Maldives promulgates its first Transfer Pricing Regulation

The Maldives Promulgates its first Transfer Pricing Regulation

By Husam Shareef (Partner, CTL Strategies, Maldives)

On June 10, 2020, the Maldives tax administration, Maldives Inland Revenue Authority (MIRA), issued the country’s first transfer pricing regulation. The Regulation is made pursuant to the new Income Tax Act, which came into effect from January 1, 2020. The Regulation sets out the rules to be followed by enterprises that are required to maintain transfer pricing documentation and stipulates the criteria which exempt enterprises from maintaining such documentation. The Maldives has had a corporate tax regime since July 18, 2011, however, this is the first time that taxpayers are required to follow a specific transfer pricing documentation requirement.Continue Reading

Worst of both worlds: A case against digital services tax in Brazil

Worst of both worlds: strong reasons why the digital services tax should not be implemented in Brazil

By Maurício Barros (Partner at Gaia Silva Gaede Advogados in São Paulo, former Taxpayer-Appointed Judge at the São Paulo Taxes and Fees Court – TIT/SP (2014-2019) and a former Visiting Professor at the Getulio Vargas Foundation and at the Mackenzie Presbiteryan University) & Luiz Guilherme de Medeiros Ferreira (Tax lawyer, São Paulo and Member of the Tax Litigation Commission at the Brazilian Bar Association)

Amid the covid-19 pandemic and the imminent financial crisis of companies, Draft Bill (DB) 2358/2020, drafted by Deputy João Maia, is making its way through the Brazilian Congress. If it becomes law, it will institute a digital services tax (DST) in Brazil, like similar taxes levied in other countries.Continue Reading

India-Mauritius Tax Treaty Benefits Denied – Controversy Continues

India-Mauritius Tax Treaty Benefits Denied – Controversy Continues

By Nishit Parikh (Partner, Sudit K Parekh & Co LLP, India)

India-Mauritius Tax Treaty has had its fair share of controversy in India. This saga continues even today, as recently Authority for Advance Ruling (‘AAR’) in India rejected a Foreign Private Equity player’s claim for Tax Treaty benefit considering the entire arrangement to be for tax avoidance.Continue Reading

No COVID support to companies that engage in tax avoidance, says Dutch government

No COVID support to companies that engage in tax avoidance_ Dutch government

Companies engaged in undesirable tax planning can apply for individual support if they satisfy two tax-related conditions concerning business location and transactions.Continue Reading

Unilateral action on digital economy taxation would heighten trade tensions: OECD

Unilateral action on digital taxation would heighten trade tensions OECD

Gurría was responding to recent statements and exchanges regarding the ongoing negotiations to address the tax challenges of the digitalisation of the economy.Continue Reading

Irish tax guidance on transfer pricing correlative adjustments explained

Irish Revenue Issues New Guidelines on Article 9 Correlative Adjustment Claims

By Catherine O’ Meara (Partner, Matheson, Dublin) 

The ability to claim relief from double taxation for transfer pricing adjustments is increasingly important as taxpayers face audits worldwide.  The Irish Revenue Commissioners (“Revenue”) have recently issued new guidelines for taxpayers seeking correlative adjustments (“CA Guidance”) in Ireland for transfer pricing adjustments by tax treaty partner jurisdictions. Continue Reading

Digital levy proposed in Brazil amid pressing budget: introducing or increasing digital taxation?

Digital levy proposed in Brazil amid pressing budget: introducing or increasing digital taxation?

By Luís Eduardo Schoueri (Full Professor of Tax Law at University of São Paulo & Senior partner at Lacaz Martins, Pereira Neto, Gurevich & Schoueri Advogados) & Mateus Calicchio Barbosa (PhD Candidate and M.Sc. at University of São Paulo & Tax partner at Lacaz Martins, Pereira Neto, Gurevich & Schoueri Advogados)

It is said that in every crisis lies an opportunity. If the quote means that possibilities may emerge, in the tax realm taxpayers also have a new momentum to the danger component of the notion. In Brazil, outdated – not to say dangerous – tax alternatives have been put on the table to meet the recent budgetary needs. Certain wealth and capital taxes on both companies and individuals, despite previous and frustrated propositions since mid-90s, have been discussed while the government seeks a way out of an unprecedented public debt in the years to come.Continue Reading

