Transfer Pricing Library

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OECD releases the report on Amount B of Pillar One

On 19 February 2024, the OECD/G20 Inclusive Framework on BEPS released the report on Amount B of Pillar One, which provides a simplified and streamlined approach to the application of the arm’s length principle to baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries. Drawing from existing principles in the OECD Transfer Pricing Guidelines, Amount B provides a simplified and streamlined pricing framework that determines a return on sales for eligible distributors. This framework is expected to reduce transfer pricing disputes, compliance costs, and enhance tax certainty for tax administrations and taxpayers alike. Low-capacity

FTA Article on Swiss Transfer Pricing Legislation and Practices as of 1 January 2024

FTA Article on Swiss Transfer Pricing Legislation and Practices as of 1 January 2024
The Swiss Federal Tax Authorities have published an Article on the status of transfer pricing legislation in Switzerland as of 1 January 2024. The Article describes the existing legal basis for the application of the arm’s length principle in Switzerland and reference is made to the OECD Transfer Pricing Guidelines as well as to Swiss administrative practice, circulars and case law. The Article highlights the importance of the comparability analysis and focuses on certain aspects of intra-group services, intangibles and financial transactions. With regard to transfer pricing documentation, the Article explains that Switzerland only requires country-by-country reporting. However, it also

Malta Publishes Local Guidance on Transfer Pricing

Malta Publishes Local Guidance on Transfer Pricing
On January 19, 2024, the Maltese Commissioner of Taxes and Customs published local guidelines in relation to the transfer pricing rules introduced in Malta in November 2022 by Legal Notice 284 of 2022. The local guidelines refer to the OECD Transfer Pricing Guidelines 2022 in relation to the application of transfer pricing methods, comparability analysis, transfer pricing documentation, etc. Malta Guidelines - Transfer Pricing Rules

Australia finalises compliance guideline on intangibles migration arrangements – PCG 2024/1

Australia finalises compliance guideline on intangibles migration arrangements - PCG 2024/1
17 January 2024 the Australian Taxation Office published the final version of its Practical Compliance Guideline PCG 2024/1 Intangibles migration arrangements. The PCG has previously been released in drafts as PCG 2021/D4 and PCG 2023/D2 Intangibles arrangements. The final version sets out ATO’s compliance approach to the tax risks associated with certain cross-border related party intangibles arrangements involving: restructures or changes to arrangements involving intangible assets (referred to as ‘migrations’ in the PCG) the mischaracterisation or non-recognition of Australian activities connected with intangible assets. Changes and additions included in the final version: further clarification of the arrangements in scope exclusion

US publishes Memorandum on the Effect of Group Membership on Financial Transactions

US publishes Memorandum on the Effect of Group Membership on Financial Transactions
On 29 December 2023, the Office of Chief Counsel of the IRS issued a memorandum (AM 2023-008) on the effect of group membership on financial transactions. The memorandum answers the following question: “May the Service consider group membership in determining the arm’s length rate of interest chargeable for intragroup loans and making a section 482 adjustment?” The answer given in the memorandum is “Yes. Under the section 482 regulations, the arm’s length rate of interest on an intragroup loan to a controlled borrower is generally the rate at which that borrower could realistically obtain alternative financing from an unrelated party.

OECD publishes Guidance on Pricing of Minerals

OECD publishes Guidance on Pricing of Minerals
6 November 2023 OECD published a transfer pricing framework on determining the price of minerals. The framework provide guidance for developing countries to accurately delineate the transaction and price mineral sales on an arm’s length basis. Specifically, it identifies the primary economic factors that influence the pricing of minerals using transfer  pricing principles. In particular the guidance offers a framework on how to use transfer pricing principles to apply the Comparable Uncontrolled Price method, including identifying the primary economic factors that influence the price of minerals (“mineral pricing frameworkâ€) to ensure that developing countries are able to tax mineral exports appropriately.

