Transfer Pricing Risk
Eight Forum on Tax Administration (FTA) members start a multilateral TP and PE tax risk assurance programme
Source: EY Press Release, 22 November 2016
Seventy-five percent of businesses identify tax risk management as their top transfer pricing priority, according to an EY report, In the spotlight: a new era of transparency. Rising from 66% in 2013, the survey of 623 tax and finance executives across 36 countries reflects the striking impact of global calls for greater tax transparency on the boardroom agenda.
Peter Griffin, EY Global Transfer Pricing Leader, says “As governments increasingly move toward real-time reporting processes and the focus on transfer pricing intensifies, businesses need to evaluate the tools available to align their transfer pricing activities with IT reporting systems. Relying on periodic, ad hoc manual adjustments is no longer enough and could be costly both in terms of time and resources.”
Country-By-Country Reporting (CBCR) is simply a report produced by multi-national enterprises (MNEs) showing their revenue, profit before tax, tax paid, tax accrued, capital, tangible earnings, retained earnings and their total number of employees, for each tax jurisdiction in which they operate. They are also required to identify each group member doing business in each jurisdiction along with details of their business activities.
Sources: HMRC Consultation Document, 12 May 2106, KPMG response dated 13 May 2016
Following the first consultation the UK government announced at Budget 2016 that new rules for addressing BEPS through interest expenses will be introduced from 1 April 2017 in line with the OECD recommendations.
This is a demonstration of the UK’s commitment to aligning the location of taxable profits with the location of economic activity, and is in line with the UK’s more territorial approach to corporate taxation.
Due to the importance of this issue, Read the rest of this entry »
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 rules covering Transfer Pricing between companies in the same multinational enterprise (MNE) are based on international standards set by the Organisation for Economic Co-Operation and Development (OECD)
Providing goods and services to companies in the same group is part of normal commercial practice. However, some MNEs try to manipulate the prices charged to reduce the tax they have to pay. Read the rest of this entry »
I reported on 16.06.2015 that Deloitte’s 2015 Global Transfer Pricing Country Guide predicted intra-group procurement would be the subject of a coordinated HMRC challenge during 2015.
So I thought it might be useful to do a note on Procurement Operating Companies (POCs). Read the rest of this entry »
Given the need for countries to protect their tax base in the current economic climate, a continuing aggressive stance by tax authorities to Transfer Pricing can be expected.
So, what actions can a Multi-National Enterprise (MNE) take to minimise its Transfer Pricing risk?
Well, it’s essential to have a Transfer Pricing policy, supported by relevant and appropriate documentary evidence to demonstrate that the outcome is arm’s length. Read the rest of this entry »