Stage 1 peer reviews of further eight jurisdictions.
Continue Reading

OECD Issues Guidance on the Impact of BEPS MLI

OECD Issues Guidance on the Impact of BEPS MLI

The OECD has published new guidance for the development of synthesised texts to facilitate the interpretation and application of tax agreements modified by the Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting (BEPS MLI).Continue Reading

Countries Discuss Implementation of BEPS Minimum Standards

Countries Discuss Implementation of BEPS Minimum Standards

More than 60 delegates from 16 countries met recently at the regional meeting of the Inclusive Framework on base erosion and profit shifting (BEPS) in Eastern Europe and Central Asia to discuss implementation of the BEPS measures.Continue Reading

Manal Corwin to Lead KPMG’s Washington National Tax practice

Audit, tax, and advisory firm KPMG LLP has named Manal S. Corwin as the principal-in-charge of the firm’s Washington National Tax practice.

Corwin is based in Washington DC and succeeds Joe Pari. Corwin has served the firm for over five years as national leader of the firm’s International Tax practice and principal-in-charge of international tax policy.Continue Reading

Curtis Best Joins Andersen Tax as Managing Director

Curtis Best has joined the New York office of Andersen Tax as Managing Director. 

Curtis has over 26 years of experience in several areas, including international tax structuring. Best will be a part of the firm’s Commercial Practice group, with a particular focus in international services.Continue Reading

Former US Committee on Ways and Means Tax Counsel Joins Miller & Chevalier

Loren Ponds has joined US law firm Miller & Chevalier as a Member in the firm’s tax department.

Previously, Ponds served as Tax Counsel to the US House of Representatives Committee on Ways and Means, where she was instrumental in the development of the international tax provisions included in the Tax Cuts and Jobs Act of 2017.Continue Reading

Indian Tax Tribunal Allows Claim of Expenses by Mauritian PE

Indian Tax Tribunal Allows Claim of Expenses by Mauritian PE

By Ritu Shaktawat (Partner, Khaitan & Co, India) and Shabnam Shaikh (Principal Associate, Khaitan & Co, India)

In a decision delivered on October 5, India’s Income Tax Appellate Tribunal, New Delhi ruled that the Indian Income Tax Act cannot limit the claim of expenses of a permanent establishment in the absence of such limitation in the India-Mauritius tax treaty.Continue Reading

Tax Officials Discuss BEPS Implementation Challenges

Tax Officials Discuss BEPS Implementation Challenges

Senior tax experts met at an event in Portugal on October 23 to discuss the strategic importance of the OECD’s work on base erosion and profit shifting (BEPS) and the challenges faced by tax administrations in implementing the BEPS proposals.Continue Reading

Further Three Jurisdictions Join BEPS Inclusive Framework

Further Three Jurisdictions Join BEPS Inclusive Framework

Antigua and Barbuda, Dominica, and Saint Vincent and the Grenadines have newly joined the OECD’s Inclusive Framework on base erosion and profit shifting (BEPS).

The Inclusive Framework on BEPS allows interested countries and jurisdictions to work with the OECD and Group of Twenty nations on monitoring the implementation of the BEPS proposals.Continue Reading

New Japan, Spain Tax Treaty to Include MAP Arbitration

New Japan, Spain Tax Treaty to Include MAP Arbitration

Japan and Spain signed a new tax treaty on October 16. The tax treaty wholly amends the existing tax treaty between Japan and Spain, which entered into force in 1974.

As per the new tax treaty, a withholding tax exemption applies to investment income from interest and royalties. Withholding tax on dividends is also exempt in certain situations.Continue Reading

Switzerland Expands Country List for Exchange of CbC Reports

Switzerland Expands Country List for Exchange of CbC Reports

The Swiss Federal Council on October 17 decided to expand the list of countries with which Switzerland would exchange country-by-country (CbC) reports.

The legal basis for the exchange of CbC reports entered into force for Switzerland on December 1, 2017. Switzerland had then submitted to the OECD a list of 108 countries with which the Government will exchange CbC reports.Continue Reading

Mutual Agreement Procedure Statistics Published for 2017

Mutual Agreement Procedure Statistics Published for 2017

The OECD on October 10 published its 2017 mutual agreement procedure (MAP) statistics covering 85 tax jurisdictions.