United Arab Emirates issues comprehensive Transfer Pricing Guide

23 October 2023, the United Arab Emirates issued a comprehensive practical Transfer Pricing Guide. The guide is designed to provide general guidance on the Transfer Pricing regime in the UAE with a view to making the provisions of the Transfer Pricing regulations as understandable as possible to readers. UAE’s Transfer Pricing regulations are contained in Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Chapter 10. Transfer Pricing Guide - EN - 23 10 2023

United Arab Emirates issues comprehensive Transfer Pricing Guide

On 23 October 2023, the United Arab Emirates issued a comprehensive practical Transfer Pricing Guide. The guide is designed to provide general guidance on the Transfer Pricing regime in the UAE with a view to making the provisions of the Transfer Pricing regulations as understandable as possible to readers. UAE’s Transfer Pricing regulations are contained in Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Chapter 10. Transfer Pricing Guide - EN - 23 10 2023

OECD releases text of the new MLC to Implement Amount A of Pillar One

11 October 2023 the OECD/G20 Inclusive Framework has released the text of a new multilateral convention that updates the international tax framework to co-ordinate a reallocation of taxing rights to market jurisdictions, improve tax certainty, and remove digital service taxes.  The Multilateral Convention to Implement Amount A of Pillar One  (the MLC) reflects the current consensus achieved among members of the Inclusive Framework. Amount A of Pillar One co-ordinates a reallocation of taxing rights to market jurisdictions with respect to a share of the profits of the largest and most profitable multinational enterprises (MNEs) operating in their markets, regardless of their

Brazil publishes comprehensive normative instructions for its new transfer pricing rules

29 September 2023 Brazil published normative instructions (IN RFB nº 2.161/23) for its new transfer pricing rules, which will apply from FY 2024 onwards. Brazil’s transfer pricing legislation is now in line with the OECD Transfer Pricing Guidelines. In fact, the new legislation is the result of a joint project between the Brazilian Federal Revenue Service (Receita Federal do Brasil) and the OECD. The normative instructions deal with the general aspects of the new law, which form the basic part of the new system and apply to all transactions falling within its scope. It addresses practical issues in the application

Poland issues Tax clarifications on transfer pricing – No. 6: Cost Plus Method

Poland issues Tax clarifications on transfer pricing - No. 6: Cost Plus Method
September 29, 2023 the Polish Ministry of Finance has published tax explanations regarding transfer pricing No. 6 regarding the cost-plus method. The purpose of the explanations is to present practical aspects related to the use of the cost plus method. The explanations take into account the recommendations of the Transfer Pricing Forum of September 28, 2021 regarding the description of the cost plus method and comments submitted as part of the tax consultations. The cost-plus method is described in OECD and UN documents: Chapter II, Part II, Section D, paragraphs 2.45-2.61 of the OECD Guidelines; Chapter 4.4 of the UN

EU Commission proposes to simplify tax rules – and harmonise transfer pricing rules across the EU

EU Commission proposes to simplify tax rules - and harmonise transfer pricing rules across the EU
12 September 2023, the European Commission published a new proposal to simplify tax rules and harmonise transfer pricing rules across the EU to reduce compliance costs for cross-border businesses. According to the press release, the proposal, called “Business in Europe: Framework for Income Taxation†(BEFIT), will make life easier for both businesses and tax authorities by introducing a new, single set of rules to determine the tax base of groups of companies. This will reduce compliance costs for large businesses who operate in more than one Member State and make it easier for national tax authorities to determine which taxes

138 countries and jurisdictions agree historic milestone to implement OECD’s global tax deal

138 countries and jurisdictions agree historic milestone to implement OECD's global tax deal
12 July 2023 138 members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) – representing over 90% of global GDP – agreed an Outcome Statement recognising the significant progress made and allowing countries and jurisdictions to move forward with historic, major reform of the international tax system. The Twoâ€Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy will ensure a fairer distribution of profits and taxing rights among countries and jurisdictions with respect to the world’s largest Multinational Enterprises (MNEs). The Outcome Statement agreed at the 15th Meeting of the Inclusive

