| India: | General rule for CbC reporting requirement: India has proposed in the 2016 Union Budget to introduce the country-by-country reporting rules pursuant to the OECD’s three-tier transfer pricing documentation approach. Multinational groups where the ultimate parent company is a resident in India would be required to submit Country-by Country (CbC) reports if the consolidated turnover exceeds €750 million (US$815 million). If this provision is enacted, it will be effective from Assessment Year 2017-18. Master file information: The Union Budget 2016 proposes to implement the Master File and CbC reporting for international groups with consolidated revenues exceeding €750 million (US$815 million). Master file will contain information regarding description of the group’s capital structure, transfer pricing policy and significant intangible assets utilized. If this provision is enacted, it will be effective from Assessment Year 2017-18. Local file information: The Union Budget 2016 proposes to introduce local file requirement as per the recommendations of the OECD’s base erosion and profit shifting (BEPS) Action 13. A local file will contain specific transfer pricing information for each relevant country of operation. If this provision is enacted, it will be effective from Assessment Year 2017-18. See the story in Regfollower Audit rules: The Central Board of Direct Taxes (CBDT) in India has issued Instruction No. 3 of 2016 with immediate effect as new guidance to provide guidance to Assessing Officers (AOs) in selecting cases for transfer pricing (TP) audits in relation to international transactions and specified domestic transactions (SDTs). See the story in Regfollower |
| UK: | General rule for CbC reporting: UK has introduced Country-by-Country (CbC) reporting requirement for domestic entities with consolidated group revenue of €750 million or more for an accounting period. The Commissioners may give a general or specific direction to a reporting entity requiring it to provide Revenue and Customs with such information (including copies of any relevant books, documents or other records) as may be specified in the direction for the purposes of determining whether information contained in a CBC report filed by that entity is accurate. The regulations will apply to multinational groups for accounting periods beginning on or after 1 January 2016. Parent company: The CbC report must be submitted by a company resident in UK that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in UK. The Ultimate Parent Entity is not required to file the equivalent of a country-by-country report in the jurisdiction in which it is resident for tax purposes in respect of the accounting period to which the report relates (or where the Ultimate Parent Entity is resident for tax purposes in more than one jurisdiction, no such requirement to file applies in any of those jurisdictions. Group definition: The country by country reporting requirement applies where the consolidated group revenue in the preceding year exceeded €750 million. Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax. Employees: The average number of employees in each entity must be reported. Assets: Tangible assets and real estate interests. Timing: The CbC report must be submitted within twelve months after the end of the tax year. Penalty for non-compliance: Non-filing of CbC report will trigger penalties of £30 and penalty of £60 for each subsequent day on which the failure continues. The person is liable to a penalty not exceeding £3,000 in respect of each CBC report to which the inaccuracy relates. See the story in Regfollower Main corporate tax rate: The March 2016 Budget announced that the corporate tax rate for 2020/21 would be further reduced to 17%. See the story in Regfollower |
| US: | Transfer pricing adjustment: The U.S. Tax Court has issued an opinion concluding that the IRS Commissioner in exercising authority under Code section 482 and adjusting the reported prices for items transferred among taxpayers and their foreign affiliates is not required to determine the “true separate taxable income” of each controlled taxpayer in a consolidated group contemporaneously with making the transfer pricing adjustments. The Tax Court also concluded that the IRS Commissioner may aggregate one or more related transactions instead of making specific adjustments for each type of transaction. See the story in Regfollower |
| Turkey: | General rule for CbC reporting requirement: Revenue administration of Turkey has issued a draft report on 16 March 2016 to introduce new transfer pricing documentation rules that generally follow the base erosion and profit shifting (BEPS) Action 13 recommendations and provide for country-by-country (CbC) reporting. Once finalized, it would expand certain legal requirements and would introduce new transfer pricing documentation rules. Ultimate parent companies that are tax residents of Turkey and having a minimum consolidated turnover of TRY 2.37 billion (€750 million) would be required to prepare and provide a CbC report. If the fiscal year of the group begins on 1 January 2016, the corporate group would need to file the CbC report by 31 December 2017. Master file information: Companies that are part of a multinational group having an asset value of a minimum of TRY 250 million at the close of the previous fiscal year and a turnover of TRY 250 million or more, would be required to prepare the “Master file” by the end of the second month following the due date for filing of the corporate income tax return. The Master file would be comprised of five main categories of information like organization structure, definition of business operations, intellectual property, intra-group financial transactions, and the tax and financial position of all group companies. Local file information: As per the draft report, all group entities that are tax residents in Turkey would be required to prepare and provide the Local file for transactions exceeding TRY 30,000. However, companies with a minimum asset value at the end of previous fiscal year and turnover of TRY 100 million, would be required to submit a form providing detailed information regarding related parties and related-party transactions. See the story in Regfollower |
| Luxembourg: | Main corporate income tax rate: As per the tax reform proposal of Luxembourg government issued on 29 February 2016, the corporate income tax rate would be reduced from the current rate of 21% to 19% in 2017, and then will further reduce to 18% in 2018. See the story in Regfollower |
| Canada: | General rule for CbC reporting requirement: Canadian Budget for 2016 proposes new legislation to strengthen transfer pricing documentation by introducing country-by-country reporting for large MNEs. The new transfer pricing documentation rules will follow the base erosion and profit shifting (BEPS) Action 13 recommendations and provide for country-by-country (CbC) reporting. Once finalized, it would expand certain legal requirements and would introduce new transfer pricing documentation rules. See the story in Regfollower |
| Ireland: | Availability of APA: The Irish revenue authority has announced that it will introduce a formal Advance Pricing Agreement (APA) program and are expected to be published in 2016. See the story in Regfollower |
| Italy: | Advance pricing agreements rules: The director of the Italian Revenue Office has issued regulation no. 42295/2016 on March 21, 2016 which contains provisions for the application of the rules on advance pricing agreements (APAs) for enterprise with international transactions. The regulation clarifies the operative aspects of the procedure which leads to the conclusion of APAs with the Italian tax authorities. See the story in Regfollower |
Transfer Pricing Brief: March 2016
05 April, 2016
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