Arm’s Length Principle
UK Transfer Pricing Consultation – Secondary Adjustments – updated with a summary of the Consultation questions
The UK government is consulting on whether a secondary adjustment rule should be introduced into the UK’s transfer pricing legislation and how that rule would be designed.
The UK’s preference is for a rule which treats the non-arm’s length element of the transfer price as a deemed loan from the UK company to the connected party, with interest imputed at a rate above the market rate, for deterrent effect. The rule would be triggered for primary adjustments above a certain threshold, for example above £1m.
The consultation opened on 26 May 2016 and closes on 18 August 2016 at 11:45pm
This is a consultation on whether a secondary adjustment rule should be introduced into the UK’s transfer pricing legislation and how that rule would be designed.
The UK government’s preference is for a rule which treats the non-arm’s length excess as a deemed loan from the UK company with interest imputed at an above-market rate (for deterrent effect). The rule would be triggered for primary adjustments above a certain threshold, e.g. above £1m.
Just put my first video onto YouTube:
What do you think?
Axiome Groupe are hosting a “Transfer Pricing Excellence 2016″ Conference on the 19th and 20th of May 2016 in Barcelona, Spain at Hotel 1898.
The aim of the conference is to bring together Transfer Pricing professionals from leading multinational organizations across the EMEA region to network, benchmark and learn best practice regarding the integration of transfer pricing into business and tax strategies, performing the required transfer pricing analyses, knowing which evidence needs to be gathered, identifying and managing transfer pricing risks, managing the risk of double taxation, managing the audit and defence processes and so on.
The UK’s March 2016 Budget is an ideal opportunity for the adoption of the OECD Report on BEPS 8-10 actions into UK statute, with immediate effect. As the Report focuses on and clarifies specific factors that already fall within the transfer pricing arm’s length principle it can be applied retrospectively.