Transfer Pricing Brief: January 2018

Hong Kong:	CbC reporting requirement-General rule: Inland Revenue (Amendment) (No. 6) Bill 2017 published on 29 December 2017 sets out rules on transfer pricing documentation including country-by-country reporting, and contains other measures to implement the minimum standards under BEPS. Master File and Local File: According to the Inland Revenue (Amendment) (No. 6) Bill 2017 (BEPS bill) which was gazetted on 29 December 2017, Hong Kong constituent entities of a group will be required to prepare a master file for each accounting period beginning on or after 1 April 2018. See the story in Regfollower
Korea, Rep Of:	Main corporate income tax rate: The 2018 Tax Reform passed on 19 December 2017 adds a new 25% corporate income tax bracket for taxable income in excess of KRW300 billion (US$270 million) effective for the fiscal year beginning on or after January 1, 2018. Restriction on interest deduction: The 2018 Tax Reform passed on 19 December 2017 includes provisions in line with OECD Action 4 “Limiting Base Erosion Involving Interest Deductions and Other Financial Payments”. The new rule will be effective for fiscal years beginning on or after 1 January 2018. Special rules for hybrid instruments or entities: The 2018 Tax Reform passed on 19 December 2017 includes provisions in line with OECD Action 2 “Neutralising the effects of Hybrid Mismatch Arrangements”. The new rule will be effective for fiscal years beginning on or after 1 January 2018. See the story in Regfollower
Thailand:	Documentation-Requirement: On 3 January 2018, the Thai Cabinet approved the draft transfer pricing act following a public hearing held in July 2017 on the first draft Act that was approved in principle in May 2015. Subject to a legislative procedure and announcement, the Draft Act will be enacted and become effective for accounting years beginning on or after 1 January 2017. Documentation-Thresholds: Corporate taxpayers with an annual income of at least Baht 30 million (US $ 930,000) or higher will be exempted from the annual transfer pricing requirement based on the ministerial regulations to be published by law. Documentation-Deadlines: The first filing date for the transfer pricing disclosure form is 31 May 2018 (for the period 1 January – 31 December 2017). See the story in Regfollower
France:	Documentation-Requirement: Under the Finance Act for 2018, which was approved by the Parliament on 21 December 2017, French companies must submit the transfer pricing documentation for financial years beginning on or after 1 January 2018, in accordance with the new Chapter V of the OECD Transfer Price Guidelines for multinational companies and tax administrations (in particular Annex I and Annex II of Chapter V). See the story in Regfollower
Colombia:	CbC reporting requirement-Timing: The Colombian tax authority issued Regulatory Decree 2120 of 15 December 2017, which requires Colombian taxpayers to notify the tax authorities about whether they must file the Country-by-Country (CbC) report. See the story in Regfollower
Argentina:	Requirements-Rule: On 29 December 2017, the Argentine government issued Decree No.1112/2017 enacting and making effective comprehensive tax reform including the new rules for transfer pricing. Under this the concept of “low-tax jurisdictions” for which transactions with parties in these jurisdictions are also subject to transfer pricing scrutiny. See the story in Regfollower
Malaysia:	CbC reporting requirement: The Inland Revenue Board (IRB) has recently published an amendment to the country-by-country (CbC) rules. Among the changes, the amended CbC rules include revised measures regarding entities having cross-border transactions with other constituent entities. See the story in Regfollower
Portugal:	CbC reporting requirement-General rule: On 21 December 2017, Orders number 383-A/ 2017 and 383-B/2017 were published in the Official Gazette. Form 55 must be submitted electronically on an annual basis and within 12 months of the end of the relevant tax period (for tax years beginning on or after 1 January 2016). See the story in Regfollower
Taiwan:	Master file-Information: On 11 December 2017, the Ministry of Finance announced a “safe harbor” exemption with respect to Master file and country-by-country (CbC) reporting. MNE with more than two members in Taiwan shall apply the safe harbor rules separately to each member. And MNE with more than two members in Taiwan can designate one of the entities to file the MF. See the story in Regfollower Main corporate income tax rate: Taiwan’s Legislative Yuan passed amendments to the Income Tax Act on 18 January 2018 increasing the corporate income tax rate from 17% to 20% and a reduction in the rate of the corporate surtax from 10% to 5%. See the story in Regfollower
US:	Updates CbC reporting FAQs: On 18 January 2018, the IRS issued a release announcing updates and information regarding country-by-country (CbC) reporting requirements in the United States. See the story in Regfollower Directives on transfer pricing examinations: On 12 January 2018, the IRS Large Business and International (LB&I) division publicly released a set of five LB&I directives as guidance with respect for examinations of transfer pricing issues. See the story in Regfollower
