Transfer Pricing Newsletter

Brazil

Financial Service- a tax on financial transactions also applies in the case of foreign exchange transactions carried out where there is an inflow of funds into Brazil under a cross-border loan agreement.

Germany

Transfer Pricing Rules– Guidance issued by the BMF in June 2014 defines important terms for transfer pricing purposes and clarifies the types of income that may be subject to the transfer pricing provisions.

India

Comparable Data –the 2014 budget proposes the amendment of the rules to permit the use of multiple year data.

Arm’s Length Range- the 2014 budget proposes the introduction of an arm’s length range, and further details are to be announced later.

Penalty for documentation failure-the 2014 Budget proposes that the penalty could be levied by the transfer pricing office (TPO) who has determined a transfer pricing adjustment.

Validity of an Advance Pricing Agreement-the Budget 2014 proposes to amend the rules to provide that an APA entered into with regard to a future transaction may also be applied to transactions taking place within the past four years. This provision would take effect from 1 October 2014.

Iceland

Priority of Methods- Iceland’s transfer pricing rules do not specify any hierarchy of transfer pricing methods or give priority to any particular method. Further guidance on the use of transfer pricing methods may be issued in due course.

Transfer Pricing Documentation Requirement- companies with total revenue or assets at the beginning or end of the year exceeding 1,000 million ISK must maintain transfer pricing documentation.

Thresholds- companies with total revenue or assets at the beginning or end of the year exceeding 1,000 million ISK must maintain transfer pricing documentation.

Documentation Deadlines- a statement must be filed at the time of filing the tax return confirming that the transfer pricing documentation has been prepared, if the company has total revenue or assets at the beginning or end of the year exceeding 1,000 million ISK.

Main corporate income tax rate- for income years 2011 to 2014 the corporate income tax rate is 20%.

Netherlands

Relevant office to apply for an Advance Pricing Agreement– the APA/ATR team of the Tax Authority for Large Companies (TALC) in Rotterdam. As per Decree DGB 2014/296M, an advance ruling for a potential foreign investor coming to the Netherlands for the first time (APBI) is also dealt with by TALC which has a separate APBI section for this purpose.

Rules for an Advance Pricing Agreement-an APA will only be negotiated if the taxpayer meets certain minimum requirements with regard to economic substance.

Validity of an Advance Pricing Agreement –Decrees issued in 2014 have amended the rules to permit an APA to have retroactive effect provided that certain conditions are met.

Tanzania

Intra-group Services-the Regulations also provide that no fee should be paid to a related party in respect of shareholder or custodial services, duplicate services or on-call services, or any other services the Commissioner may specify.

Priority of Methods- the Regulations state that the traditional transaction methods should be used in the first instance, in priority to the profit methods.

Rules for an Advance Pricing Agreement (APA) -the Regulations set out a list of transfer pricing documents that must be submitted with the APA application. The information will be treated as confidential by the TRA.

Withdrawal from an APA- as per Income Tax (Transfer Pricing) Regulations 2014, the Commissioner has the discretion to accept the taxpayer’s proposal, modify it or reject it. Fees are not specified in the Regulations.

Ukraine

Transfer Pricing Rules- Order 368 of 1 July 2014 approved a tax consultation on issues relating to the transfer pricing law. The issues covered by the tax consultation include the transfer pricing reporting period; the determination and qualification of controlled transactions; transfer pricing penalties; electronic submission of reports; and advance pricing agreements.

South Africa

Adjustment-under the provisions of the Tax Laws Amendment Bill 2014 the amount of the transfer pricing adjustment will be treated as a dividend in specie, with effect from 1 January 2015.