Significant economic presence: Nigerian perspective

Significant economic presence: Nigerian perspective

By Kelechi Ugbeva (Managing Partner, Blackwood & Stone, Nigeria)

Existing global tax rules such as, the arm’s length principle and principle of physical presence may not be robust enough to accommodate the peculiarity of digital activities and digital taxation. To this end, the OECD has come up with a few proposals on how digital activities may be taxed. Continue Reading

Netherlands mulling withholding tax on dividends paid to low tax jurisdictions

Netherlands mulling withholding tax on dividends paid to low tax jurisdictions

The measure will apply to financial flows to countries with a corporate tax rate of under nine percent and to countries on the EU blacklist, even if the Netherlands has a tax treaty with them.Continue Reading

US Trade Representative to investigate digital services tax rules in EU, nine others

US Trade Representative to investigate digital services tax rules in EU, nine others

These ten trading partners are: Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom.Continue Reading

Equalisation Levy in India

Equalisation Levy in India

By Lokesh Shah (Partner, L&L Partners, New Delhi) & Devashish Poddar (Advocate, L&L Partners, New Delhi)

Technology, considered as a factor of production, has virtually been adopted in all sectors of the economy in order to enhance productivity, enlarge market reach, and reduce operational costs.  The adoption of technology is demonstrated by the spread of broadband connectivity in businesses, which in almost all countries of the Organisation for Economic Co-operation and Development (“OECD”) is universal for large enterprises and reaches 90% or more even in smaller businesses.Continue Reading

Draft Bill proposes a Digital Service Tax in Brazil

Draft Bill proposes Digital Service Tax in Brazil

By Ramon Tomazela Santos (Partner, Mariz de Oliveira e Siqueira Campos Advogados)

The taxation of large technology companies has been at the center of the global debate in recent years, as their disruptive business models allows the exploitation of the market of a country without a physical presence. The underlying assumption surrounding the debate is that the application of current tax rules to companies operating in the digital economy has led to a misalignment between the place where profits are taxed and the place where value is created, due to the growing relevance of interaction and engagement with a user base for digital business.Continue Reading

Amendments regarding documentation in decree on disguised profit distribution through transfer pricing

Amendments Regarding Documentation in Decree on Disguised Profit Distribution Through TP

By Kardelen Lule (ADMD / MAVIOGLU & ALKAN, Turkey) & Zeynep Ozbaran (ADMD / MAVIOGLU & ALKAN, Turkey)Continue Reading

How international tax landscape changes in India from April 1, 2020

How international taxation landscape changes in India from 1 April 2020

By Ritu Shaktawat (Partner, Khaitan & Co, India) Raghav Kumar Bajaj (Principal Associate, Khaitan & Co, India)

India’s Union Budget for the fiscal 2020-21 was announced in February 2020 and the tax proposals, after undergoing some important changes, were approved by the Indian Parliament and received Presidential assent on March 27, 2020. With this, the annual exercise of amending India’s tax law was completed, and the tax changes are effective from April 1, 2020.

On the tax front, some significant amendments have been made – such as widening the scope of digital tax, abolition of dividend distribution tax, more stringent tax residency rules for non-resident Indians etc.

We have analyzed here the key international tax changes impacting non-residents (MNEs and others having Indian business or nexus).Continue Reading

Augmenting Loan Documentation in light of Chapter X of the OECD Transfer Pricing Guidelines

Augmenting Loan Documentation in light of Chapter X of the OECD TP Guidelines

By Stefanie Perrella (Managing Director, Duff & Phelps’, New York) and Zachary Held (Director, Duff & Phelps’, New York)

On February 11, 2020, the OECD released its Final Report, Transfer Pricing Guidance on Financial Transactions, (Final Guidance), which was simultaneously incorporated into the OECD Transfer Pricing Guidelines. With respect to inter-company loans, the new Chapter X of the Transfer Pricing Guidelines is not limited to considerations for interest rate pricing, but also includes a framework for assessing the instrument’s accurate delineation as debt. Going forward, taxpayers with lenders or borrowers in OECD countries should consider this new guidance and augment their documentation accordingly. Below are some of the items that these taxpayers should consider to offer a proactive defense of potentially scrutinized areas.

