TPA Newsletter

Australia

Intangible property- Under Draft Taxation Determination TD 2013/D3 support payments made by an Australian parent company to a foreign related entity (e.g. where a limited risk entity has not made sufficient profits or has made a loss) would be considered as capital payments and would not be tax deductible for the Australian parent.

Audits Process- Profit shifting and e-commerce are the focus of compliance activities in 2013/14. Business restructuring and the use of marketing hubs that may facilitate profit shifting are likely to be the subject of tax audits.

China

MAP-New implementation rules on the mutual agreement procedure issued on 24 September 2013 clarify the situations in which the procedure may be used, including issues surrounding the attribution of profits to permanent establishments. Separate implementation rules are to be issued for Special Tax Adjustments relating to transfer pricing, thin capitalization and controlled foreign corporations.  

Colombia

TPA requirements –Transactions with related parties in free trade zones within Colombia must also conform to the arm’s length principle.

Intangible property-Contributions of intangibles to foreign related parties must be declared in the transfer pricing return.

Financial services-Share transfers between related parties must be valued using financial methods such as discounted cash flow.

Documentation format- The transfer pricing report must include the statutory certification of the financial statements.

 France

Documentation format-Legislation effective from 31 December 2013 requires companies above the relevant threshold to submit certain documentation each year within six months of the due date for the tax return.

India

Safe Harbour-On 18 September 2013 the final safe harbour rules were issued.

Italy

Requirements –A decision of the Supreme Court in July 2013 has effectively established that the arm’s length principle applies to domestic as well as cross-border transactions.

Mexico

TPA Rule-Under legislation passed in November 2013 payments made to a foreign company that controls or is controlled by the taxpayer are not deductible for tax purposes if they relate to interest, royalties or technical assistance fees; the foreign party receiving the payment is transparent; and the participants do not pay tax on the income.

Nigeria

Form-The Transfer Pricing Declaration Form and the Transfer Pricing Disclosure Form must be sent to FIRS with the tax return for the year to which they relate.

Ukraine

Priority of Methods-Resolution 763 establishes the methodology for calculating the range of market prices or profits.

Comparable Data- Resolution 749 allows a deviation of 5% from the market prices of the categories of goods listed in the transitional provisions for new transfer pricing rules (including agricultural products, chemicals or metals.

Bilateral APA- Resolution 764 sets out the procedure for negotiating bilateral and multilateral advance pricing agreements.

Multilateral APA- Resolution 764 sets out the procedure for negotiating bilateral and multilateral advance pricing agreements.