According to the 2017 MAP statistics, new transfer pricing MAP cases are up by 25 percent and other MAP cases by 50 percent. Anecdotal evidence suggests that the increase in new MAP cases is due to a range of factors including the effects of the new reporting framework and increased awareness of and expectations from taxpayers about MAP, the OECD noted.Continue Reading

Liberia: Where Transfer Pricing is in Full Bloom

Liberia is a typical example amongst developing African countries making noticeable effort to expand their tax base to the size it should appropriately be, therefore collecting more taxes and adapting to the fast-changing local and global business environment.Continue Reading

Belgium Announces Cooperative Tax Compliance Program

Belgium Announces Cooperative Tax Compliance Program

By Bram Markey (Director, Transfer Pricing, PwC Belgium)

The Large Enterprises Division of the Belgian tax administration has announced the launch of a two-year pilot project aimed at transforming the traditional approach of ex-post tax investigations towards a system of proactive, real-time, and constructive dialogue on corporate tax affairs.

Continue Reading

Countries Share Ideas on Country by Country Reporting Implementation

Countries Share Ideas on Country by Country Reporting Implementation

Senior tax officials from over 20 countries recently met at a workshop to share experiences from the first year of country-by-country (CbC) reporting and explore how information can be used most effectively in the tax risk assessment of MNE groups.Continue Reading

Aruba Newest to Join BEPS Inclusive Framework

Aruba Newest to Join BEPS Inclusive Framework

Aruba has now joined the OECD’s Inclusive Framework on base erosion and profit shifting (BEPS).

The Inclusive Framework on BEPS allows interested countries and jurisdictions to work with the OECD and Group of Twenty nations on monitoring the implementation of the BEPS proposals.Continue Reading

More Countries Ratify BEPS Convention

More Countries Ratify BEPS Convention

Australia, France, Japan, and the Slovak Republic have deposited their instruments of ratification of the OECD’s Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS).

For these four countries, the BEPS Convention would enter into force from January 1, 2019. The Convention entered into force last month for New Zealand, Serbia, Sweden, and the UK.Continue Reading

Israel Introduces New Transfer Pricing Safe Harbor Rules

Israel Introduces New Transfer Pricing Safe Harbor Rules

By Adv. (Eco.) Eyal Bar-Zvi (Partner and Head of Transfer Pricing, Herzog Fox & Neeman)

The Israel Tax Authority, on September 5, 2018, published two safe harbor Circulars (which remained in draft mode for several months), noting the tax authority’s expected profit levels for marketing services and for low-risk distributorship activities carried out in Israel by multinational entities (MNEs), and providing guidance on non-value-added services.Continue Reading

Saudi Arabia Signs OECD’s BEPS Multilateral Instrument

Saudi Arabia Signs OECD’s BEPS Multilateral Instrument

Saudi Arabia has become the 84th tax jurisdiction to sign the base erosion and profit shifting (BEPS) Multilateral Convention.

The BEPS Convention, negotiated by over 100 countries and jurisdictions, updates the existing network of 1,400 bilateral tax treaties and reduces opportunities for tax avoidance by multinational enterprises.Continue Reading

ICC Welcomes OECD Draft on Transfer Pricing Aspects of Financial Transactions

ICC Welcomes OECD Draft on Transfer Pricing Aspects of Financial Transactions

The International Chamber of Commerce (ICC) has largely welcomed the OECD’s public discussion draft on the transfer pricing aspects of financial transactions.

The discussion draft deals with follow-up work in relation to base erosion and profit shifting (BEPS) Actions 8-10, on assuring that transfer pricing outcomes are in line with value creation.Continue Reading

Charles Rettig Confirmed as US IRS Commissioner

The US Senate has, by a 64 – 33 vote, confirmed Charles Rettig to be the new Internal Revenue Service (IRS) Commissioner.

During his more than 35 years of professional career with Hochman, Salkin, Rettig, Toscher & Perez, PC, Rettig represented numerous taxpayers before every administrative level of the IRS as well as in matters before the Tax Division of the US Department of Justice, and various other tax authorities.Continue Reading

Former OECD Transfer Pricing Head Joins Squire Patton Boggs

Former OECD Head of Transfer Pricing, Jefferson P. VanderWolk, has joined international law firm Squire Patton Boggs as a partner in the Tax Strategy & Benefits Practice. VanderWolk will work from the firm’s Washington DC office.Continue Reading

BEPS Instrument to Enter into Force in January 2019 for Israel, Lithuania

BEPS Instrument to Enter into Force in January 2019 for Israel, Lithuania

Israel and Lithuania have newly deposited with the OECD their instrument of ratification for the Multilateral Instrument to implement tax treaty-related base erosion and profit shifting (BEPS) measures.Continue Reading