Loan Terms

Chapter X is intended to provide guidance for OECD countries that choose to apply accurate delineation under Chapter 1 to determine debt characterization for federal income tax purpose. Para 10.12 of Chapter X includes a list of characteristics that “may be useful indicators” of the accurate delineation of advances of funds, including but not limited to a fixed repayment date, the obligation to pay interest, and enforcement rights of the lender. Taxpayers should ensure that inter-company loans have robust and legally binding agreements that articulate these relevant characteristics. These characteristics should also be emphasized in the loan documentation both in terms of form and substance. In other words, the taxpayer should make sure behavior is aligned and well documented such that these characteristics are not just labels/descriptions. Robust documentation on these characteristics and associated behaviors may be a general best practice even in the context of alternative debt characterization frameworks.

Debt Capacity Analysis

Chapter X suggests that a borrower’s ability to bear the amount of debt, based on good faith projections, is also an important consideration for debt characterization. It provides a specific example wherein an economic analysis demonstrates that a borrower would be unable to service the purported loan, in which case, the maximum amount that the borrower could service would be treated as debt for federal income tax purposes and the remainder would be recharacterized.

An economic analysis, such as a cash flow analysis presenting the projected ability to make ongoing payments and repay (or refinance) the principal, can be useful to avoid such recharacterization.

Business Strategies

Chapter X notes that business strategies are a consideration for accurately delineating financial transactions and implies that the context of the financing (e.g., business purpose, industry standards) can have bearing on debt characterization. An example describes an entity that takes out a ten-year intercompany loan for short-term working capital needs, even though the multinational group usually addresses working capital needs using a one-year revolver. In this example, the borrower’s ten-year loan could be recharacterized as a one-year revolver, with the corresponding interest rate adjusted accordingly.

Taxpayers documenting intercompany loans should consider including a description of the context and business purpose of the loan to support the appropriateness of the purported characterization. Adding this detail could be especially important if the loan at issue differs from the general business policy or the terms of third-party debt of the multinational.

Functional Analysis

To accurately delineate a financial transaction, Chapter X highlights the necessity of a functional analysis to document the functions performed, assets used, and risks assumed by the parties. This largely entails a description of the decision-making process that both the lender and borrower undertook in deciding to enter into the subject transaction, given reasonable alternatives. For a lender this could mean analyzing the borrower’s creditworthiness and for the borrower this could mean supporting that a specific debt amount was optimal given their funding needs and financial standing. Crucially, if the lender is deemed to not be the entity that makes financing decisions (e.g., if these are made by a central treasury group), guidance suggests that the lender could be entitled to no more than a risk-free return.

While it is our experience that documentation on financial transactions has historically been “light” on functional analysis, the new guidance stresses the importance of the functional analysis for both accurate delineation and pricing.

Implicit Support

Chapter X notes that the impact of implicit support should be a matter of judgment based on factors such as the relative importance of the entity to the multinational group. To the extent that an interest rate (or guarantee fee) is tied to a specific credit rating, taxpayers should consider documenting how implicit support was considered and the reasons why the assumed impact of implicit support (or lack thereof) is appropriate.  

While Chapter X does not set specific documentation expectations, the above are some of our takeaways on how taxpayers can augment their documentation in light of the new financial transactions guidance.

Augmenting Loan Documentation under Chapter X of the OECD Guidelines


Stefanie Perrella is Managing Director in Duff & Phelps’ Transfer Pricing practice in New York.

Zachary Held is Director in Duff & Phelps’ Transfer Pricing practice in New York.

Brazilian TP Reform: Can We Have the Full First World Package?

By Luis Schoueri (University of Sao Paulo; Lacaz Martins, Pereira Neto, Gurevich & Schoueri Advogados) 


There is no divine truth about what the Arm’s Length Standard (ALS) actually means. Its content can only be determined by a decision, which can be reached by a court or by means of political consensus. There is no international tax court with jurisdiction to promote harmonization among countries on the content of the ALS and all efforts in this direction are made by means of negotiation. Such decisions affect not only the extent to which double (non-)taxation will be avoided, but also concern the country to which income is allocated, which may render the issue controversial where countries present distinct patterns of capital in- and outflow[1].

The OECD has been responsible for consolidating some degree of consensus around the content of the ALS in the last decades. More than merely clarifying the meaning of an expression, it has adopted an evolutionary approach towards the ALS, often leading academics to perceive the outcomes as going way beyond the original intent of the standard[2].  It has promoted flexibility where comparables are not available and offered the theorization necessary to fill the gaps where the application of the standard was not immediate.

