Overview of Transfer Pricing in India

Overview of Transfer Pricing in India

By CA. Akshay Kenkre (Founder and Practice Lead, TransPrice Tax Advisors LLP, India)

Introduction

The Indian transfer pricing regulations were enacted via the Indian Finance Act 2001 by introducing  a separate code under Sections 92 to 92F of the Income- tax Act , 1961 (‘the Act’) read with Income- tax Rules, 1962 (‘the Rule’s) 10A to 10ETHD. The regulations are largely and principally based on OECD guidelines and describe the various transfer pricing methods, requirement for transfer pricing documentation, and contain penal provisions for non-compliance. The Indian regulations deal with intra-group transactions and is applicable from April 1, 2001.Continue Reading

Anti-avoidance tax measures introduced through Pakistan Finance Bill 2021

Anti-avoidance measures introduced through Pakistan Finance Bill 2021

By Muzammal Rasheed (Co-founder, CEO & Head of Practice, WTS Global, Pakistan)

The Federal Government has announced several anti-avoidance tax measures in the Finance Bill 2021, presented as part of its third Budget before the National Assembly. The Government tags this budget as “No New Tax Budget” and emphasizes on the expansion of tax bases. This article outlines some of the anti- avoidance measures of the new tax policy introduced through Finance Bill 2021.Continue Reading

Glencore’s transfer pricing tax victory: key takeaways

Taxation v Glencore Investments Pty Ltd

By Carmen McElwain (Partner, Minter Ellison, Melbourne, Australia)

On 21 May 2021 the High Court of Australia (comprised of Chief Justice Kiefel and Justice Gordon) heard and refused an application for special leave sought by the Commissioner of Taxation (Commissioner) in relation to the Full Federal Court’s decision in Commissioner of Taxation v Glencore Investments Pty Ltd (2020) [2020] FCAFC 187; 384 ALR 252 (Glencore). Continue Reading

Corporate Tax Rates of Turkey in 2021

By Kardelen Lule (ADMD / MAVIOGLU & ALKAN, Turkey) 

The rate of corporate tax was amended significantly with the Law No.7316 Amending the Law on Collection of Public Receivables and Certain Laws (“Law No.7316”) published in the Official Gazette dated April 22, 2021.

The rate which was earlier determined for 2018, 2019, and 2020 was 22%. Article 11 of the Law No.7316 amended the corporate tax rates by adding Temporary Article 13 to Corporate Tax Law No.5520 (“CTL”) which increased corporate tax rates to 25% for 2021 and to 23% for 2022. For institutions subject to special accounting periods (the regular period is January 1 to December 31), the mentioned rates will be applied to the earnings of these institutions for the accounting periods starting in the relevant year.Continue Reading

Thai Tax Authority Issues Notification on Transfer Pricing Methods

Thailand’s Revenue Department Issues Notification on Transfer Pricing Methods

By Varapa Aurat (Consultant, Tilleke & Gibbins, Thailand) 

On May 6, 2021, a new transfer pricing notification from Thailand’s Tax Department was officially published in the Government Gazette. The Notification of the Director-General of the Tax Department Re: Income Tax (No. 400), which was first announced earlier in the year, prescribes the criteria, methods, and conditions for Tax Department officials on how to assess income and adjust expenses for transactions between related parties (as defined in Section 71 bis of the Tax Code) that engage in intercompany transactions where conditions between the two parties in their commercial or financial relations differ from those that would be made between independent parties (i.e., where the transaction is not an “arms length” transaction).Continue Reading

Kenyan Finance Bill 2021 includes key international tax measures

Kenyan Finance Bill 2021 include key international tax measure

By CPA David Ndiritu Mwangi (Principal Consultant, Hisibati Consulting, Nairobi, Kenya)

The Kenyan government tabled the Finance Bill 2021 in Parliament on 11/05/2021. Unlike the prior year, the bill does not introduce new taxes. However the bill proposes significant changes that will indeed have a far reaching effect on multinational organizations operating in Kenya.Continue Reading

Pakistan’s appellate tribunal rules on tax treaty override

Applicability of Section 111 on Non Resident Pakistanis

By Muzammal Rasheed (Co-founder, CEO & Head of Practice, WTS Global, Pakistan)

The Appellate Tribunal Inland Revenue of Pakistan (ATIR) has disapproved applicability of Section 111 on Non-Residents in the case (2020) 122 TAX 10 (Trib.).

ATIR is the second forum of appeal against the Tax Assessment Orders issued by the Tax Authority. The appeal was filed by a Non-Resident Individual, challenging the best judgment assessment finalized by the Inland Revenue Department under section 121/111 of the Income Tax Ordinance, 2001 on ex parte basis.