Transfer Pricing Regulations Revised in Nigeria: Some Highlights

Transfer Pricing Regulations Revised in Nigeria: Some Highlights

By Amaka Samuel Onyeani (Senior Manager, Transfer Pricing, Andersen Tax, Nigeria) & Abisola Agboola (Assistant Manager, Transfer Pricing, Andersen Tax, Nigeria)

Nigeria’s Federal Inland Revenue Service (FIRS) recently released the revised Income Tax (Transfer Pricing) Regulations, 2018 (the Transfer Pricing Regulations). The Transfer Pricing Regulations are one of the efforts of the FIRS in improving the administration of transfer pricing in the country, increasing revenue collection via taxes, and protecting Nigeria’s tax base.Continue Reading

Transfer Pricing Aspects of Financial Transactions: Read TEI’s Comments

Transfer Pricing Aspects of Financial Transactions: Read TEI’s Comments

The Tax Executives Institute has responded to the OECD’s public discussion draft on the transfer pricing aspects of financial transactions.

The discussion draft deals with follow-up work in relation to base erosion and profit shifting (BEPS) Actions 8-10, on assuring that transfer pricing outcomes are in line with value creation.Continue Reading

OECD Transfer Pricing Profiles for 7 More Countries Published

OECD Transfer Pricing Profiles for 7 More Countries Published

The OECD has published new transfer pricing country profiles for Costa Rica, Greece, Republic of Korea, Panama, Seychelles, South Africa, and Turkey. The OECD has also updated the information contained in Singapore’s profile.Continue Reading

Draft Tax Proposal Drastically Expands Scope of Finnish CFC Regime

Draft Tax Proposal Drastically Expands Scope of Finnish CFC Regime

By Mika Ohtonen (Head of Tax, Roschier, Finland) & Laura Puro (Senior Associate, Roschier, Finland)

Finland’s Ministry of Finance last month published a draft proposal on amending the Finnish controlled foreign corporation (CFC) statute. While the purpose of the draft is to implement the CFC provisions of the Anti-Tax Avoidance Directive (ATAD), the proposed changes are materially stricter than required by the ATAD.Continue Reading

Countries Lowering Corporate Income Tax Rates

Countries Lowering Corporate Income Tax Rates

A new OECD report reveals that countries have used recent tax reforms to lower corporate income tax.

Tax Policy Reforms 2018 highlights the continuation of a trend toward corporate income tax rate cuts, which has been largely driven by significant reforms in a number of large countries with traditionally high corporate tax rates.Continue Reading

Indian Tax Authority Extends ‘Significant Economic Presence’ Consultation Deadline

Indian Tax Authority Extends ‘Significant Economic Presence’ Consultation Deadline

India’s tax authority has extended the earlier deadline of August 10 to submit comments on the newly introduced “significant economic presence” test to tax profits of foreign businesses.Continue Reading

Finland Consulting on Draft Controlled Foreign Corporation Rules

Finland Consulting on Draft Controlled Foreign Corporation Rules

By Sami Tuominen (Partner, Head of Tax, Bird & Bird, Finland) &  Marianna Santamala (Associate, Bird & Bird, Finland)

The Finnish Ministry of Finance recently proposed amendments to the current Finnish legislation concerning controlled foreign corporations (CFC). On August 6, 2018, the Finance Ministry submitted a proposal for Government Bill on the amendments to the Act on taxation of members of controlled foreign companies (Act). The Act is currently going through a consultation round and the Ministry would accept input until the end of this month. The purpose of the Act is to prevent the avoidance of taxation in Finland by utilizing corporations established in states with low taxation.Continue Reading

Transfer Pricing Adjustment Rules Amended in Mexico

Transfer pricing adjustment rules amended in Mexico

By Ricardo Rendón (Partner, Chevez, Ruiz, Zamarripa y Cía, S.C., Mexico)

The Mexican tax authorities last month issued the Second Resolution of modifications to the 2018 Miscellaneous Tax Resolution (MTR) in which the rules regarding transfer pricing adjustments were amended and certain additional provisions were included. This article discusses the relevant modifications to the miscellaneous tax rules on transfer pricing adjustments.Continue Reading

Transfer Pricing Documentation: Belgium Gazettes Administrative Fines

Transfer Pricing Documentation: Belgium Gazettes Administrative Fines

By Stefaan De Ceulaer (Director, Tax and Legal Support, PKF International)

