| Greece: | Documentation requirement: As per the bill approved by the Ministry of Finance on 27 July 2016, the General Secretary of Public Revenue may exempt very small enterprises from the submission of transfer pricing documentation. Documentation deadline: As per the approved bill, the documentation has to be submitted at the deadline set for filing the income tax returns. The new deadline applies to documentation pertaining to transactions executed after 1 January 2015. Advance Prcing Agreement (APA) rules: The bill enacted on 27 July 2016 amends the deadline for the issuance of the APA decision that cannot exceed the 18 months instead of the 120 days from the submission of the respective APA application . Furthermore, the period may be further extended to 36 months upon a decision of the General Secretary. See the story in Regfollower |
| Canada: | BEPS related compliance General rule for Country-by-Country (CbC) reporting: Canada’s Department of Finance released draft legislative proposals to implement CbC reporting requirement that were originally announced in the 2016 federal budget. The draft legislation sets out country-by-country (CbC) reporting requirements, as developed by the Organization for Economic Cooperation and Development (OECD) and that would apply to a multinational enterprise (MNE) group that has total consolidated group revenue of €750 million or more in a fiscal year. Filing deadline: As per the draft legislative proposals, the country-by-country report must be filed before the later of 12 months after the ultimate parent’s fiscal year end or within 30 days of a notification by the Minister to an MNE entity of a “systemic failure”. Penalty for non-compliance: Penalties are set out in the draft legislation for failure to comply with the new reporting requirements. The penalties dealing with the failure to furnish foreign-based information will apply to the country-by-country report and that can reach C$12,000 per report, or C$24,000 in situations where a demand has been issued by the Minister to file the report. See the story in Regfollower |
| India: | Priority of method: The Delhi Bench of the Income-tax Appellate Tribunal upheld the decision in the case of Liugong India Private Ltd. v. ACIT (ITA No. 1482/Del/2015) and concluded that when comparables are available, the CUP method is the best method to use in computing the arm’s length price. See the story in Regfollower |
| Luxembourg: | BEPS Related Compliance General rule for Country-by-Country (CbC) reporting: The Luxembourg Government submitted draft law n°7031 on 2 August 2016 regarding Country-by-Country (CbC) reporting to the Luxembourg Parliament. The draft law is in accordance with a European Union (EU) Directive of 25 May 2016 requiring all EU Member States to implement a CbC reporting obligation in their national legislation. If adopted, all Luxembourg tax resident entities that are part of a multinational group with a consolidated annual group turnover of at least €750 million will need to comply with the CbC reporting requirements for financial years starting on or after 1 January 2016. See the story in Regfollower |
| Sweden: | Transfer pricing rules: The tax authorities issued an updated version of the Swedish Transfer Pricing guidance on July 2, 2016. The guidance has been updated with the final report on aligning Transfer Pricing outcomes with value creation (Actions 8-10) of the Action Plan on Base Erosion and Profit Shifting. See the story in Regfollower |
| Slovak Republic: | Documentation requirement: The Ministry of Finance published Guidelines no. MF/014283/2016-724 regarding transfer pricing documentation and replaces the guidelines published in 2015. The requirements for transfer pricing documentation and its content for taxpayers do not change in principle. However, the Guidelines clarify obligations for public administration units. They also provide special rules for transactions performed in the public interest and for cases where prices are regulated by special legislation. See the story in Regfollower |
| Mexico: | Advance Prcing Agreement (APA) rules: Rule 2.12.8 published on July 14, 2016 states that if the Mexican Tax Authorities consider the information provided by the taxpayer to be insufficient, they may perform a site visit to obtain and verify information regarding assets, functions, and risks of the Mexican taxpayer requesting an APA in order to validate the selection of method as well as the comparable companies. See the story in Regfollower |
| Uruguay: |
Bilateral Advance Pricing Agreement (APA): The proposed draft law would allow tax payers to apply for bilateral APAs. BEPS Related Compliance |
| Ireland: | Availability of Advance Pricing Agreement (APA): The Irish Revenue published bilateral advance pricing agreement guidelines on June 23 relating to the operation of Ireland’s APA program, which is effective for applications received on or after July 1, 2016. The guidance outlines the framework of the APA program, as well as the requirements to apply for an APA, and the roles and responsibilities of taxpayers and Irish Revenue. Bilateral Advance Pricing Agreement (APA): The Irish Revenue on June 23 published bilateral advance pricing agreement guidelines relating to the operation of Ireland’s APA program. The bilateral APA program was launched in response to action 14 of the OECD’s base erosion and profit shifting (BEPS) project. See the story in Regfollower |