Brazil publishes new updated 2023 transfer pricing legislation – aligned with OECD guidelines

14 June 2023 Brazil issued it’s new updated transfer pricing legislation, which is now aligned with OECD transfer pricing guidelines. Click here for unofficial English translation Brazil LEI Nº 14.596, DE 14 DE JUNHO DE 2023 ORG

2023: ATO Draft Practical Compliance Guidelines on Intangibles Arrangements, PCG 2023/D2

2023: ATO Draft Practical Compliance Guidelines on Intangibles Arrangements, PCG 2023/D2
The Australian Taxation Office (ATO) has released a new draft of Compliance Guidelines on Intangible Arrangements, PCG 2023/D2. When finalised, the guidelines will set out the ATO’s compliance approach to the development, use and transfer of intangible assets. The guidelines focus on tax risks associated with the potential application of the transfer pricing provisions, withholding tax provisions, capital gains tax (CGT), capital allowances, the general anti-avoidance rule (GAAR) and the diverted profits tax (DPT). Examples of high-risk intangibles arrangements under the draft guidelines include centralisation of intangible assets bifurcation (separation) of intangible assets non-recognition of local intangible assets and DEMPE

IRS publishes new interim Guidance on Review and Acceptance of APA Submissions

In a memorandum issued April 25, 2023, the IRS provides guidance to their employees of the Treaty and Transfer Pricing Operations practice area in the Large Business and International Division with respect to requests from taxpayers for an APA with the IRS. The guidance instructs IRS personnel on how to review and, where appropriate, accept taxpayer APA requests to align the processes for APAs to be consistent with IRS’ strategy and maximize the probability of successful, timely, and comprehensive resolution of transfer pricing issues for both taxpayers and the IRS. Visit IRS’ webpage for more information on the US Advance

Canada plans to modernize and strengthen the general anti avoidance rule (GAAR)

Canada plans to modernize and strengthen the general anti avoidance rule (GAAR)
According to the Canadian Budget 2023 the government will release for consultation draft legislative proposals to amend the general anti avoidance rule (GAAR) which was added to the Canadian Income Tax Act in section 245 back in 1988. If abusive tax avoidance is established, the GAAR applies to deny the tax benefit that was unfairly created. The GAAR has helped to tackle abusive tax avoidance in Canada but it requires modernizing to ensure its continued effectiveness. The following amendments to the GAAR is proposed: introducing a preamble (containing interpretive rules and statements of purpose); changing the avoidance transaction standard (from a

Poland issues Tax clarifications on transfer pricing – No. 5: Resale Price Method

Poland issues Tax clarifications on transfer pricing - No. 5: Resale Price Method
24 March 2023 the Polish Ministry of Finance issued Tax clarifications on transfer pricing No. 5: Resale Price Method The resale price method (RPM) is one of the traditional transaction methods and probably most useful where it is applied to distribution operations.. Application of the RPM for determining the price of a controlled transaction begins with the price at which a product that has been purchased from an associated enterprise is resold to an independent enterprise. This price (the resale price) is then reduced by an appropriate gross margin on this price (the “resale price marginâ€) representing the amount out

Germany publishes draft legislation to implement the global minimum tax – OECD Pillar II

Germany publishes draft legislation to implement the global minimum tax - OECD Pillar II
The German Federal Ministry of Finance issues draft law for the implementation of the EU Directive to ensure a global minimum level of taxation for multinational groups of companies and large domestic groups in the Union The aim of the draft law is to implement key elements of the international agreements on Pillar 2 of the so-called two-pillar solution. The post-taxation provisions contained therein are intended to ensure a global effective minimum taxation, to counteract harmful tax competition and aggressive tax structuring and thus to contribute to the promotion of tax justice and a level playing field. Click here for