The Belgian Parliament on June 29 adopted the Programme Act, which introduces in Belgian tax law specific transfer pricing documentation requirements, that is, in article 321/1 to 321/7 of the Income Tax Code (Programme law of July 1, 2016 gazetted on July 4, 2016), in response to Action 13 of the OECD’s base erosion and profit shifting (BEPS project.  Continue Reading

Transfer Pricing Documentation Regime Being Revised in Poland

Transfer Pricing Documentation Regime Being Revised in Poland

By Marcin Jamroży (Associate Professor, Warsaw School of Economics, and Partner, Rödl & Partner, Poland)

Poland’s Finance Ministry recently published a draft tax Bill to implement key changes to the country’s transfer pricing documentation rules. The draft Bill is aimed at simplifying Poland’s transfer pricing regulations and lowering the bureaucratic and administrative burden for enterprises. The philosophy of a simple, transparent, and friendly tax system should be written into the law. At the same time, it is underlined that the draft Bill should be sealed against loopholes and incorporate the new OECD recommendations. The new regulation is proposed to be effective from January 1, 2019.Continue Reading

Spain’s Patent Box Regime Aligned with BEPS Action 5

Spain's Patent Box Regime Aligned with BEPS Action 5

By Mario Ortega Calle (Partner, Garrigues, Madrid) and Laura Jiménez (Associate, Garrigues, Madrid)

Spain’s General State Budget for 2018, published by Law 6/2018 of July 3, 2018, in the Official Gazette, has amended the country’s patent box regime to bring it in further alignment with the “nexus approach” developed by the OECD under Action 5 of the base erosion and profit shifting (BEPS) project.Continue Reading

Australian Taxation Office Issues Draft Guidance on Related Party Financing Arrangements

Australian Taxation Office Issues Draft Guidance on Related Party Financing Arrangements

The Australian Taxation Office (ATO) has published for public comments Schedule 2 to Practical Compliance Guideline (PCG) 2017/4DC, which discusses the tax authority’s  compliance approach to tax issues relating to cross-border, related-party financing arrangements and related transactions.Continue Reading

US Transfer Pricing Examination Process: A Critique

US Transfer Pricing Examination Process: A Critique

By Ross B. Newman (CEO and Chief Economist with Altus Economics and Chairman of the Altus Transfer Pricing Network) 

The US Internal Revenue Service (IRS) on June 29 issued the Transfer Pricing Examination Process (TPEP), which replaces the 2014 Transfer Pricing Audit Roadmap (Roadmap) and provides a guide to best practices and processes involved in the three phases of a transfer pricing examination: planning, execution, and resolution.

Continue Reading

Taiwan Begins International Tax Training for 2018

Taiwan Begins International Tax Training for 2018

Taiwan’s Finance Ministry is holding the 2018 International Tax Academy from July 30 to August 17 this year.

The event was launched in 1984 and is conducted every year in cooperation with the School of Law of Southern Methodist University.Continue Reading

New Mexican Transfer Pricing Adjustment Regulations Explained

New Mexican Transfer Pricing Adjustment Regulations Explained

By Guillermo Villaseñor-Tadeo (Partner, Sánchez Devanny, Mexico) and Pedro Palma-Cruz (Attorney, Sánchez Devanny, Mexico)

Mexico’s Tax Administration Service on July 11, 2018, updated the country’s existing regulations concerning transfer pricing adjustments as set out in rules 3.9.1.1 to 3.9.1.5 of the Resolución Miscelánea Fiscal. The changes are aimed at clarifying many questions that arose from the enactment of the first set of regulations on transfer pricing adjustments last year. In broad terms, the regulations can be classified as: definition and types, application, requirements, and timing issues and deadlines. These are discussed below.Continue Reading

Franka Sturm Joins Houthoff’s Tax Practice as Counsel

Houthoff, one of the largest law firms in the Netherlands, has hired Franka Sturm as Counsel for the firm’s tax practice.

Sturm has over 13 years of experience as a tax specialist in international practice with a focus on M&A and oil and gas.

Before joining Houthoff, Sturm worked with the Dutch Tax and Customs Administration and with PwC as a Senior Tax Manager.

‘Significant Economic Presence’ – Missing Pieces of the Indian Tax Puzzle!

‘Significant Economic Presence’ – Missing Pieces of the Indian Tax Puzzle!

By Ritu Shaktawat (Associate Partner, Khaitan & Co, India) and Krutika Chitre (Associate, Khaitan & Co, India)

Ritu Shaktawat and Krutika Chitre of Khaitan & Co discuss the consultation document addressing the tax challenges of digital economy released by Indian’s Central Board of Direct Taxes on July 13, 2018.

