In 2013 and 2014, the Canadian tax authorities conducted the Transfer Pricing Audit of Bank of Nova Scotia. Prior to issuing tax assessment letters for FY 2007, 2008, 2009 and 2010, the Bank entered into a settlement agreement with the Minister of National Revenue in respect of the Transfer Pricing Audit. The settlement agreement provided for the Minister to reassess the Bank to include certain amounts in its income as transfer pricing adjustments in its 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013 and 2014 Taxation Years. In this regard, the agreement was to result in an increase of the Bank’s taxable income for the 2006 Taxation Year of $54,916,616. The Bank then wrote to the Minister to carry back $54,000,000 of non-capital loss that arose in the Bank’s taxation year ended October 31, 2008 to its 2006 Taxation Year in order to offset the pending $54,916,616 Transfer Pricing Adjustment. The Minister did so and as part of the reassessment, interest was calculated based on the date of the written request (i.e. March 12, 2015). The Bank of Nova Scotia was of the opinion that the interest should have been calculated based on the filing date of the loss year return (i.e. April 28, 2009). The Tax Court’s decision The Tax Court ruled in favor of the tax authorities and dismissed the appeal. “The wording of the provision is unambiguous and when applied to the present circumstances, the correct deemed payment date is April 11, 2015 which is 30 days after March 12, 2015, i.e. based on subparagraph 161(7)(b)(iv). For the purposes of the refund interest, the correct deemed overpayment date is also April 11, 2015, based on paragraph 164(5)(l). The Minister’s error in using March 12, 2015 for her calculation rather than April 11, 2015, resulted in 30 days’ less interest being assessed and this Court cannot put the taxpayer in a worse position” ...

Telefónica have been in a long lasting tax dispute with SUNAT – the Peruvian tax authorities – over various tax and transfer pricing issues, and interest on tax debt has been accumulating. Telefonica requests the non-application of article 33 of the Tax Code with regard to the late payment interest on the tax debt related to income tax for the years 2000 and 2001, with respect to the periods that exceed the deadlines set forth in articles 142, 150 and 156 of the aforementioned code. Judgement of the Constitutional Court In this Judgement, the Constitutional Court declares Telefónica’s claim for violation of the right to reasonable time and ORDERS the recalculation of the default interest without considering those generated in excess of the legal time limit established to resolve the dispute. Although the purpose of late payment interest is to encourage the payment of taxes, the disproportionate increase due to the excess of the legal term to resolve (without valid justification based on the “Complexity Test”), is a violation of the taxpayers’ rights. Click here for English Translation Click here for other translation ...

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Apple has paid an additional £136m taxes in a settlement with the UK. The settlement is revealed in Apple Europe’s 2017 accounts. “Following an extensive audit by Her Majesty’s Revenue and Customs (HMRC) the Company agreed to pay a corporate income tax adjustment of £136m covering prior years up to September 26, 2015. This payment of additional tax and interest reflects the Company’s increased activity and is recognized in the current financial period which ended on 1 April 2017. As a result of this adjustment the Company’s corporate income tax payments will increase going forward.” Most likely, the HMRC has found that the UK subsidiary had not received a large enough sales- and marketing commission from the Irish Apple sales hub ...

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