Eight Forum on Tax Administration (FTA) members start a multilateral TP and PE tax risk assurance programme
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: 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.”
Until recently I was a Senior Transfer Pricing Specialist with HM Revenue & Customs. I have HMRC TP risk-assessing and case-working experience for most business sectors and transaction types and was a member of HMRC’s TP Governance Panel, which has the final say on most TP enquiries.
I have now decided to specialise in helping MNEs and their advisers prepare their “final” TP documentation for HMRC eyes.
You may think your TP Documentation is clear and complete; but HMRC may think otherwise. Many TP enquiries are opened or extended by HMRC because the full facts and circumstances of the business and its transfer pricing are absent from or not clearly presented in the documents provided. Ironically, on establishing the facts it often becomes clear to HMRC that the pricing is actually at arm’s length and the enquiry can be closed without adjustment. Unfortunately, considerable time and money will have been expended on the enquiry in the meantime.
Such enquiries can be avoided or cut short.
I can “sense-check” your TP documentation; issues that might otherwise trigger “TP risk” alarm bells within HMRC will be identified and can be corrected, clarified or expanded as required, before submission to HMRC, to better demonstrate your principled and objective approach to achieving the appropriate arm’s length pricing.
To find out how I can help you please use the “contact me” tab above or email me directly.
Gordon McLeman 08 December 2017
In this recent transfer pricing case the Dutch Courts reduced the tax authority’s adjusted assessment of €188.3m down to €32.1m
The basic facts are:
- A Dutch parent company had provided services to foreign subsidiaries on a cost-plus basis.
- The parent received compensation when a business restructuring transferred its HQ and strategic functions to Switzerland.
- The Dutch Tax Authorities concluded that this compensation was not enough and that the parent continued to perform strategic functions for the group.
However, the Court ruled that:
- the parent had fulfilled its legal obligations by preparing thorough transfer pricing documentation.
- that the burden of proof was on the Dutch tax authorities and
- the tax authorities did not provide sufficient arguments to support their adjustment.
This outcome illustrates the importance of ‘preparing thorough transfer pricing documentation’ and, although it’s a Dutch example, the principle holds good across jurisdictions.
If you are interested in finding out how your TP documentation might fare if audited by HMRC then read on…… Read the rest of this entry »
Originally published by Grant Thornton UK LLP, 9 May 2016
Reinsurance is a common connected-party transaction for groups operating in the insurance sector. This 2016 article from Grant Thornton discusses a key change to the OECD Transfer Pricing Guidelines arising from BEPS and how it impacts the transfer pricing of intra-group reinsurance.
The article concludes that “for many groups there is unlikely to be a sea change in the transfer pricing analysis performed, but there will be a greater level of documentation and evidence required to support the nature of the analysis performed.”
Source: accountancy age.com 14 September 2017
“Diverted profits tax revenue collected by HMRC in 2016-17 totalled £281m, leaping from £31m collected in the previous year, according to data released by HMRC.”
“However, law firm Pinsent Masons said that many DPT disputes become transfer pricing disputes, and HMRC is spending an increasing amount of time settling the cases.”
““Transfer pricing disputes are taking HMRC nearly two-and-a-half years to settle – a year longer than its internal target. This is creating a serious backlog,” said Heather Self, partner at the firm.”
“Self said that she expected the number of DPT charging notices issued by HMRC to increase next year, as the tax applies to profits arising from 1 April 2015, and the deadline for notices for the period ending 31 December 2015 is 31 December 2017.”
Source: offshorenewsflash.com 23 August 2017
“The Federal Court of Canada has ruled that the Canadian Revenue Agency may not conduct further in-person interviews with representatives from a multinational corporation concerning its transfer pricing affairs, having already discussed earlier tax years.
Ruling in favor of Cameco Corporation, the Federal Court, in Minister of National Revenue v Cameco Corporation (2017 FC 763), noted that the Minister’s power “is not so wide to compel an indeterminate number of people for oral interviews.””
The case of Luxottica India Eyewear Pvt. vs Acit was heard in New Delhi on 23 May 2017 and the decision on 25 May has created new uncertainty for multinationals operating in India. Read the rest of this entry »