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 »