Apart from the technical grounds raised before ATIR, the major thrust of the arguments on behalf of appellant involved the contention that the taxpayer was a non-resident person, having no Pakistan source income during the relevant tax year. Continue Reading

Advance Pricing Agreements to bring tax, transfer pricing certainty in Maldives

Publication of the Advance Pricing Regulation in the Maldives

By Zaina Zahir (Senior Associate, CTL Strategies, Maldives)

Transfer Pricing Landscape

With the commencement of the Income Tax Act in January 2020, the transfer pricing landscape has significantly changed in the Maldives. Within the past 12-months, the Maldives tax administration – Maldives Inland Revenue Authority – has published the Transfer Pricing Regulation, the Country-by-Country Reporting Regulation and the Advance Pricing Arrangement Regulation.

Through the Transfer Pricing Regulation and the Country-by-Country Reporting Regulation, the Maldives – aligning its practices with the OECD’s Transfer Pricing Guidelines – implements the three tiers of transfer pricing documentation which require qualifying enterprises to prepare the Master File, the Local File, and Country-by-Country Reports.

Hence, the subsequent issuance of the APA Regulation on 16 March 2021 has provided taxpayers with the much-needed certainty in the domain of transfer pricing in the Maldives. Taxpayers now have the option to enter into an ahead of time arrangement with the Maldives tax administration, agreeing on the transfer pricing methodology and the prices to be applied to a set of related party transactions for a period not exceeding 5 consecutive years. Taxpayers can enter into unilateral, bilateral or multilateral APAs. This is expected to provide a more promising, non-adversarial environment for investors.

APA Regulation

The APA Regulation sets out the procedure to be followed in entering into an APA and introduces several provisions on the administration of the APA. This includes the imposition of an annual compliance report filing requirement, details on circumstances under which the arrangement can be revoked or cancelled and more significantly, introduction of a roll back provision which would allow taxpayers to enter into APAs retrospectively.

The application process

The Maldives, similar to many other jurisdictions, implements a 3-phase process in entering into an APA. Initially, a pre-filing consultation is required, through which the scope of the arrangement is identified, the controlled transaction in question is understood and discussions are held in relation to the broader terms of the arrangement.

Subsequently, a formal application requesting for an APA can be lodged with detailed information on the elected transfer pricing methodology, comparability analysis, company’s group structure, and other relevant information. From thereon, the application is passed through evaluation and a final decision is made. Once the parties have successfully entered into an APA, an annual compliance report is to be filed along with the income tax return.

The APA process is comprehended to be a lengthy and comprehensive process. While the regulation does not specify a time frame within which the Maldives tax administration is to complete the process, it is still believed to be less time consuming than dealing with hefty transfer pricing audits and the resulting dispute resolution efforts.

Rollback to prior years

The regulation states that having considered certain factors, an APA can give coverage to tax years for which the deadline for submission of the income tax return has already elapsed. Overall, the allowability of such a retrospective coverage can be viewed as a more efficient method to administer and resolve  unsettled transfer pricing disputes.

However, the application of the provision is unclear – the Regulation merely states that in permitting a roll back, the tax administration will look into the APA duration of participating jurisdictions; surrounding circumstances of the transaction in question; whether a tax audit or investigation is being carried out; or whether any legal actions are being taken in relation to the transaction in question.

Hence, a complete guideline on the applicability and limitations of the roll back provision is still awaited.

Other considerations

The Regulation comprises provisions on possible revisions or cancellation of an APA in case of a material change in any of the critical assumptions or conditions or changed economic circumstances. On the other hand, in cases of fraud, deliberate misrepresentation of information or non-compliance, the arrangement may even be declared void ab-initio.

Takeaways

The inclusion of the option to enter into an APA with the Maldives tax administration is viewed as a diversion from the customary audit techniques applied to related party transactions which often results in robust assessments – paving the way to reduce the much frequent transfer pricing disputes in the Maldives.

It may be beneficial for multinational enterprises doing business in the Maldives to enter into an APA especially if the underlying set of related party transactions involve complex business restructuring, intercompany financing and intangibles. Though, when entering into an APA, consideration should always be put on whether the surrounding facts will remain constant for the coming years.

Publication of the Advance Pricing Regulation in Maldives

 

The author is Senior Associate at CTL Strategies, Maldives.