EU list of Non-Cooperative Tax Jurisdictions – Tax Havens

EU list of Non-Cooperative Tax Jurisdictions - Tax Havens
14 February 2023 the Council of the European Union published an updated list of non-cooperative tax jurisdictions. The British Virgin Islands, Costa Rica, the Marshall Islands and Russia have been added to the list, which now comprises 16 jurisdictions: American Samoa Anguilla Bahamas British Virgin Islands Costa Rica Fiji Guam Marshall Islands Palau Panama Russia Samoa Trinidad and Tobago Turks and Caicos Islands US Virgin Islands Vanuatu This revised EU list of non-cooperative tax jurisdictions includes countries that either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments

Interpretation statement from the Inland Revenue of New Zealand on application of the general anti-avoidance provision

Interpretation statement from the Inland Revenue of New Zealand on application of the general anti-avoidance provision
3 February 2023 the Inland Revenue of New Zealand issued an interpretation statement explaining the Commissioner’s view of the law on tax avoidance in New Zealand. It sets out the approach the Commissioner will take to the general anti-avoidance provisions in the Income Tax Act 2007 – ss BG 1 and s GA 1. Where s BG 1 applies, s GA 1 enables the Commissioner to make an adjustment to counteract a tax advantage obtained from or under a tax avoidance arrangement. The Supreme Court in Ben Nevis considered it desirable to settle the approach to the relationship between s

The South African Revenue Service (SARS) issues Arm’s Length Guidance on Intra-Group Loans

The South African Revenue Service (SARS) issues Arm's Length Guidance on Intra-Group Loans
17 January 2023 the South African Revenue Service (SARS) released an interpretation note titled “DETERMINATION OF THE TAXABLE INCOME OF CERTAIN PERSONS FROM INTERNATIONAL TRANSACTIONS: INTRA-GROUP LOANS†which provides guidance on how SARS will determine arm’s length pricing for intra-group loans. The Note also provides guidance on the consequences for a taxpayer if the amount of debt, the cost of debt or both are not arm’s length. According to the note an intra-group loan would be incorrectly priced if the amount of debt funding, the cost of the debt or both are excessive compared to what is arm’s length. Legal-IN-127-Determination-of-the-taxable-income-of-certain-persons-from-international-transactions-Intra-group-loans

Brazil issues Draft Legislation on implementation of the Arm’s Length Principle

Brazil issues Draft Legislation on implementation of the Arm's Length Principle
28 December 2022 Brazil published draft legislation on implementation of the arm’s length principle as described in the OECD Transfer Pricing Guidelines. The new provisions came into effect on the date of publication and must be converted into law by the National Congress. The new transfer pricing regime will be optional for taxpayers for 2023 and mandatory as of 2024. Unofficial English Translation MEDIDA PROVISÓRIA Nº 1.152, DE 28 DE DEZEMBRO DE 2022 - BRAZIL - MEDIDA PROVISÓRIA Nº 1.152, DE 28 DE DEZEMBRO DE 2022 - DOU - Imprensa Nacional

EU reaches agreement on Pillar 2 – Implementation in Member States no later than 31 December 2023

EU reaches agreement on Pillar 2 - Implementation in Member States no later than 31 December 2023
12 December 2022 the EU Council announced unanimous agreement among member states on the Commission’s proposal for a Directive ensuring a minimum effective tax rate of 15% for large multinationals with a turnover of at least €750 million. With the agreement, the EU will be among the first to implement Pillar II. The Council Directive includes a common set of rules on how to calculate the 15% effective minimum tax rate– so that this is properly and consistently applied across the EU. The rules will apply to multinational enterprise groups and large-scale domestic groups in the EU, with combined financial

OECD Publishes Consultation Document on Amount B

OECD Publishes Consultation Document on Amount B
On 9 December 2022 OECD published a consultation document on Amount B as part of the ongoing work on OECD’s two-pillar solution to address the tax challenges arising from the digitalisation of the economy. Amount B is one of the components of Pillar One and aims to simplify and streamline application of the arm’s length principle in regards to in-country baseline marketing and distribution activities. A particular concern of low capacity jurisdictions has been the relative unavailability of appropriate local market comparables through which arm’s length prices can be established. Amount B will address this issue by providing a basis