| Colombia: | Specific transfer pricing compliance: DIAN reminded that the formal obligation to file an informative return will only be complied with if the transfer pricing informative return (Form 120) is digitally signed and submitted and as such mere submission of Form 1125 to DIAN through its online services does not satisfy the obligation to report information for transfer pricing purposes. See the story in Regfollower |
| Czech Republic: | BEPS Related Compliance General rule for Country-by-Country (CbC) reporting: The Czech Ministry of Finance announced on August 11, 2016 that it started a public consultation on a bill which would implement country-by-country reporting. As per the bill, tax resident entities that are part of a multinational group in Czech Republic with a consolidated annual group turnover of at least €750 million will need to comply with the CbC reporting requirements. See the story in Regfollower |
| Ukraine: | Control: As per the Guidance Letter No. 14491/6/99-99-15-02-02-15 issued by the Ukrainian tax authorities, transactions with related non-residents of Ukraine, transactions with residents of low-tax jurisdictions and sales of goods through a non-resident agent are classified as controlled. See the story in Regfollower |
| South Africa: | Documentation requirements: The South African tax authorities published for public comments a Draft Notice on additional Transfer Pricing record-keeping requirements. Where a person has entered into a potentially affected transaction, the aggregate of the transaction for the year of assessment exceeds higher of 5% of gross income or ZAR 50 million, such a person is required to keep specified records. See the story in Regfollower |
| Israel: | Documentation requirements: The Israeli approved budget plan contemplates the imposition of transfer pricing documentation and record keeping requirements on any taxpayer that belongs to an MNE group, or that has engaged in a related-party cross-border transaction.
BEPS Related Compliance |
| Turkey: | Transfer pricing rules: New law no. 6728 as effective from 9 August 2016, provides new rules related to transfer pricing. The provisions make changes to article 13 of Turkey’s corporate tax law (no. 5520) to align Turkish transfer pricing rules to OECD transfer pricing guidelines. Control: Article 59 of law no. 6728 adds a new clause to the second paragraph of article 13 of law no. 5520 defining related party with threshold. In order for a case to be deemed as a disguised profit distribution through a direct or indirect shareholder relationship, at least a 10% shareholder relationship, voting or dividend rights must be present. In certain circumstances when there is at least a 10% direct or indirect voting or dividends right present without a shareholding relationship, the parties will also be deemed to be affiliated. With regards to related parties, these percentage ratios will be considered collectively. Transactional Net Margin Method (TNMM): TNMM methods are based on profits arising from the transactions between related parties in designation of arm’s length price or return. These methods consist of the transactional net margin method and profit split method. The transactional net margin method (TNMM) is based on the examination of an established net profit margin realized by the taxpayer resulting from a controlled transaction on certain relevant and appropriate basis such as costs, sales or assets. Profit split method: Profit split method refers to the arm’s length split of total operating margin or loss between related parties realized from one or more related-party transactions with regards to the functions performed and risks borne by each party. Other methods: As per the new law no. 6728, when an arm’s length price or remuneration could not be identified via any of the applicable methods, another method that is consistent with the nature of the related-party transaction and defined by the taxpayer can be used. Penalty for documentation failure: As per the new law no. 6728, when transfer pricing documentation obligations are fulfilled completely and timely, the loss of tax penalty relating to under-assessed or past-due taxes by reason of a disguised profit distribution will be imposed with a 50% discount. Advance Pricing Agreement (APA) rules: As per the new law no. 6728, The taxpayer and the Ministry are permitted to implement the designated method for previous tax periods if not barred by statute of limitations by including the method in the agreement scope, given that the practice of repentance and correction precepts of the Tax Procedure Law are applicable and the agreement conditions are valid for the listed periods. See the story in Regfollower |
| Slovenia: | Main corporate tax rate: The government has submitted the Corporate Income Tax Bill to the parliament to increase the corporate income tax rate from 17% to 19% and which is effective from 1 January, 2017. See the story in Regfollower |
Transfer Pricing Brief: August 2016
September 05, 2016
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