On 13 March 2019, the Australian Taxation Office (ATO) released a PCG 2019/1 for all multinational enterprises (MNEs) with distribution operations in Australia.
This Guideline outlines compliance approach to the transfer pricing outcomes associated with the following activities of inbound distributors:
- distributing goods purchased from related foreign entities for resale, and
- distributing digital products or services where the intellectual property in those products or services is owned by related foreign entities.
Such activities, together with any related activities involving the provision of ancillary services, are referred to in this Guideline as ‘inbound distribution arrangements’.
The Guideline applies to inbound distribution arrangements of any scale. Where the taxpayer is an inbound distributor and choose to adopt the distributor simplified transfer pricing record keeping option in Practical Compliance Guideline PCG 2017/2 Simplified transfer pricing record keeping options, this Guideline will not apply and instead ATO will follow the compliance approach set out in PCG 2017/2.
This Guideline is structured as the main body sets out general principles relevant to ATO framework for assessing transfer pricing risk and applying compliance resources to inbound distribution arrangements to which the Guideline applies, and the schedules set out quantitative and qualitative indicators relevant to distributors generally or based on their industry sector, including those that operate in the life science, information and communication technology (ICT) and motor vehicle industries.
The Guideline applies from 13 March 2019 and will apply to existing and new inbound distribution arrangements.