Parallelly, Brazil has gone its own way, designing a system which is much simpler than the OECD counterpart – for the good and for the bad. This simplicity seeks to strike a balance between preventing double taxation and ensuring ease of administration, considering the Brazilian institutional capacity – e.g. the available personnel vis-à-vis the size of our economy. The abrupt abandonment of the current system, suggested by a Joint Report of the Brazilian tax authorities (RFB) and the OECD[3] (hereinafter, the “Joint Report”) is expected to significantly increase uncertainty, punishing taxpayers in case a controversy arises, by means of practices that are not as progressist as one would expect from the intended reform.

Shifting gears in the Brazilian transfer pricing policy

In the 1995 Guidelines, following US legislative reforms[4], the OECD opened the path towards profit methods, which would afterwards become prevalent in transfer pricing practice. Indirect methods were incorporated into the Guidelines as measures of last resort, after years of discussions on whether they could be considered ALS-based in the first place. The Guidelines also provided important theorization on the remuneration of assets, risks and functions, which would become central to the evolution of the standard in subsequent years.

In 1996, Brazil enacted its first TP legislation, whose essential features have remained the same ever since[5], in spite of relevant improvements which have clearly reduced tax litigation initially observed in the country. The Brazilian transfer pricing methods are all inspired on the traditional transactional methods, but they adopt sectorial fixed margins instead of demanding the identification of comparables, and functional analysis is present only to a very limited extent[6]. Commodities are subject to a control based on publicly traded prices. No profit method is possible and the issue of intangibles is dealt with by means of significant restrictions to royalty deductions[7] – which have put tax authorities in the very comfortable position of not having to provide answers to the most complicated TP issues, but also have rendered the system particularly obsolete in the long run.

Despite the significant differences with the OECD Guidelines, it is a huge misconception to regard the Brazilian approach as a methodology of formulary apportionment. The Brazilian legislation does not take global profits into account: all existing methods are one-sided. The sectorial margins are intended to imitate the behavior of independent parties and, at the same time, grant certainty and practicability both to taxpayers and tax authorities. It is even inspired by the 1995 Guidelines, in the sense that it adopts simplified versions of the traditional methods. As far as Brazilian tax authorities and Brazilian treaty partners are concerned, the Brazilian system has been deemed as an ALS-based one during the last twenty years for the purpose of applying Article 9 of the signed treaties – which do not include an equivalent to Art. 9(2) of the OECD-MC.

In 2010, with widespread application of the TNMM, the Guidelines followed practice and acknowledged that profit methods were no longer methods of last resort[8]. Indirect methods progressively left the periphery and finally reached the center of the TP system, with further detail on its application. A year later, the UN Committee of Experts on International Cooperation in Tax Matters published the “Practical Manual on Transfer Pricing for Developing Countries”[9]. The Brazilian approach is described therein as an ALS-based approach. The document is much more aimed at presenting miscellaneous alternatives on the ALS than properly at reaching a more refined consensus on the topic. Instead of aiming at convergence, the Practical Manual gives space for countries to present divergent practices. The Practical Manual is not intended to pose itself as an antagonist to the OECD Guidelines. Being included therein has not attenuated the Brazilian isolation, as no country seem to have adopted something similar to the fixed margins.

In 2015, the BEPS Project brought the ultimate relativization of the need for comparables, enthroning the allocation of profits pursuant to “value creation” as the theoretical goal to be pursued by transfer pricing rules. Value chain analysis is now central and justifying individual transactions does not seem to cut it anymore. The allocation of residual profits under profit split methods is perhaps the most controversial outcome of the new ALS consensus. Even synergy rents, which were deemed to be the Achilles’ heel of the ALS, seem to have found their redemption in the value creation mantra. By means of abstractions on the behavior of independent parties, it is now possible to allocate synergy rents as independent parties would have, even though independent parties would never derive synergy rents in the first place. As part of the G20, Brazil had the first opportunity to present its dissonant perspective on transfer pricing at a negotiation table. Apparently, however, it only managed to remain isolated on transfer pricing issues, being the only country to which a footnote has been dedicated in the Actions 8-10 Final Report[10].