Malta issues Legal Notice 284 of 2022 implementing Transfer Pricing provisions into its Legislation

Malta issues Legal Notice 284 of 2022 implementing Transfer Pricing provisions into its Legislation
On 18 November 2022 Malta published Legal Notice 284 of 2022 whereby transfer pricing rules are implemented into its legislation. The new rules will come in to effect 1 January 2024 in relation to transactions/arrangements entered into on or after that date. For arrangements that have been entered into before that date, the rules will only apply to transactions/arrangements that are materially altered on or after that date. The new transfer pricing provisions will apply to cross border transactions/arrangements carried out between associated parties having 50% or more of common direct or indirect control. Malta LN 284 of 2022

OECD Publishes Updated Guidance on CbC Reporting

OECD Publishes Updated Guidance on CbC Reporting
On 14 October 2022 OECD published updated guidance on CbC reporting. The guidance contains definitions of items in the CbC reporting template – revenue, related parties, tax accrued and paid, fair value accounting, positive and negative figures etc. Issued related to particular reporting entities is also addressed (investment funds, major shareholding, deemed listing provisions and permanent establishment information. Guidance is provided on common issues such as currency fluctuations, definition of consolidated revenue, long and short accounting periods, mergers – demergers and acquisitions, and errors made by MNE groups in preparing CbC reports. And finally the updated guidance addresses issues related

OECD Publishes Manual on Bilateral Advance Pricing Arrangement

OECD Publishes Manual on Bilateral Advance Pricing Arrangement
On 28 September 2022 OECD published a new manual for entering bilateral advance pricing arrangement (APA’s) which has been approved by the Inclusive Framework on BEPS, as well as all members of the FTA, on 6 July 2022. The Bilateral Advance Pricing Arrangement Manual (“BAPAM†or “Manualâ€) is intended as a guide to tax administrations and taxpayers for streamlining the bilateral APA process. In addition to detailing several Best Practices for engaging in bilateral APAs, it also includes practical resources for tax administrations and taxpayers, such as templates and examples. It provides tax administrations and taxpayers with basic information on the

Joint Statement on Pillar I and II by France, Germany, Italy, Netherlands and Spain

Joint Statement on Pillar I and II by France, Germany, Italy, Netherlands and Spain
France, Germany, Italy, Netherlands and Spain have issued a joint statement to reaffirm their commitment to swiftly implement the global minimum effective corporate taxation (Pillar Two). According to the statement the five countries are also fully committed to to complete the work on the better reallocation of taxing rights from huge global multinationals’ profits (Pillar One) with the objective of signing a multilateral convention by mid-2023. g5-statement-global-minimum-effective-taxation

Poland – Ordinance No. 1934 on Transfer Pricing-Documentation

Poland - Ordinance No. 1934 on Transfer Pricing-Documentation
Polish Ordinance No. 1934 of August 29 2022 on transfer pricing documentation. The new ordinance sets out the detailed scope of data and information and the content of the statement contained in the corporate income tax transfer pricing documentation together with explanations on how it should be prepared. Click here for unofficial English translation Click here for other translation Poland TP doc 2022 1934

Australian Treasury issues Consultation Paper on Multinational Tax Integrity and Tax Transparency

Australian Treasury issues Consultation Paper on Multinational Tax Integrity and Tax Transparency
As part of a multinational tax integrity package aimed to address the tax avoidance practices of multinational enterprises (MNEs) and improve transparency through better public reporting of MNEs’ tax information, the Australian Treasury issued a Consultation Paper in August 2022. This paper seeks to consult on the implementation of proposals to: amend Australia’s existing thin capitalisation rules to limit interest deductions for MNEs in line with the Organisation for Economic Cooperation and Development (OECD)’s recommended approach under Action 4 of the Base Erosion and Profit Shifting (BEPS) program (Part 1); introduce a new rule limiting MNEs’ ability to claim tax

