Greece: Documentation requirement:  Transfer pricing documentation requirements as set out by the Income Tax Code and the Procedural Code do not apply in respect of transactions made by real estate investment companies as per the clarification document issued on 21 October 2015.
Number of years to be compared: As per the Circular POL 1227/2015 issued on 20 October 2015 by the Public Revenue Authority, taxpayers may use the same comparables in the 2 subsequent fiscal years.
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Poland: Control shareholding to qualify as a related party: As per the amended Corporate Income Tax (CIT) Act, the management or control shareholding is 25% for a taxpayer to qualify as a related party for transfer pricing purposes.
Documentation requirements: As per the amended Corporate Income Tax (CIT) Act, tax authorities may request documentation concerning transactions or events if it is probable that the value of the transaction was intentionally reduced to avoid the documentation requirement and the time for submitting this documentation would be 30 days from the date of the request not the standard deadline of seven days. Obligation to submit a declaration signed by a member of the Management Board confirming the preparation of complete transfer pricing documentation by the date of filing the annual CIT return has been introduced by the amended tax Act and will be effective from 1 January 2017.
Documentation thresholds: As per the amended tax Act, a taxpayer that is part of a multinational corporate group with annual income or expenses of at least €10 million, or making payments to entities registered in low-tax jurisdictions, will be required to prepare and deliver a simplified report on transactions with associated entities. Documentation would be determined by reference to those transactions that have a “significant influence” on the level of income or loss.
BEPS Related Compliance:
Master file and local file information: Poland has introduced a requirement for a master file and a local file in line with the OECD Base Erosion and Profit Shifting (BEPS) project from 1 January 2017. It will be mandatory to provide information for taxpayers with turnover of above €20 million. Master file will contain information regarding description of the group’s capital structure, TP policy and significant intangible assets utilized. A local file will contain specific TP information for each relevant country of operation.
Reporting structure: In line with the Action 13 of OECD Base Erosion and Profit Shifting (BEPS) project.
Country by country reporting: Poland has introduced CbC reporting for domestic entities with consolidated turnover above €750 million that require providing information concerning the amount of revenue earned and tax paid by location, also activities and places of business for dependent entities and permanent establishments within the group. CbC reporting is applicable to the fiscal year that begins after 31 December 2015.
Parent company: The CbC report must be submitted by a company resident in Poland that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company whether resident or non-resident in Poland.
Group definition: The country by country reporting requirement applies where the consolidated group revenue in the preceding year exceeded EUR 750 million.
Profits and tax: 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: CbC reporting covers tangible assets and real estate interests.
Timing: The CbC report must be submitted within twelve months after the end of the tax year.
Review time: No specific provision mentioned regarding review time.
Penalty for non-compliance: No specific penalty provision in relation to BEPS reporting requirements.
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Mexico: Financial services: As per the tax reform proposal which is expected to be signed by the President to publish in the Official Gazette, Interest-accruing debts incurred in constructing, operating or maintaining production infrastructure linked to strategic areas in Mexico will not subject to the thin capitalization rules. Once published, the reform will be effective from 1 January 2016.
BEPS related Compliance:
Master file and local file information: The tax reform proposal was approved to introduce and maintain a master file and local file as per the BEPS action plan 13. Once published after signing by the President, the reform will be effective from 1 January 2016.
CbC reporting requirement: The tax reform proposal was approved by the Lower Chamber to introduce Country by Country (CbC) reporting requirement. Once published after signing by the President, the reform will be effective from 1 January 2016.
Penalty for non-compliance: Under the tax reform proposal approved by the Lower Chamber and presented for President signing, non-compliance with the rules would be imposed penalties in a range of MXN 140,540 (USD 8,365) to MXN 200,090 (USD 11,910) and in addition, a failure to file or presenting incomplete or erroneous reports would be penalized by disqualifying the taxpayer from entering into contracts with the Mexican public sector. Once published after signing by the President, the reform will be effective from 1 January 2016.
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US: Penalty in case of adjustment: Under both the temporary and the final regulations, the penalty may be waived if a taxpayer reasonably concluded that the taxpayer’s analysis was the most reliable based upon the data that was reasonably available to the taxpayer, and satisfied the documentation requirement of the regulations.
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Ireland: CbC reporting requirement: As per the released Finance Bill 2015, multinational groups headquartered in Ireland with consolidated revenues in excess of €750M will be required to file Country-by-Country (CBC) reporting in line with OECD’s agreed minimum standard under Action 13 of the OECD base erosion and profit shifting (BEPS) project. The deadline for filing the new report will be 12 months after the end of the accounting period and will be required to prepare for fiscal years beginning on or after January 1, 2016.