In relation to the digital economy, the OECD decided that the ALS can no longer be tweaked[11] and that the current allocation of taxing rights is not fair. Under Pillar One, new alternatives to the ALS are being discussed and it is acknowledged that, this time, some amendments to the Model Convention will be necessary, in order to make the application of the new policy possible. Within the Inclusive Framework, Brazil again could play a role, considering how central the current negotiations are to the future of the international tax regime. Brazil has not showed any particular initiative on the topic, even though the issue is one aimed at ensuring more source taxation along with simplicity concerns – which should be central for the Brazilian interests. India has taken the lead among emerging economies, but a strong position from Brazil has not followed.

In practice, Brazil has remained a complete stranger to the evolutionary process of the OECD Guidelines and is currently responsible for the most significant deviation from the OECD transfer pricing methodology, with no significant influence around the globe.

As the Brazilian accession to the OECD gains momentum, these separate ways are required to converge. Brazil is expected to adhere to the OECD consensus on the ALS. Since Brazil is the one requesting accession and not the other way around, convergence has taken the form of elimination of the Brazilian peculiarities. The Joint Report is an expression of such approach: it identifies the gaps between Brazil and the Guidelines and elaborates on how Brazil should adapt to the Guidelines. Both the traditional isolation and the recent tentative approximation strategies do not seem to have provided Brazil with any leverage to support its positions. Despite earlier criticism of Brazilian specialists[12], no partial alignment with the Guidelines is envisaged by the Joint Report and full alignment is presented as a deal-breaker for the Brazilian accession.

Can we converge to the full first world package?

Simply put, Brazil is expected to incorporate twenty years of evolutionary transfer pricing practice at once. Whilst the complete lack of precedents on the application of profit methodologies, and even on more basic aspects of functional analysis for the application of the traditional methods, full-alignment is demanded[13], also on a “gradual” version, based on the size of the companies or on the type of transaction[14]. If taken forward, this sort of alignment will surely be followed by a lot of uncertainty, considering the theoretical and institutional adaptations that will be necessary. When dealing with such uncertainty, the Joint Report has already set the tone and made clear that, despite the alleged modernization, some practices will remain medieval.

An example thereof is on the issue of penalties. The Joint Report states the difficulty of evaluating in abstract while a monetary penalty is excessive, making a general statement on the need for proportionate measures[15]. It further specifies, however, that “the imposition of sizable ‘no-fault’ penalty based on the mere existence of an understatement of a certain amount would be unduly harsh when it is attributable to good faith error rather than negligence or an actual intent to avoid tax[16]. It also affirms that  “it would be unfair to impose sizable penalties on taxpayers that made a reasonable effort in good faith to set the terms of their transactions with associated enterprises in a manner consistent with arm’s length principle[17].

The Report then identifies the relevant Brazilian framework on the topic, according to which “as a general rule, the penalty for underpayment of federal taxes is 75% [of the amount due][18]. This is precisely the “no-fault” sort of penalty criticized in the preceding paragraphs of the Joint Report: a mere divergence of interpretation leads to the 75%-penalty. In case of fraud or sham, the penalty is increased to 150%.

In relation to the 75%-penalty, the Joint Report dedicates two conflicting statements. The first affirms that “the Brazilian framework does not necessarily deviate from the OECD Guidelines, since it is recognised therein that it is difficult to assess whether a particular penalty is fair or not[19]. The second, considers that “the 75% penalty that is automatically applicable to a tax underpayment, irrespective of the reason, may be considered unduly harsh in some situations (e.g., good faith)[20]. The conflict is further blurred by the following excerpt[21]:

This potential harshness may however be mitigated because the penalties resulting from an assessment by the tax authorities may be decreased by half if the taxpayer voluntarily pays the tax due, which also means that he gives up any administrative remedies.

The reasoning is therefore that a no-fault 75%-penalty is not “unduly harsh”, when it is reduced to 37,5%, if the taxpayer just agrees to pay the tax allegedly due and give up the relevant administrative remedies. This logic is not exactly sound, but leads one to believe that the no-fault 75%-penalty is acceptable under OECD standards. In practical terms, however, the unduly harsh penalty may reduce to ashes the efforts on mitigating double taxation. If maintained after the intended reform, there is no doubt that the 75%-penalty will remain being applied by tax authorities to any and every interpretative divergence – as it currently is. From a good faith taxpayer’s perspective there is no benefit in completely avoiding double taxation in a given transaction, but paying a 75%-fine (or 37,5%) to one of the states.

