JapanAudit Rules-Statute of limitation: On 27 March 2019, the Parliament of Japan adopted the legislation for the government’s tax reform proposals for 2019. Accordingly, the statute of limitations for transfer pricing purposes is extended from six years to seven years.

Applicable Methods-Other methods: The tax reform for 2019 introduced cash flow method as an allowed method for calculating arm’s length prices for intangibles where comparable transactions cannot be identified.

Special Areas-Hard to value intangibles: Under the tax reform proposals for 2019, the scope of the intangible assets subject to the transfer pricing rules is clarified and defined as assets other than tangible or financial assets and investments for which consideration is paid in return for transfer or leasing of the property between independent parties. In addition, the tax authority is allowed to make pricing adjustments where the results of transactions of hard-to-value intangibles are different from initial projections by more than 20%.
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PolandAvailability of APA: On 22 March 2019, Poland’s legislative centre published a draft bill that addresses dispute resolution of double taxation issues and advance pricing agreements (APAs). Under this taxpayers will be benefited from the new procedure on Simplified Advance Pricing Agreement (sAPA) under certain conditions. “Simplified APAs” will have the unilateral nature and it will be addressed to a beneficiary.
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USFinancial services-Restriction on interest deduction: On 28 March 2019, the U.S. Joint Committee on Taxation (JCT) published an overview of the limitation on the deduction of business interest expense under Section 163(j) of the Internal Revenue Code as introduced by the Tax Cuts and Jobs Act. The new rule applies to taxable years beginning after 31 December 2017 and generally limits the amount of a taxpayer’s business interest deduction to the sum of the taxpayer’s business interest income; 30% of the taxpayer’s adjusted taxable income; and the floor plan financing interest of the taxpayer.
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LuxembourgAdjustments-Treaty Application: On 9 April 2019, Luxembourg deposited its instrument of ratification for the multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting (MLI). The MLI will enter into force for Luxembourg on the first day of the month following the expiration of a period of three months beginning on the date of the deposit by Luxembourg of its instrument of approval, i.e., 1 August 2019.
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Main corporate income tax rate: On 26 April 2019, Luxembourg published the Law of 26 April 2019 in the Official Gazette containing the measures for the 2019 budget. The law lowered the standard corporation tax rate from 18% for the financial year 2018 to 17% for the financial year 2019.
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UkraineControl: On March 29, 2019, the State Fiscal Service (SFS) of Ukraine issued letter 1358/6/99-99-15-02-15/ІPK on the treatment of salary payments to non-resident persons as controlled for transfer price purposes. Accordingly, salary payments must be included in the annual report on the transactions under review and determined using the arm’s length principle if the specific thresholds met.
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IndiaInformation exchange-Multilateral: On 25 April 2019, India published Notification No. 37/2019 from the Department of Revenue in an extraordinary version of the Official Gazette. India and USA have signed a Bilateral Competent Authority Agreement and Inter – Governmental Agreement (IGA) for exchange of CBC reports on 27 March 2019.
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CbC reporting requirement-Timing: On 8 April 2019, the Central Board of Direct Taxes(CBDT) has issued Circular 7/2019 regarding the constituent entities of U.S. MNEs are required to submit Country-by-Country (CbC) reports in India by 30 April 2019.
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UgandaFinancial services-Restriction on interest deduction: On 28 March 2019, the Finance Minister of Uganda presented a number of tax reforms amendment bills to the Parliament including the introduction of exclusion for financial institutions and insurance companies from the 30% of Earnings before interest, tax, depreciation and amortization (EBITDA) interest deduction restriction for related party debt, which was introduced in 1 July 2018.
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GermanyCbC reporting requirement-General rule: The German Ministry of Finance issued an updated version of the Application Decree on the General Tax Code on 5 April 2019. The updated version simplifies that the obligation of the affected domestic group company pursuant to section 138a (4) of the GTC to submit a CbC report applies only if the company concerned has its registered office or administrative seat in Germany and specified conditions is fulfilled.
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ZambiaTransfer pricing case: Recently, the Tax Appeals Tribunal (TAT) issued a decision for the Zambia Revenue Authority (“ZRA”) in the case of: Nestlé Zambia Trading Limited v. Zambia Revenue Authority [2018] TAT 03, regarding transfer prices used with respect to its cross-border related-party transactions and business model. The decision provides the first substantive judicial guidance in Zambia with respect to arm’s length arrangements between related parties.
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DenmarkDocumentation-Penalty for documentation failure: Recently, the Danish parliament adopted an important amendment of the Tax Control Act (L 13 Forslag til Skattekontrollov of October 4, 2017) that is in force from January 1, 2019 with regard to transfer pricing documentation. Accordingly, If the Danish Tax Authorities request the transfer pricing documentation from a taxpayer, and the taxpayer is not able to submit a compliant transfer pricing documentation, the Danish Tax Authorities can impose penalties (up to DKK 250,000 per income year) or issue a discretionary assessment.
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UruguayCbC reporting requirement-Timing: According to Resolution No. 860/2019 of 27 March 2019, Uruguay’s Directorate General of Taxation has extended the deadline for the submission of Country-by-Country Report (CbCR) to 30 April 2019 in respect of the reporting fiscal year ending 31 December 2017.
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