Hungary – Legislation on use of Interquartile Range and Median

Hungary - Legislation on use of Interquartile Range and Median
As part of tax legislation recently enacted in Hungary, rules governing the application of statistical tools – arm’s length range and adjustments within the range – will now be governed by law. When determining arm’s length prices based on benchmarks of comparables it will now be mandatory to use the interquartile range. If the price falls outside the arm’s length range, adjustment must be made to the median value – unless the taxpayer can prove that another value within the range is more appropriate. Where the price is within the arm’s length range, taxpayers will no longer be allowed to

2022: ATO Taxpayer Alert on Treaty shopping arrangements to obtain reduced withholding tax rates (TA 2022/2)

2022: ATO Taxpayer Alert on Treaty shopping arrangements to obtain reduced withholding tax rates (TA 2022/2)
The ATO is currently reviewing treaty shopping arrangements designed to obtain the benefit of a reduced withholding tax (WHT) rate under a double-tax agreement (DTA) in relation to royalty or dividend payments from Australia. Typically, this benefit is sought via the interposition of one or more related entities between an Australian resident and the ultimate recipient of the royalty or dividend, where the interposed entity is a resident of a treaty partner jurisdiction. The ultimate recipient is generally located in a jurisdiction that either does not have a DTA with Australia or, where it is a treaty partner of Australia, the

German draft-legislation on application of the arm’s length principle to cross-border relocation of functions

German draft-legislation on application of the arm's length principle to cross-border relocation of functions
On 5 July 2022, the Federal Ministry of Finance in Germany published draft legislation regarding application of the arm’s length principle to cross-border relocation of functions. According to the general provisions A function is a business activity that consists of a grouping of similar operational tasks performed by specific units or departments of an enterprise. It is an organic part of an enterprise, without the need for a sub-operation in the tax sense. A transfer of functions within the meaning of section 1(3b) of the Foreign Tax Act occurs if a function, including the associated opportunities and risks as well

The Netherlands releases New 2022 Decree on application of the Arm’s Length Principle

The Netherlands releases New 2022 Decree on application of the Arm's Length Principle
On 1 July 2022, the tax authorities in the Netherlands published Decree No. 2022-0000139020 of 14 June 2022 containing local guidance on application of the arm’s length principle. The Decree is based on article 9 of the OECD Model Tax Convention and the OECD Transfer Pricing Guidelines and also contains references to local case laws. In the Decree, particular focus is on areas that have been updated in the most recent releases of the OECD Transfer Pricing Guidelines – Legal ownership, DEMPE functions, Services, HTVI and Valuation Methods, Government policies (COVID-19), Remuneration of Procurement activities, Financial transactions etc. Click here

AFIP has published a non exhaustive list of Low and No Tax Jurisdictions (LNTJ)

AFIP has published a non exhaustive list of Low and No Tax Jurisdictions (LNTJ)
The Federal Tax Administration of Argentine (AFIP) has published a non exhaustive list of 41 Low and No Tax Jurisdictions (LNTJ). The list related to Law 27,430 from 29 December 2017 which introduced certain adverse tax implications for transactions with LNTJs. For instance, according to the Law transactions with unrelated parties in LNTJs are not deemed arm’s length for transfer pricing purposes. Furthermore such transactions are required to be reported to the tax authorities. LNTJs refers to jurisdictions where the income tax rate is 60% lower than the minimum 25 % CIT rate applicable in Argentina. Hence, LNTJs are jurisdictions

Italy releases operational instructions on arm’s length range and benchmarking.