At the end of the day, the Brazilian divergence with the OECD is not one based on the fair allocation of taxing rights, which is a discussion to which Brazil has remained completely alienated and never achieved the necessary refinement to offer any opposition. The main problem is that the OECD Guidelines methodology is much more complicated than the current Brazilian system, which has also been drafted to be an ALS-based one, even though in a (much) rougher version. If there is no bargaining power to meet the OECD halfway, Brazil will end up with a complicated legislation with flavors of the current disproportionate administrative measures and practices – of which the 75%-penalty is only an example. The full first world package cannot be simply enacted as legislation and demands years of institutional development, which an abrupt reform will not be able to skip.

[1] See L. E. Schoueri & R. A. Galendi Júnior, ‘Justification and Implementation of the International Allocation of Taxing Rights: can we take one thing at a time?’, In: A. Christians; S. A. Rocha (ed.). Tax Sovereignty in the BEPS Era, Alphen aan den Rijn: Wolters Kluwer, 2017, pp. 47-72.

[2] See, for a discussion on the evolution of the standard, L. E. Schoueri, Arm’s Length: Beyond the Guidelines of the OECD, BIT, 69(12), 2015, pp. 690-726.

[3] OECD/Receita Federal do Brasil (2019), Transfer Pricing in Brazil: Towards Convergence with the OECD Standard, OECD, Paris,

[4] See, on the evolution of the methods in the U.S. tax system, R. Avi-Yonah, The Rise and Fall of Arm’s Length: A Study in the Evolution of U.S. International Taxation, Public and Legal Theory Working Paper Series, Working Paper No. 92 (September 2007).

[5] For an extensive analysis of the Brazilian legislation, see L. E. Schoueri, Preços de Transferência no, Direito Tributário Brasileiro (3rd ed., São Paulo, Dialética, 2013), 479p.

[6] See, on the Brazilian TP system, L. E. Schoueri; R. A. Galendi Júnior. Brazil. Cahiers de Droit Fiscal International –  The future of transfer pricing, v. 102B, 2017, pp. 191-215.

[7] See L. E. Schoueri & R. A. Galendi Júnior, Challenges to Brazilian Transfer Pricing Rules upon Accession to the OECD, ITPJ, 26, 2019, pp. 433-441.

[8] See OECD, OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, July 22, 2010 (OECD Publishing, 2010), para. 2.2.

[9] United Nations, Practical Manual on Transfer Pricing for Developing Countries, (United Nations, New York, 2011). A second edition was published in 2017.

[10] The authors have commented the footnote on a previous article to Kluwer International Tax Blog. See L.E. Schoueri and R. A. Galendi Júnior, ‘The Brazilian Mysterious position on Actions 8-10: a blank check for cherry picking?’, Kluwer International Tax Blog, October 25 2016,

[11] For criticism on how the ALS has been “tweaked” in the last decades, see Yariv Brauner, BEPS: an interim evaluation, WTJ, 2014, p. 28.

[12] The first author has signed a public position on the topic, along with other Brazilian professors, which has been published by the Kluwer International Tax Blog. See L. E. Schoueri, Brazilian TP: Missed Opportunities Ahead, Kluwer International Tax Blog, July 30, 2019,

[13] The authors have presented an alternative to the full-alignment. See L. E. Schoueri & R. A. Galendi Júnior, Challenges to Brazilian Transfer Pricing Rules upon Accession to the OECD, ITPJ, 26, 2019, pp. 433-441.

[14] OECD/RFB, Transfer Pricing in Brazil, para. 1054-1064.

[15] OECD/Receita Federal do Brasil (2019), Transfer Pricing in Brazil: Towards Convergence with the OECD Standard, OECD,, para. 316.

[16] OECD/RFB, Transfer Pricing in Brazil, para. 318.

[17] OECD/RFB, Transfer Pricing in Brazil, para. 318.

[18] OECD/RFB, Transfer Pricing in Brazil, para. 363.

[19] OECD/RFB, Transfer Pricing in Brazil, para. 364.

[20] OECD/RFB, Transfer Pricing in Brazil, para. 365.

[21] OECD/RFB, Transfer Pricing in Brazil, para. 365.