Soon after having introduced ‘Google Tax’ in 2016, India becomes one of the first tax jurisdictions to treat ‘significant economic presence’ of a foreign enterprise as its taxable presence in India (effective from April 1, 2018 (that is, from assessment year 2019-20)).Continue Reading

Altera and the Arm’s Length Standard

Altera and the Arm’s Length Standard

By Reuven Avi-Yonah (Irwin I. Cohn Professor of Law, University of Michigan)

On July 24, 2018, the Ninth Circuit Court of Appeals reversed the US Tax Court decision in Altera Corp. v. Commissioner, 145 T.C. 91 (July 27, 2015), which had invalidated Treas. Reg. § 1.482- 7A(d)(2).[1]Continue Reading

Baker McKenzie Elects New Tax Partners

Law firm Baker McKenzie has announced the election of 13 new tax partners.

The newly elected partners are: Michael Nixon (Singapore), Simone Bridges (Sydney), Kirill Vikulov (Moscow), David Jamieson (London), Jessica Eden (London), Rodrigo Castillo Cottin (Bogota), Paul F. DePasquale (New York), Tatyana Johnson (New York), Victor Alejandro Morales-Chavez (Mexico City), Jonathan Welbel (Chicago), Joshua Nixt (New York), Andrew C. O’Brien-Penney (Chicago), and Ivan Tsios (Chicago).Continue Reading

WZ Advogados Gets New Tax Partner in Artur Braga

Artur Braga has joined São Paulo firm WZ Advogados as a Tax Partner.

Braga joined WZ Advogados after a 20-year career at Ernst and Young (EY). Braga specializes in advising clients in cross-border tax planning, tax litigation, audit reviews, mergers and acquisitions, and corporate restructurings.Continue Reading

New Italian Transfer Pricing Guidelines Explained

New Italian Transfer Pricing Guidelines Explained

By Diletta Fuxa (Senior Manager), Studio Associato Servizi Professionali Integrati, Member of Fieldfisher

On May 14, 2018, Italy’s Ministry of Economy and Finance issued a Decree, which lays down new transfer pricing guidelines in compliance with the provisions set forth in article 110 (7) of the Income Tax Code (Testo Unico delle Imposte sui Redditi).Continue Reading

Report on Taxation of Offshore Indirect Transfer of Assets Issued

Report on Taxation of Offshore Indirect Transfer of Assets Issued

The Platform for Collaboration on Tax – a joint initiative of the IMF, the OECD, the UN, and the World Bank Group – has published for public comments a revised version of its report on taxation of offshore indirect transfers of assets.Continue Reading

No Indian Permanent Establishment for Nokia, But Concerns Remain

No Indian Permanent Establishment for Nokia, But Concerns Remain

By Daksha Baxi (Head of International Taxation, Cyril Amarchand Mangaldas) and Jyoti Anumolu (Associate, Cyril Amarchand Mangaldas)

India’s Income Tax Appellate Tribunal (ITAT) at New Delhi last month delivered a significant decision in the case of Nokia Networks OY (taxpayer) on the issue of whether it’s Indian subsidiary, Nokia India Private Limited (NIPL) (which was assigned installation contracts by the taxpayer or entered into independent installation contracts with customers) constituted a permanent establishment (PE) for the taxpayer.Continue Reading

Guernsey Signs New Tax Treaty With UK

Guernsey Signs New Tax Treaty With UK

Guernsey has signed a new tax treaty with the UK. The new tax treaty replaces the one that has been in force since 1951.

The new tax treaty is based, broadly, on the OECD Model Tax Convention, which Guernsey has generally followed in its negotiations with other jurisdictions in recent years. The text of the tax treaty incorporates some of the recent international standards designed to prevent base erosion and profit shifting (BEPS). Continue Reading

OECD Consulting on Transfer Pricing Aspects of Financial Transactions

OECD Consulting on Transfer Pricing Aspects of Financial Transactions

The OECD today called for stakeholders’ input on a discussion draft on financial transactions, which deals with follow-up work in relation to base erosion and profit shifting (BEPS) Actions 8-10, on assuring that transfer pricing outcomes are in line with value creation.
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Nigeria CbC Reporting Tax Regulations Explained

Nigeria CbC Reporting Tax Regulations Explained

By Josh Bamfo (Partner & Head, Transfer Pricing Services, Andersen Tax, Nigeria)

The Federal Government of Nigeria finally published the much anticipated Income Tax (Country-by-Country Reporting) Regulations, 2018 (the CbC Regulations) on June 19, 2018 (with a commencement date of January 1, 2018). This is in line with Nigeria’s signing of the OECD’s Multilateral Competent Authority Agreement on January 27, 2016, providing for automatic exchange of CbC reports.