Italy releases operational instructions on arm's length range and benchmarking.
On 24 May 2022, the Italian Tax Agency (Agenzia delle Entrate) released CIRCULAR NO. 16/E containing operational instructions on issues relating to application of the arm’s length range. The circular – which is based on the OECD transfer Pricing Guidelines, guidance on benchmark studies issued by the Joint Transfer Pricing Forum, and relevant Italian case laws – provides operational instructions regarding the correct interpretation of the notion of “arm’s length range”, as also specified in Article 6 of the Decree of 14 May 2018, when applying the provisions set forth in Article 110, paragraph 7, of the Consolidated Income Tax

South African Revenue Service releases comprehensive Interpretation Note on intra-group loans

South African Revenue Service releases comprehensive Interpretation Note on intra-group loans
The South African Revenue Service (SARS) has published a comprehensive Interpretation Note on intra-group loans. The note provides taxpayers with guidance on the application of the arm’s length principle in the context of the pricing of intra-group loans. The pricing of intra-group loans includes a consideration of both the amount of debt and the cost of the debt. An intra-group loan would be incorrectly priced if the amount of debt funding, the cost of the debt or both are excessive compared to what is arm’s length. The Note also provides guidance on the consequences for a taxpayer if the amount

OECD releases the 2022 edition of the OECD Transfer Pricing Guidelines

OECD releases the 2022 edition of the OECD Transfer Pricing Guidelines
On 20 January 2022 the OECD released the 2022 edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. The OECD Transfer Pricing Guidelines provide guidance on the application of the “arm’s length principle”, which represents the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises. In today’s economy where multinational enterprises play an increasingly prominent role, transfer pricing continues to be high on the agenda of tax administrations and taxpayers alike. Governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and

Finnish TP-Legislation updated to include non-recognition and recharacterisation

Finnish TP-Legislation updated to include non-recognition and recharacterisation
Effective as of 1. January 2022 Finnish Transfer Pricing legislation has been updated to align the rules with the OECD Transfer Pricing Guidelines in regards to non-recognition and recharacterisation. Going forward the arm’s length provision in the Tax Procedure Act, section 31, will include the possibility for non-recognition and recharacterisation which according to Finnish Case Law has not been possible under the previous wording of the provision. Unofficial Translation of New Finnish Transfer Pricing Legislation on Non recognition and Recharacterisation in Section 31 of the Tax Procedure Act

December 2021 – EU directive on minimum effective tax rate – implementation of OECD Pillar II

December 2021 - EU directive on minimum effective tax rate - implementation of OECD Pillar II
The European Commission has proposed a Directive ensuring a minimum effective tax rate for the global activities of large multinational groups. The proposal delivers on the EU’s pledge to move extremely swiftly and be among the first to implement the recent historic global tax reform agreement, which aims to bring fairness, transparency and stability to the international corporate tax framework. The proposed directive follows closely the international agreement and sets out how the principles of the 15% effective tax rate – agreed by 137 countries – will be applied in practice within the EU. It includes a common set of

OECD releases Pillar Two model rules – Global Minimum Tax of 15%

OECD releases Pillar Two model rules - Global Minimum Tax of 15%
The OECD has published detailed rules to assist in the implementation of a landmark reform to the international tax system, which will ensure Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023. The Pillar Two model rules provide governments a precise template for taking forward the two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy agreed in October 2021 by 137 countries and jurisdictions under the OECD/G20 Inclusive Framework on BEPS. The rules define the scope and set out the mechanism for the so-called Global Anti-Base Erosion (GloBE) rules

Spain releases report on application of their General Anti-Abuse Rule.

Spain releases report on application of their General Anti-Abuse Rule.
The Spanish tax authorities have published a report on the applicability of their domestic General Anti-Abuse Rule (GAAR). In the report, a conduit arrangement aimed at benefiting from an exemption at source on the payment of interest to EU residents is described. Click here for English translation Spain GAAR report

Austrian Ministry of Finance issues Updated Local Transfer Pricing Guidelines (VPR 2021)