Penalty for non-compliance: Failure to provide the CbC report or providing an incomplete or inaccurate report will trigger a penalty of €19,045. In some instances, a further penalty of up to € 2535 may be charged for each day during which the default continues.
Availability of APAs: As per the manual published by the Irish Revenue authority on 9 November 2015, Ireland will accept bilateral advance pricing agreements (APAs) on an ad hoc basis if the treaty partner has accepted to enter into a bilateral APA negotiation. The basis of the negotiations will be the approach taken by the competent authority of the other treaty partner.
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India: Transfer pricing rule: The new instruction No.15 of October 2015 replaced the existing Instruction No. 3 of 2003.
Transfer pricing adjustments: The Mumbai Bench of the Income-tax Appellate Tribunal held in the case of DCIT v. Tata Consultancy Services Ltd. (ITA no. 7513/2010) that no transfer pricing adjustment can be made in instances when the taxpayer enjoys the benefit of a “tax holiday” or when the tax rate of the related party’s country of residence is greater than the tax rate in India.
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France: Documentation requirement: Transfer pricing documentation reports would have to be filed with the tax administration as it considered by the Finance Committee of the French National Assembly to be included for the second part of the Finance Bill for 2016.
CbC reporting requirement: Country-by-country (CbC) reporting would become a compulsory section of the documentation as it considered by the Finance Committee of the French National Assembly to be included for the second part of the Finance Bill for 2016. It would be based on the model provided in Action 13 of the OECD’s base erosion and profit shifting (BEPS) plan.
Penalty for non-compliance: As per the adopted Finance Bill 2016, Country-by-country (CbC) reporting would become a compulsory section of the documentation and failure to file this report would be subject to a penalty of €100,000.
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Malawi: OECD Guidelines: As per the proposed amendments, the transfer pricing rules will be based on the principles of the OECD TP Guidelines. In case of inconsistencies in the regulations, the provisions of the OECD Guidelines shall prevail in resolving any dispute. Any amendments made to the OECD Guidelines shall be deemed to be incorporated in the regulations.
Documentation requirement: Transfer pricing documentation will be compulsory as per the proposed amendments. Any person to whom the transfer pricing regulations apply shall upon the submission of the return of income under section 84(1) or where necessary as requested by the Commissioner General provide information, including books of accounts and other documents relating to transactions subject to transfer pricing.
Netherlands: BEPS related compliance:
Master file and local file information: The lower house of the parliament adopted the Tax Plan 2016 on 18 November 2015 with supplementary transfer pricing documentation requirements in line with the three-tiered approach of Action 13 of the OECD like master file and local file requirements and will be applicable for fiscal years starting on or after 1 January 2016.
CbC reporting requirement: The lower house of the parliament adopted the Tax Plan 2016 on 18 November 2015 with supplementary transfer pricing documentation requirements in line with the three-tiered approach of Action 13 of the OECD like Country-by-Country (CbC) reporting requirements and will be applicable for fiscal years starting on or after 1 January 2016.
Penalty for non-compliance: The lower house of the parliament adopted the Tax Plan 2016 on 18 November 2015 includes that not satisfying the requirements to submit the CbC report will be regarded as a criminal offense. Non-compliance will lead to a monetary fine of €8,100 or custody of six months at the most for the party involved. In case of non-compliance occurs intentionally, then a fine of the fourth category, as provided in article 23, paragraph 4 of the criminal code applies in addition to an imprisonment of four years at the most. It will be applicable for fiscal years starting on or after 1 January 2016.
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Nigeria: Financial services: Nigeria has planned to introduce thin capitalization rule sooner, thereby addressing base erosion involving interest deductions and other financial payments.
CbC reporting requirements: Nigeria’s tax authority expecting multinational entities in Nigeria to submit country-by-country (CbC) reports. The CbC reporting requirements has been incorporated into the audit process.
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UK: Intangible property: Legislation will be introduced in Finance Bill 2016 to amend Part 8 of CTA 2009. These revisions will include specific provisions that apply the commencement rules to partnerships. The measures seeks to ensure that partnerships cannot be used in arrangements to obtain a tax relief for their corporate members in a way that is contrary to the intention of the existing related party rules; and will apply to all transactions involving intangible fixed assets that take place on or after 25 November 2015.
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Italy: Main corporate tax rate: The draft budget for 2016 provides a cut of the applicable corporate income tax (IRES) rate from 27.5% to 24.5%. As of FY 2017, the applicable corporate income tax (IRES) rate would be further reduced to 24%.
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Israel: Main corporate tax rate: The Ministry of Finance published a draft amendment to the Income Tax Ordinance (ITO) on 22 November 2015 providing for a reduction of the corporate income tax rate from 26.5% to 25% as from 2016.
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