As a sequel to my earlier publication on the potential implications of the draft CbC reporting Regulations to affected taxpayers, which was published four months ago, this article presents the key highlights of the CbC reporting Regulations and re-assesses the potential implications based on the content of the final, published version.Continue Reading

ATO Issues Draft Tax Guidance on Hybrid Mismatch Rules

ATO Issues Draft Tax Guidance on Hybrid Mismatch Rules

On June 21, 2018, the Australian Taxation Office (ATO) published for stakeholders’ comments draft Practical Compliance Guideline (PCG 2018/D4) to assist taxpayers who may be affected by the country’s hybrid mismatch rules and wish to unwind or restructure out of existing hybrid arrangements.Continue Reading

Transfer Pricing: The Intangible Assets Case

Introduction

The transfer pricing of intangible properties has always been a significant issue for multinational enterprises (MNEs). The excellent idea devoted to this matter with the current drive of the OECD to counter tax base erosion is dim long over-due. Indeed, the case with transfer pricing is technically considered a neutral concept but erroneously taken as an offensive action of MNEs that permits them to transfer profits generated by intangibles to so-called tax havens. Although, the arm’s length principle enshrine in the OECD Model has been misidentified as the primary instrument to tackle such abusive behavior of MNEs.Continue Reading

UAE Joins BEPS Inclusive Framework

UAE Joins BEPS Inclusive Framework

The UAE has newly joined the OECD’s Inclusive Framework on base erosion and profit shifting (BEPS).

The Inclusive Framework on BEPS allows interested countries and jurisdictions to work with the OECD and Group of Twenty nations on monitoring the implementation of the BEPS proposals.Continue Reading

CCCTB: The concept and the effects in Cyprus and Malta

Introduction

When states attain membership of the European Union (EU), the governments are in charge of enacting and implementing their local direct taxation policy. The tax framework of the member-states shall not contravene or interfere the laid down policies and directives of the EU institutions; therefore, the sovereignty of member states is extremely safeguarded. Although the EU faces difficulties to come up with results that would be generally accepted by all member states, it has taken every step to integrate all Member States’ corporate direct taxation systems since the 1950s.Continue Reading

India’s CbC Reporting Requirement Clarified

Maulik Doshi discusses CBDT's clarification issued in relation to the timeline for furnishing of Country-by-Country Report

By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)

As an active participant in the OECD’s base erosion and profit shifting (BEPS) project, India has implemented nearly all the BEPS recommendations and has taken several steps to amend the country’s domestic tax laws appropriately. The Indian Finance Act, 2016 implemented BEPS Action Item 13 by introducing a three-tiered transfer pricing documentation structure and made it effective from the 2016-17 financial year.Continue Reading

Revised India-Qatar Tax Treaty to Include BEPS Minimum Standards

Revised India-Qatar Tax Treaty to Include BEPS Minimum Standards

India’s Union Cabinet has approved revision of the country’s tax treaty with Qatar.

The revised tax treaty includes a limitation of benefits clause to prevent treaty shopping. It meets the base erosion and profit shifting (BEPS) minimum standards on treaty abuse (BEPS Action 6) and mutual agreement procedure (BEPS Action 14).Continue Reading

Indian Cabinet Approves Tax Treaty with Iran

Indian Cabinet Approves Tax Treaty with Iran

The Indian Government has approved the country’s tax treaty with Iran.

The tax treaty is in line with the ones entered into by India with other countries. The proposed treaty also meets tax treaty-related minimum standards proposed under the OECD’s base erosion and profit shifting project, in which India is participating on an equal footing.Continue Reading

How Will Brazil’s OECD Membership Affect Its Transfer Pricing Regime?

How Will Brazil’s OECD Membership Affect Its Transfer Pricing Regime?

By Debora De Souza Correa Talutto (Group Transfer Pricing Manager, Temenos Banking Software Co.)

