Transfer Pricing

TP Back to Basics – The HMRC ATCA Process

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This article is accompanied by a slide presentation on YouTube. Feel free to use my material for your own in-house purposes, all I ask is that you acknowledge the source. Read the rest of this entry »

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OECD announces further guidance on the implementation of CbC Reporting

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TP Back to Basics – Transfer Pricing Documentation

Posted on Updated on

This article is accompanied by a slide presentation on YouTube. Feel free to use my material for your own in-house purposes, all I ask is that you acknowledge the source. Read the rest of this entry »

BEPS Action 13: Jurisdictions implement final regulations for first filings of CbC Reports

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Source: OECD Press Release 21 December 2017

21/12/2017 – Today, a further important step was taken to implement Country-by-Country (CbC) Reporting in accordance with the BEPS Action 13 minimum standard, through activations of automatic exchange relationships under the Multilateral Competent Authority Agreement on the Exchange of CbC Reports (“the CbC MCAA”).

The automatic exchange of Country-by-Country Reports which is set to start in June 2018 will give tax administrations around the world access to key information on the annual income and profits, as well as the capital, employees and activities of Multinational Enterprise Groups that are active within their jurisdictions.

With more than six months before the first exchange deadline, there are now over 1400 automatic exchange relationships in place among jurisdictions committed to exchanging CbC Reports as of mid-2018, including those under EU Council Directive 2016/881/EU and bilateral competent authority agreements (including 31 with the United States).

OECD Press Release here

 

Facebook to overhaul Irish tax scheme

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Source: BBC.co.uk 12 December 2017

“Facebook is to overhaul its tax structure so that it pays tax in the country where profits are earned, instead of using an Irish subsidiary.

The online advertising giant is to make the change in every country outside the US where it has an office.

However, that does not necessarily mean it will start paying more tax in other countries as a result of the overhaul, Professor Prem Sikka of the universities of Sheffield and Essex told the BBC.

Taxes are paid on profits, and “the huge difficulty with large companies is trying to determine exactly what the profit is,” he said.

There are a number of ways firms can muddy the waters, including charging intra-group management fees, royalty fees, and profit-sharing, he said.”

source article here

 

UK CbCR filing and notification deadline – 31 December 2017

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The UK has an annual requirement (following BEPS13) for certain MNEs with consolidated group revenue of at least €750m to notify and electronically deliver to HMRC a report of revenue, pre-tax profit and taxes paid in each country in which they operate. Guidance on preparing and filing the reports has been published.

For groups planning to file a report with HMRC for the year ended 31 December 2016, the filing deadline is 31 December 2017 and notifications are also required for the year ending 31 December 2017 by 31 December 2017.

Your HMRC Customer Relationship Manager should be your first point of contact for any questions about notifications, the registration service, the reporting service or HMRC’s rules for completing the XML schema. If you don’t have a CRM, email digitalservice.cbc@hmrc.gsi.gov.uk.

The ultimate group parent is primarily responsible for filing the report with HMRC although the UK entities are required to make a “local filing” where:

  1. the ultimate parent’s country of residence does not require it to file a CbC report,
  2. that country does not have specific exchange of information arrangements with the UK in respect of CbC reporting, or
  3. such arrangements do exist but are not operating effectively.

in which case the UK entity must request from its ultimate parent all the information it needs to complete a full CbC report and file it with HMRC unless another group member has filed the report with HMRC or where a report containing the necessary information has been filed in another country that has effective information exchange arrangements with the UK. If it does not receive the information in time, the UK entity must inform HMRC and must file a report in respect of the UK entities in the group only.

You must make your report using XML format and in the structure, called a schema, published by the OECD. You must follow HMRC’s rules to create a valid template as only reports in this approved format will be accepted for electronic filing.

In accordance with OECD guidance, UK partnerships that are parent entities of multinational groups must also file CbC reports (as well as other group entities that are required to file).

“A wind of change blowing across the Irish Sea?”

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Reproduced from The Tax Justice Network’s “Offshore Wrapper” – Sunday December 10th

A recent editorial in the Irish Times demonstrates an extraordinary shift of opinion in one European tax haven. Ireland has for many years staunchly defended its corporate tax policy as being key to the economic development of the country. Attacks on Ireland’s tax haven status have been interpreted as an attack on Ireland’s right to share in a prosperous global economy.

Telling its readers that the county can no longer afford the damage being done to its reputation by Ireland’s tax haven policy, the article – which would have been unimaginable in a major Irish newspaper even a few years ago – concludes:

“There is a broad consensus that Ireland must defend its 12.5 per cent corporate tax rate. But that rate is defensible only if it is real. The great risk to Ireland is that we are trying to defend the indefensible. It is morally, politically and economically wrong for Ireland to allow vastly wealthy corporations to escape the basic duty of paying tax. If we don’t recognise that now, we will soon find that a key plank of Irish policy has become untenable.”

“ExxonMobil paid no tax on $18 billion revenue, unions allege”

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Source: smh.com.au 3 December 2017

“Exxon is more aggressive in minimising its tax than Chevron, which agreed to a settlement believed to be worth more than $1 billion this year, after being taken to court by the Australian Taxation Office”

“Energy giant ExxonMobil​ has not paid a cent in corporate income tax in Australia in at least two years, despite reaping more than $18 billion from the nation’s natural resources, according to three ofd the company’s workplace unions.

Tax campaigners accuse the company of cashing in on Australia’s soaring gas prices, but avoiding paying tax on its profits by sending much of its money to a network of offshore companies, some based in notorious tax havens.”

Source article here