“The controlled transaction” in draft of the Poland’s Ministry of Finance General Ruling for Transfer Pricing Purposes

BKuzniacki_PWC Poland

By Błażej Kuźniacki (Attorney-at-Law, Deputy Director for Strategic Tax Advice & Dispute Resolution,PwC Poland) & Katarzyna Kotowska (Senior Associate, Transfer Pricing, PwC Poland) & Piotr Niewiadomski (Tax Advisor, Director in Transfer Pricing, PwC Poland)

The definition of controlled transaction in the light of Polish Corporate Income Tax Act (CIT Act) and explanatory memorandum

According to Article 11a point 6 of the CIT Act, a controlled transaction refers to economic activity identified on the basis of actual behavior of the parties to the transaction, including allocation of income to the foreign permanent establishment (PE), where the conditions are imposed/made as a result of existing relations.Continue Reading

Parity for All? Delhi High Court upholds trigger of MFN clause, bats for ‘common interpretation’ of Tax Treaties

Parity for All Delhi High Court upholds trigger of MFN clause, bats for ‘common interpretation’ of Tax Treaties

By Aditi Sharma (Partner, Khaitan & Co, India) & Krutika Chitre (Principal Associate, Khaitan & Co, India)

The Delhi High Court in its recently pronounced decision in the case of Concentrix Services Netherlands BV WP (C) 9051/2020 and Optum Global Solutions International BV WP (C) 882/2021 invoked the ‘Most Favoured Nation’ (MFN) clause under the India-Netherlands double taxation avoidance agreement (Tax Treaty) and applied a reduced 5% withholding rate on dividend income paid by Indian companies to Dutch shareholders.

Continue Reading

Outline and Considerations for the Pillar One Blueprint Proposals for Amount A

Outline and Considerations for the Pillar One Blueprint Proposals for Amount A

By Simon Webber (Managing Director, Duff & Phelps LLC, New York) & Ryan Lange (Director, Duff & Phelps LLC, New York)

On October 12, 2020 the OECD/G20 Inclusive Framework (IF) released the Report on Pillar One Blueprint. This is a working document that presents the IF’s current thinking on the scope and application of changes to the international tax system to address the Tax Challenges Arising from Digitalization.  Specifically, the OECD is seeking broader consensus and approval for its proposals before moving forward further into a more detailed design.Continue Reading

Shackling the FTAs by New Rules of Origin

By Ajinkya Gunjan Mishra (Partner, L&L Partners) & Avani Tewari  (Associate, L&L Partners).

International trade and commerce are critical to sustaining the economic development of a country. To attain high growth momentum, a Country must engage in trade negotiations and agreements at multilateral, regional, and bilateral levels. India has been a party to several bilateral and regional trade agreements, and quite a few important ones are under negotiations and slated to be finalised soon. 

However, India’s experience with the trade agreements has so far been mixed: favourable trade balance mostly in the case of smaller partners, and deficit with the larger ones. This coupled with the fact that trade agreements have been misused by availing preferential duty rate against the import of goods that did not meet the originating criteria have only added to the government’s list of concerns.

Continue Reading

Proposed modifications to the German Transfer Pricing Legislation

Dr. Björn Heidecke (Partner,  Deloitte Germany, Hamburg)

By Dr. Björn Heidecke (Director, Deloitte Germany, Hamburg) & Tatchamon Nanavaratorn (Senior Consultant, Deloitte Germany, Hamburg)

As part of the obligation to implement the European-wide mechanism to counter base erosion and profit shifting, the German Federal Ministry of Finance circulated a draft law on 10 December 2019 (hereafter referred to as “draft law”). Besides conforming to the requirement as directed by the EU Anti-Tax Avoidance Directive, the draft law brings about the modification to the current transfer pricing legislation of both the Foreign Tax Act (Außensteuergesetz) and the Fiscal Code (Abgabenordnung), and it introduces topics not previously codified into the legislation in accordance with the BEPS concepts introduced by the OECD. The draft law takes a strict stance on businesses’ actual conducts rather than their contractual arrangements.Continue Reading

Thailand moves to apply VAT to foreign digital services

Thailand Moves to Apply VAT to Foreign Digital Services

By Varapa Aurat (Consultant, Tilleke & Gibbins, Thailand) & Natthanit Mallikamal (Consultant, Tilleke & Gibbins, Thailand)

The rise of global digital economies has introduced uncertainties and exposed many loopholes in our existing tax system, with the most significant issues being the difficulties in collecting tax from those conducting digital activities without a physical presence in a jurisdiction. Thailand has long considered reforming its traditional tax system to better cover the digital economy and digital transactions, believing that foreign companies engaged in the same transactions in Thailand as local companies should also pay tax to the country. This includes value added tax (VAT) on the provision of digital services.Continue Reading

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

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

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

Customs valuation and related party transactions

Customs Valuation and Related Party Transactions

By Shilpa Goel (Tax Lawyer, India)

I am currently working on a case that involves questions of huge significance when it comes to related-party transactions and customs valuation. It is always good to begin with a caveat and I have two. The first is that the import in question pertains to the years 2002-2006, when the Indian custom valuation rules were somewhat different (from what they are now). The second is that I will not comment on the exact merits of the case but provide a broad overview of the legal and practical side of things.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

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) 

Introduction

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].Continue Reading

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

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

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

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

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

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. 

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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

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

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

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

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.

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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

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

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

‘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

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

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

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

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

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

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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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

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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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