The Brazilian transfer pricing rules were created to address the maximum tax deductible costs or expenses when domestic taxpayers buy goods and services from foreign suppliers, and the minimum taxable revenues when local companies sell goods and services to foreign customers.Continue Reading

Applying the Transfer Pricing CUP Method

The arm’s length principle treats the members of a multinational enterprise (MNE) as operating in separate entities, rather than as inseparable parts of a single, unified business. Therefore, it is required that MNEs follow the same pricing policy for intra-group and uncontrolled transactions, under comparable circumstances. Otherwise, the controlled companies shall take the necessary measures and adjust their profits by reference to the conditions, which would have obtained between independent enterprises.Continue Reading

Italy’s Transfer Pricing Overhaul Will Boost Taxpayer Confidence

Italy’s Transfer Pricing Overhaul Will Boost Taxpayer Confidence

By Marco Greggi (Professor, International Tax Law, University of Ferrara)

The Italian Finance Ministry, on February 21, 2018, published for stakeholders’ comments two draft transfer pricing regulations. The first Regulation is a proposed decree that deals with substantive aspects of transfer pricing regulations (analyzed in this article), while the second Regulation concerns corresponding adjustments (procedural aspects). The second Regulation on corresponding adjustments will be analyzed in a forthcoming article.Continue Reading

South Africa’s 2018 Budget: Unpacking International Tax Measures

South Africa’s 2018 Budget: Unpacking International Tax Measures

By Ahmed Jooma (Independent Tax, Legal, and Public Policy Consultant)

On February 21, 2018, South Africa’s Finance Minister, Malusi Gigaba, presented the country’s National Budget, which will be tougher on the populace than on multinational corporations. Most of the tax changes that will affect cross-border transactions are of a technical nature. A continued focus on base erosion and profit shifting is expected to assist in arresting the deteriorating fiscal environment. This is further exacerbated by pressure to maintain a relatively low corporate tax rate in the face of tax competition.
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Accountants Concerned About New Zealand’s BEPS Tax Bill

Accountants Concerned About New Zealand’s BEPS Tax Bill

Chartered Accountants Australia and New Zealand (CA-ANZ) has stressed that by implementing the Taxation (Neutralising Base Erosion and Profit Shifting) Bill in its current form, the New Zealand Government would be “going further than most other OECD countries.”Continue Reading

The Future of the Dutch Tax Ruling Practice

The Future of the Dutch Tax Ruling Practice

By Jian-Cheng Ku (Legal Director, DLA Piper Nederland N.V.) and Jeroen Swart, (Tax Adviser, DLA Piper Nederland N.V.)

On February 18, 2018, the Dutch State Secretary of Finance announced that it will revise the Dutch tax ruling practice in light of results from a review conducted to examine if Dutch tax rulings met Dutch procedural requirements. Over 4,000 Dutch tax rulings were reviewed.

Current practice and review

A tax ruling provides Dutch taxpayers with the opportunity to obtain advance certainty on the tax consequences of proposed legal transactions. Taxpayers and the tax authorities are able to avoid potential disputes through tax rulings, which provide upfront assurance. The Dutch tax ruling practice is considered an important pillar of the Dutch business climate.Continue Reading

Belgium Initiating New Wave of Transfer Pricing Audits

Belgium Initiating New Wave of Transfer Pricing Audits

By  Bram Markey (Director, Transfer Pricing, PwC Belgium)

The Belgian tax authorities are increasing their manpower, shifting focus areas, and stepping up national and international cooperation with other tax authorities, with a clear view to audit transfer pricing and other international tax matters in a more targeted and efficient way, writes Bram Markey, Director, Transfer Pricing at PwC Belgium. Continue Reading

New Zealand to Modify Transfer Pricing Rule in BEPS Bill

New Zealand to Modify Transfer Pricing Rule in BEPS Bill

By Alex Cooper

The New Zealand Inland Revenue is seeking to rectify a drafting error in a new rule to limit the rate of deductible interest on related-party, cross-border debt (the restricted transfer pricing rule) in the Taxation (Neutralising Base Erosion and Profit Shifting) Bill.Continue Reading

Ireland, Ghana Sign New Tax Treaty

Ireland, Ghana Sign New Tax Treaty

Ireland and Ghana signed a new tax treaty on February 7, 2018. The procedures to ratify the treaty are underway.

Ireland is also negotiating and renegotiating existing treaties with foreign jurisdictions.

 According to the tax authority, Ireland’s existing treaty base will also be updated to incorporate provisions set out in the Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting.