Mozambique:	Requirements-Control: In accordance with Decree 70/2017, approved by the Council of Ministers on 6 December 2017, one company is considered to be related to another if the company; is directly or indirectly meet the three conditions provided by law. Application-Applicable Methods: Decree 70/2017 of 6 December 2017 recognize the comparable uncontrolled price, the resale price method, the cost-plus method, the profit-split method, the transactional net margin method and any other method deemed appropriate based on the circumstances of the transaction. Documentation-Thresholds: Taxpayers are required to prepare the transfer pricing documentation if annual net sales (including sales and other revenue) in the previous tax year under the terms specified therein exceed 2,500,000 MT (approximately $ 40,000). See the story in Regfollower
Ukraine:	Requirements-Control: Under Law No. 2245-VIII, which was adopted by the Parliament on 7 December 2017, transactions between a non-resident company and its Ukrainian permanent establishment (a branch that conducts business in Ukraine) worth more than UAH 10 million are considered as controlled transactions for transfer pricing purposes. APAs-Rules: The advance pricing agreement procedure has been updated under the Law No. 2245-VIII. The APA can now be executed retroactively. See the story in Regfollower
Finland:	Financial services-Restriction on interest deduction: On 19 January 2018, the Finnish Ministry of Finance published a draft government bill containing proposed changes on the deduction of interest paid to related parties. The Ministry of Finance has requested comments from interested parties by the end of February. See the story in Regfollower
Dominican Republic:	Documentation-Thresholds: On 19 January 2018, the tax authority issued Notice No. 5 of 2018 adjusting the transfer pricing documentation threshold for 2018 to 11,015,961 DOP. Taxpayers who do not meet the threshold do not need to prepare the transfer pricing documentation for 2018. See the story in Regfollower
Poland:	Information exchange-Multilateral: On 23 January 2018, Poland became the fourth country to deposit its instrument of ratification for MLI. The MLI will enter into force once five countries have deposited instruments of ratification. See the story in Regfollower
Nigeria:	CbC reporting requirement-General rule: On 21 January 2018, the Federal Inland Revenue Service (FIRS) announced the signing of the Income Tax Regulations (Country-By-Country Reporting) 2018 by Nigeria’s President. See the story in Regfollower
Sweden:	CbC reporting requirement-General rule: According to clarification no. 202 521135-17 / 111 released on 15 January 2018, a Swedish parent company must submit a CbC report even if it was included in another group of companies in the previous year, unless the group is exempted from reporting obligations. CbC reporting requirement-Parent company: Swedish parent company is required to submit a CbC report for a particular fiscal year, it is decisive if the group’s total income during the previous financial year of the parent company exceeded SEK7 billion. In this context, a fiscal year may be either longer or shorter than 12 months. See the story in Regfollower
Ecuador:	Main corporate income tax rate: Ecuador has passed a new law that raises the corporate tax rate from 22% to 25% compared to the previous year. For local taxpayers with shareholders or beneficiaries resident in tax havens or lower tax jurisdictions, the corporate income tax rate increases from 25% to 28%. See the story in Regfollower
Australia:	Financial services-General: The Australian Taxation Office (ATO) has recently published the final Practical Compliance Guideline PCG 2017/4 on its compliance approach to cross-border related financing arrangements. See the story in Regfollower
Indonesia:	CbC reporting requirement-General rule: On 16 January 2018, the Directorate General of Taxes (“DGT”) has issued the long-awaited implementation regulation on Country-by-Country Reports (“CbCR”), DGT Regulation No. 29/PJ/2017 (“PER-29”) regarding “Procedures for the Management of CbCR”, following the release of the Regulation No. 213/PMK.03/2016 (“PMK-213”). See the story in Regfollower
Philippines:	Main corporate income tax rate: Under the second package released on 9 January 2018, the DOF aims to reduce the CIT rate from 30% to 25%. It was submitted to the House of Representatives on January 15, 2018. See the story in Regfollower
Peru:	Local file-Information: Under the Ruling No.014-2014/SUNAT published on 18 January 2018, taxpayers required to submit local file electronically on the official form approved by SUNAT. The due date for filing the first local file for fiscal year 2016 is in April 2018. From fiscal year 2017 and onwards, the submission deadline is in June of the following year. See the story in Regfollower