Austrian Ministry of Finance issues Updated Local Transfer Pricing Guidelines (VPR 2021)
In October 2021 the Austrian Ministry of Finance issues updated local transfer pricing guidelines – VPR 2021 The Transfer Pricing Guidelines 2021 (VPR 2021) are an interpretative aid to the arm’s length principle and serve to ensure its uniform application. They are to be regarded as a summary of the applicable transfer pricing provisions and thus as a reference work for administrative and operational practice. Rights and obligations that go beyond the statutory provisions cannot be derived from the guidelines. In 1995, the OECD published general principles for the determination of arm’s length transfer prices between associated enterprises (OECD Transfer

German TP-Legislation updated as of June 2021

German TP-Legislation updated as of June 2021
German legislation on transfer pricing has been updated to align the rules with the OECD Transfer Pricing Guidelines 2017. The new amendments are effective as of fiscal year 2022. The rules includes revised content on Substance over form Risk analysis Best method rule Use of interquartile range Aggregation of transactions Determination of actual ownership vs legal ownership DEMPE functions Valuation of Hard to value intangibles Unofficial translation of the new amendments to the German TP legislation Article 5 Amendment of the Foreign Tax Act The Foreign Tax Act of 8 September 1972 (BGBl. I p. 1713), as last amended by

OECD: Fighting Tax Crime – The Ten Global Principles, Second Edition

OECD: Fighting Tax Crime – The Ten Global Principles, Second Edition
“Fighting Tax Crime – The Ten Global Principles” is a comprehensive guide to fighting tax crimes published by the OECD. Read the online report here. The report sets out ten essential principles covering the legal, institutional, administrative, and operational aspects necessary for developing an efficient and effective system for identifying, investigating and prosecuting tax crimes, while respecting the rights of accused taxpayers. The guidance also addresses new challenges, such as tackling professionals who enable tax and white-collar crimes, and fostering international co-operation in the recovery of assets. Drawing on the experiences of jurisdictions in all continents, the report also highlights

2021: ATO Draft Practical Compliance Guidelines on Intangibles Arrangements, PCG 2021/D4

2021: ATO Draft Practical Compliance Guidelines on Intangibles Arrangements, PCG 2021/D4
The Australian Taxation Office (ATO) has issued draft Compliance Guidelines on intangible arrangements, PCG 2021/D4. These Guidelines will (when finalised)  set out the ATO’s compliance approach to international arrangements connected with the development, enhancement, maintenance, protection and exploitation of intangible assets, specifically, the potential application of the transfer pricing, general anti-avoidance rule (GAAR) and the diverted profits tax (DPT) provisions. The capital gains tax and capital allowances provisions will also be discussed in this Guideline where these may be considered alongside, or relevant to, the ATO’s transfer pricing, GAAR or DPT risk assessment. The draft Guidelines sets out ATO’s compliance

Paraguay’s TP Decree in effect as of April 2021

Paraguay's TP Decree in effect as of April 2021
Paraguay’s new Transfer Pricing Decree in effect as of April 2021. Click here for English Translation Decreto N° 4644-2020

UN releases New 2021 Practical Manual on Transfer Pricing

UN releases New 2021 Practical Manual on Transfer Pricing
On 27 April UN released a new 2021 Practical Manual on Transfer Pricing. “…this third edition of the Manual makes improvements in usability and practical relevance, updates and improves the existing text, including on Country Practices (Part D) and has new content, in particular, on financial transactions, profit splits, centralized procurement functions and comparability issues. Improved capacity development based on the Manual has encouraged and contextualized developing country feedback, helped identify these priority areas for improvement and contributed to better targeting the messages in the Manual and examples used.” The changes in the new edition of the Manual include: •

UN agrees on inclusion of Article 12B to the UN Model Tax Treaty – computer software

UN agrees on inclusion of Article 12B to the UN Model Tax Treaty - computer software
On 26. April 2021 the UN released agreed changes to the commentary on Article 12 of the United Nations Model Double Taxation Convention reflecting decisions made with respect to the inclusion of Article 12B and the treatment of computer software. UN model Proposed Art 12 Commentary
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