Italy Enacts New Web Tax, Redefines PE

Italy Enacts New Web Tax, Revises PE definition

By Aurelio Massimiano (Partner, Maisto e Associati) and Matteo Cataldi (Associate, Maisto e Associati)

On December 29, 2017, the Italian Government published Law No. 205 of December 27, 2017 (Budget Law) in the Italian Official Journal, which contains key tax measures including a new tax on digital transactions (Web Tax) and revisions to the definition of permanent establishment (PE) in the domestic law.Continue Reading

France Gazettes Revised Transfer Pricing Documentation Requirements

Terence WILHELM of CARA Avocats, France discusses Transfer Pricing Documentation Requirements in France

By Terence WILHELM (Attorney at Law, Managing Partner, CARA Avocats, France) 

On December 31, 2017, the French Government gazetted Finance Act, 2018, which revises the current transfer pricing documentation requirements in France. Accordingly, companies falling within the ambit of the new requirements will need to newly submit to the tax authority a two-fold documentation comprising “master” and “local” files, developed under Action 13 of the OECD’s base erosion and profit shifting (BEPS) project. The revised transfer pricing documentation requirement is inserted in Article L13AA of the French Procedural Tax Book (Livre des procedures fiscales) and is applicable to fiscal years beginning January 1, 2018.
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Bermuda Updates CbC Reportable Tax Jurisdictions List

Bermuda CbC Reporting Tax Jurisdictions

On January 31, 2018, Bermuda’s Finance Ministry released an updated list of tax jurisdictions that will be treated as “reportable jurisdictions” for the purposes of the country-by-country (CbC) reporting standard for the 2016 and 2017 reporting periods.Continue Reading

Indian Budget 2018: Transfer Pricing Expectations

Maulik Doshi of SKP Group stresses what India's 2018 Budget must cover on the transfer pricing front

By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)

The Indian Government has, in recent past, taken bold and practical measures to align the Indian transfer pricing regulations with global best practices by introducing country-by-country reporting and “master” file regulations; interest limitation provisions; revising the rates under the safe harbor rules; rationalizing specified domestic transactions; and introduction of range concept and use of multiple-year data. Additionally, the Government has made several attempts on the administrative side to reduce litigation and introduce a taxpayer-friendly regime. Having said that, there are certain ambiguities that need to be resolved.

In the 2018 Budget, which is due to be presented on February 1, 2018, we hope to see appropriate steps being taken to address these ambiguities, some of which are listed below.Continue Reading

CbC Reporting Regulations in Nigeria: Potential Implications For Taxpayers

Joshua Bamfo of Andersen Tax discusses CbC Reporting Regulations in Nigeria

By Josh Bamfo (Partner & Head, Transfer Pricing Services, Andersen Tax, Nigeria)

Since the signing of the Multilateral Competent Authority Agreement by the Federal Inland Revenue Service (FIRS) and its subsequent ratification by the Federal Executive Council in 2016, most Nigerian taxpayers and tax practitioners have been keenly waiting for the implementation of a country-by-country (CbC) reporting requirement, developed under Action 13 of the base erosion and profit shifting (BEPS) project. Nonetheless, we were still surprised by the FIRS’ communication via its official Twitter handle on 24 January, 2018, that the Income Tax (Country-by-Country Reporting) Regulations, 2018, (CbC Regulations) has now been signed by the Federal Government of Nigeria, and will be gazetted soon.Continue Reading

Greece, Bulgaria Discuss Ways to Address BEPS Concerns

TP News Bulgaria-Greece

Senior officials from Greece and Bulgaria met on January 18, 2018, to discuss ways to tackle base erosion and profit shifting by certain Greek businesses, who transfer their headquarters to Bulgaria to benefit from a low corporate tax rate in Bulgaria.Continue Reading

Hong Kong, French Tax Administrations to Exchange CbC Reports

Hong Kong Bill implements transfer pricing, BEPS rules

On January 15, 2018, the Government of Hong Kong announced that it has entered into a bilateral arrangement with France to automatically exchange country-by-country (CbC) reports filed by multinational corporations.Continue Reading

Indian IT Giant Infosys Signs APA with US

TP News India Tax

Indian IT giant Infosys Limited has announced the successful conclusion of an advance pricing agreement (APA) with the US Internal Revenue Service (IRS), a move that will enhance predictability of the company’s tax obligations in respect of its US operations.Continue Reading

Mongolia Joins BEPS Inclusive Framework

Mongolia joins BEPS Inclusive Framework on BEPS

Mongolia has joined the OECD’s Inclusive Framework on BEPS, bringing the total number of countries participating in the project on an equal footing to 111.

Members of the framework work together with other OECD and G-20 countries on implementing the BEPS package consistently and on developing further standards to address BEPS issues.