The article was first published here

Belgian Transfer Pricing Circular sets out tax authority’s view on 2017 OECD Guidelines

View of Belgian Tax Administration on 2017 OECD Guidelines and specific positions

By Géry Bombeke (Partner, Baker McKenzie, Brussels)

On February 25, 2020, the Belgian Tax Administration published a new transfer pricing Circular (Circular 2020/C/35) (TP Circular) summarizing the post-base erosion and profit shifting (BEPS), OECD Transfer Pricing Guidelines and reflecting the tax authority’s views thereon.Continue Reading

OECD issues MAP peer review reports for further eight jurisdictions

OECD issues MAP peer review reports for further eight jurisdictions

The reports highlight how well these jurisdictions are implementing BEPS Action 14 minimum standard on making tax treaty dispute resolution more timely, effective, and efficient.Continue Reading

BVI to accept country by country report filings from March 2020

BVI to accept country by country report filings from March 2020

International Tax Authority informs BVI Constituent Entities, that are part of Multinational Entity Group, that it will soon be ready to receive filings for CbC reporting.Continue Reading

US Congresswoman introduces public country by country reporting Bill

US Congresswoman introduces public country by country reporting Bill

The report would include CbC financial filings for the information, including profits, taxes, employees, and tangible assets – that these corporations already provide to the IRS on an annual basis.Continue Reading

Australia expanding ‘significant global entity’ definition

Australia expanding ‘significant global entity’ definition

The definition of “significant global entity” to include members of large business groups headed by private companies, trusts, partnerships, investment entities, and individuals.Continue Reading

137 countries commit to designing rules on digital economy taxation by 2020-end

137 countries commit to design rules on digital economy taxation by 2020-end

The “safe harbour” issue is included in the list of remaining work, but a final decision on this issue will be deferred until the architecture of Pillar One has been agreed upon.Continue Reading

OECD issues further guidance on country-by-country reporting

OECD issues further guidance on CbC reporting

The additional interpretative guidance contains complete set of guidance concerning the interpretation and operation of BEPS Action 13 issued so far.

OECD issues further guidance on country-by-country reportingThe OECD on December 23, 2019, released additional interpretative guidance on country-by-country (CbC) reporting.

The guidance is aimed at providing greater certainty to tax administrations and MNE Groups on the implementation and operation of CbC reporting requirement as culminated from the OECD’s work on base erosion and profit shifting (BEPS) Action 13.

It is clarified that, under the BEPS Action 13 minimum standard, the automatic exchange of CbC reports filed under local filing rules is not intended.

The December 23 document contains complete set of guidance concerning the interpretation and operation of BEPS Action 13 issued so far. The document will continue to be updated.

In addition, a summary of CbC reporting notification requirements in BEPS Inclusive Framework member jurisdictions has been posted on the OECD website. The summary is aimed at helping MNE Groups in complying with notification requirements in different jurisdictions where they have constituent entities.

US responds to French digital tax with USD 2.4 billion tariffs; France calls it ‘unacceptable’

US responds to French digital tax with USD 2.4 billion tariffs; France calls it ‘unacceptable’

French Finance Minister, Bruno Le Maire, termed the US’ proposed action as unacceptable.Continue Reading

EU Commission warns Austria, Ireland to transpose interest limitation rules

EU Commission warns Austria, Ireland to transpose interest limitation rules

The Commission may bring the cases before the Court of Justice of the EU if Austria and Ireland do not act by February 1, 2020.Continue Reading

OECD official responds to tax Professor’s views on inclusive international tax policy making

OECD responds to tax Professor’s views on inclusive international tax policy making
Ben Dickinson said that the Secretariat’s role is not to propose solutions that favor one group or another but rather to explore a potential consensus solution that will appeal to states, with the inevitable compromises such a process necessitates.

Continue Reading

Mexican 2020 Tax Reform: key international tax proposals

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

On September 8, 2019, the Executive Branch of the Mexican Government submitted to the Congress Tax Reform for 2020, which includes key tax changes to the country’s tax law primarily inspired by the OECD’s base erosion and profit shifting (BEPS) project.Continue Reading

Ireland Transfer Pricing Feedback Statement Explained

Ireland's Transfer Pricing Feedback Statement Explained By Expert

By Catherine O’ Meara (Partner, Matheson, Dublin)

The Irish Government recently published a Transfer Pricing Rules Feedback Statement, which confirms that changes to the country’s transfer pricing rules and their implementation are forthcoming.Continue Reading

OECD preparing for ‘big bang’ reform to address digital economy taxation

Gurría also described the delivery of the OECD’s BEPS package in 2015 as one of the two “big bang” developments that transformed the global tax landscape in recent years.Continue Reading

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  

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