Global Transfer Pricing Update: October 2019 - Tax and Legal blog

Global Transfer Pricing Update: October 2019

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.

Australia updates its transfer pricing simplified reporting and the Australian Taxation Office (“ATO”) issues guidance on non-resident owned mobile offshore drilling units in Australian waters

Simplified transfer pricing record-keeping options updated:

On 11 September 2019, the Australian Taxation Office (ATO) released an updated version of Practical Compliance Guideline 2017/2 (the PCG). The update relates to the eligibility criteria for applying simplified transfer pricing record-keeping options for low-level related party inbound and outbound loans, and follows significant amendments to the PCG made in January 2019.

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ATO guidance on non-resident owned mobile offshore drilling units in Australian waters.

On 26 September 2019, the ATO released a draft Practical Compliance Guidelines (PCG 2019/D5) on its compliance approach for offshore drilling and associated activities. Specifically, the guideline relates to “transfer pricing issues involving the use in Australian waters of non-resident owned mobile offshore drilling units”. This follows ATO concern whether the amount brought to tax in relation to various cross-border leasing arrangements involving mobile assets is consistent with the contribution made by the Australian operations.

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Bulgaria introduces mandatory transfer pricing documentation rules.

Bulgaria introduced mandatory transfer pricing documentation requirements effective from 1 January 2020.
The legislation also adopts the European Union directive that implements the mutual agreement procedures (MAP) as a mechanism for dispute resolution with regard to international double tax.

The new law provides that Bulgarian entities (subject to thresholds) must prepare a local file. The local file must be prepared by 31 March of the following year (the same as the due date for filing the corporate income tax return), whereas the master file must be available by 31 March of the year after that deadline.

The new law also imposes penalties for non-compliance with the requirements for preparation of documentation.

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Denmark proposed legislation would amend transfer pricing rules

Denmark’s Parliament introduced draft legislation on 13 September that would require taxpayers to submit their transfer pricing documentation with their income tax returns. The draft legislation also clarifies the Danish Tax Agency’s ability to conduct discretionary assessments in accordance with the Danish Tax Control Act.

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Ireland’s Department of Finance issues draft transfer pricing legislation

The Irish Department of Finance on September 2, issued “Ireland’s Transfer Pricing Rules Feedback Statement,” which contains draft legislation to update Ireland’s domestic transfer pricing regime from 1 January 2020.

The following key changes are proposed:

  • Broadening of the applicability of the transfer pricing rules to not only trading income and expenses but also to non-trading income and expenses taxed at 25 percent;
  • Arrangements relating to the acquisition and disposal of chargeable assets (such as tangible and intangible assets) are now also within scope;
  • New provisions allowing the recharacterization of transactions for transfer pricing purposes;
  • The application of the 2017 OECD transfer pricing guidelines from 1 January 2020;
  • The grandfathering exemption will be removed for chargeable periods beginning on or after 1 January 2020;
  • Companies classified as “medium enterprises” would be subject to the domestic transfer pricing law provisions (including documentation requirements) from 1 January 2020;
  • A master file and local file approach is adopted. The due date for the completion of the relevant documentation would be contemporaneous with the filing of the annual corporation tax return.

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Saudi Araba starts requesting transfer pricing documentation

Under the Kingdom of Saudi Arabia’s (KSA’s) by laws, which were introduced in February 2019 and applicable for tax returns filed on or after 1 January 2019, taxpayers are required to prepare transfer pricing documentation (local file and master file) at the time of filing their tax return. The General Authority of Zakat and Tax (GAZT) has started requesting taxpayers’ transfer pricing documentation. The requests for documentation have not been made by the GAZT on a standalone basis, but are part of a broader information-gathering process to kick-start a broader tax audit.

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OECD’s newly released 2018 MAP statistics indicate that total number of cases continues to increase

On 16 September 2019, the OECD released the 2018 Mutual Agreement Procedure (“MAP”) statistics. The statistics cover reporting jurisdictions that are members of the OECD Inclusive Framework.
These statistics indicate that the aggregate number of MAP cases continues to increase, even though tax administrations are closing an increasing number of cases. In part, this result reflects that the number of new transfer pricing cases is rising faster than the number of transfer pricing cases closed.

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Panama establishes regulatory framework for country-by-country report

Panama’s government on May 27 issued an executive decree that establishes the regulatory framework for submission of the country-by-country (CbC) report.

Every ultimate parent entity of a multinational entity (MNE) group that has consolidated income exceeding EUR 750 million or its equivalent in Panamanian currency (the balboa) (at the exchange rate as of January 2015) and is domiciled in Panama for tax purposes will be required to submit a CbC report annually.

The report must be filed within 12 months following the end of the tax year.

The first CbC reports that must be filed are those for the 2018 tax year.

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Transfer pricing controversy and country focus: What's happening in Australia, China, and Japan?

Transfer pricing continues to be at the top of revenue authorities' tax agendas, and keeping abreast of changing local requirements and practices is important for taxpayers in managing their global transfer pricing. In this webcast (content provided by Deloitte Singapore), the presenters will provide you with inside views on the China's State Administration of Taxation (SAT), Japan's National Tax Agency (NTA) and the Australian Taxation Office's (ATO) current thinking, activities, and plans on transfer pricing matters. Join us to keep abreast of the developments in this important area of 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_BLOG

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.



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.


 Lorenzo Mondin_blog

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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