Multinational companies are operating in an environment of unprecedented complexity. The rising volume and variety of intercompany transactions and transfer pricing regulations, coupled with increased tax authority collaboration across borders present both risks and opportunities. Our transfer pricing updates will provide you with the latest transfer pricing issues and developments worldwide that may affect your business.

Argentina extends transfer pricing due dates

Argentina’s tax authorities announced on July 30 that they will extend the deadline for filing transfer pricing documentation (local file, TP Form 741, TP Form 867, and TP Form 743) related to fiscal periods ending between December 31, 2018, and April 30, 2019. The new due dates will fall during the week of December 16-20, 2019.

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The Australian Taxation Office (“ATO”) rules that transfer pricing provisions override debt-equity rules

The ATO issued Taxation Determination TD 2019/10 on 3 July 2019, which deals with the interaction of the transfer pricing rules and the debt/equity rules.

The ATO’s view is that the debt/equity rules cannot limit the operation of the transfer pricing rules for related party financing transactions. The ATO view is that the debt/equity rules apply to classify the interest that arises by reference to the arm’s length conditions, which are identified, not to the actual conditions.

Although the approach in TD 2019/10 is broadly in keeping with past practice (TD 2008/20), taxpayers should consider their cross border related party financing arrangements from the perspective of transfer pricing rules, rather than merely rely upon the approach taken in the debt-equity rules.

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Belgian Ministry of Finance publishes guidance on CbC reporting correction procedures

On 30 July 2019, the Federal Public Service for Finance (FPS Finance) published guidance on country-by-country (CbC) reporting correction procedures. The guidance clarifies the reasons for correcting CbC Reports, the types of corrections, and provides technical guidance on the creation of corrective XML files. Furthermore, it contains correction examples and information on the reporting of CbC Report corrections.

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Denmark will allow reopening of old tax years following transfer pricing ruling

The Danish Tax Agency has published new guidance that allows the reopening of old tax years - back to 2008 - if certain conditions are met. The guidance comes in response to the Supreme Court’s January 2019 ruling in favour of Microsoft.

Under the new guidance, taxpayers that were subject to a discretionary transfer pricing adjustment by the Danish Tax Agency, based solely on the fact that transfer pricing documentation (in its entirety) was not prepared at the due date for filing the Danish income tax return, can have the affected years reopened. To reopen, taxpayers must be able to document that the Tax Agency’s assessment was not made in accordance with the Danish Tax Assessment Act Section 2 defining the arm’s length principle.

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Portugal approves new transfer pricing rules

Portugal has amended its almost 20-year old transfer pricing and penalties regimes; the new rules will apply from 1 October 2019. The new law reiterates that the terms and conditions of all commercial or financial transactions carried out between related parties (both resident and non-resident) must be in line with the arm’s length principle.

In summary, the following changes are made to the transfer pricing and penalty rules:

• The hierarchy for selecting a transfer pricing method will no longer apply.
• Transfer pricing reporting rules will be aligned with the new reporting obligations in Appendix H of the annual tax return following the Ministerial Order No. 35/2019.
• “Large taxpayers” will be required to prepare and submit transfer pricing documentation by the 15th day of the seventh month after the tax year-end.
• Advance pricing agreements validity will increase from three to four years.
• Penalties for late filings will be extended to the country-by-country notification form as well.

Additional details on the revised transfer pricing regime are expected to be provided in guidelines to be issued via a new ministerial order.

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Saudi Arabian tax authorities provide transfer pricing guidance during workshop

Saudi Arabia’s General Authority of Zakat and Tax held a transfer pricing workshop in Riyadh to clarify key areas of the transfer pricing regulations that were issued on 15 February 2019, and to address taxpayer questions regarding transfer pricing compliance requirements. The regulations are effective for tax returns filed on or after 1 January 2019.

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MAP and APA Statistics published by the EU

The EU have published statistics on MAP and APAs entered into by tax authorities in EU member states in 2018. The MAP statistics published here are limited to those cases entered into under the EU Arbitration Convention and there will be many more MAP cases involving taxpayers in EU countries that are entered into under the treaty network.

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Deloitte has published the new fourth Edition of Global Transfer Pricing: Principles and Practice

Deloitte has published the new fourth Edition of Global Transfer Pricing: Principles and Practice. The book continues to provide accessible and practical guidance on one of the most important areas of business taxation in the post-BEPS era.

How to effectively manage transfer pricing risks and compliance with transfer pricing rules is one of the recurring challenges for taxpayers. Deloitte’s Global Transfer Pricing book offers readers an overview of transfer pricing as it is practised today, including the 2017 changes to the OECD Transfer Pricing Guidelines following the Base Erosion and Profit Shifting (BEPS) initiative which brought about multiple changes and led to a renewed focus of tax authorities on transfer pricing.

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If you would like to discuss more on this topic, please do reach out to our key contacts below.

Key Contacts

Raoul Stocker - Partner, International Tax

Raoul Stocker is a tax partner with more than 15 years’ experience specifically in international tax litigation such as mutual agreement procedures and advanced pricing agreements. His focus lies on corporate tax planning, cross-border structuring of corporate transactions and businesses, transfer pricing as well as taxation of financial institutions. Raoul is also a lecturer of transfer pricing and tax law at the University of St. Gallen.

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Hans Rudolf Habermacher - Partner, Transfer Pricing 

Hans Rudolf has over 17 years’ of experience in advising clients in Transfer Pricing concepts. He successfully engages with MNCs in various industries in the planning, implementation, documentation & defence of TP concepts. Further he has significant experience in the design and implementation of principal & licensing structures. He is also highly successful in filing and negotiating bilateral APA's (Advanced Pricing Agreements) and mitigating double taxation issues through MAP procedures.

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Lorenzo Mondin - Manager, Transfer Pricing

Lorenzo works on Swiss and international engagements focusing on advisory projects mostly in relation to intra-group transfer pricing policies, corporate restructurings, intra-group debt, fiscal due diligences and tax audits whilst contributing to a certain number of compliance projects in relation to global transfer pricing documentation engagements. A large part of his client portfolio includes multinational groups active in the energy and resources sector, financial sector and life-science sector.

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