slide1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
TRANSFER PRICING AS THE TOOL FOR AVOIDING EROSION OF THE TAX BASE PowerPoint Presentation
Download Presentation
TRANSFER PRICING AS THE TOOL FOR AVOIDING EROSION OF THE TAX BASE

Loading in 2 Seconds...

play fullscreen
1 / 22

TRANSFER PRICING AS THE TOOL FOR AVOIDING EROSION OF THE TAX BASE - PowerPoint PPT Presentation


  • 140 Views
  • Uploaded on

Promoting V oluntary T ax C ompliance as a C ommon P riority of Slovakia and the EU 17. 05. 2013, Hotel Bôrik. TRANSFER PRICING AS THE TOOL FOR AVOIDING EROSION OF THE TAX BASE. TOOLS FOR MONITORING THE TAXPAYERS' CONDUCT.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'TRANSFER PRICING AS THE TOOL FOR AVOIDING EROSION OF THE TAX BASE' - breck


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
introduction

Recent works of the OECD and the EU Joint Transfer Pricing Forum (JTPF) have established that the successful resolution of Transfer Pricing disputes rely on:

    • Developing a targeted knowledge strategy
    • Systematic use of appropriate techniques and methodologies
    • Identifying Best practices and adopting good governance process
Introduction
    • EU JTPF – October 2012 - Transfer PricingRisk management : http://ec.europa.eu/taxation_customs/resources/documents/taxation/company_tax/transfer_pricing/forum/jtpf/2012/jtpf_019_2012_en.pdf
    • EU JTPF – June 2012 – Discussion Paper on furtherWork in the Area of Transfer PricingRiskassessment: http://ec.europa.eu/taxation_customs/resources/documents/taxation/company_tax/transfer_pricing/forum/jtpf/2012/jtpf_011_2012_en.pdf
    • OECD DraftHandbook on Transfer PricingRiskassessment (April 2013): http://www.oecd.org/tax/transfer-pricing/Draft-Handbook-TP-Risk-Assessment-ENG.pdf
  • OECD – DealingEffectivelywith the Challenges of Transfer Pricing: http://www.oecd.org/site/ctpfta/49428070.pdf
why and how to make tools efficient

Finite Resources for the Tax Administration to balance with complex issues and significant Tax Base erosion risks

An effective and efficient management of transfer pricing cases meets the common interest of Taxpayers and Tax Administration: key for a successful outcome for the Tax Administration and legal certainty/possible neutralization of the tax assessment for the Taxpayers

Why and How to make tools efficient?
tools for efficient transfer pricing audits

Riskassessment and risk management:

    • Riskfactors and quantification
      • Recurring transactions
      • Large & complex « one time » transactions
    • Riskindicators
      • Profitability
      • Transactions withrelated Parties in low-taxjurisdictions
      • Intra-group service transaction
      • Marketing or procurementcompaniesabroad
      • Excessive debt/interestexpenses
      • Transfer or use of intangibles to a related Party
      • CCA
      • Business restructurings
    • Sources of information: contemporaneous TP documentation, Questionnaires, Information returns, Public data and registers
    • Governancetools: Riskassessmentprocess and Riskassessment reports
TOOLs for efficient transferpricing audits
tools for efficient transfer pricing audits1

Conducting the audit:

    • Follow-up of pre-audit phase: Case selectionand selection of fieldswith high reassessmentprobability
    • Assessment of the quality of the transferpricingdocumentation
    • Function & risk matrix analysis
    • Value chain
    • Segment-analysis
    • Interviews
TOOLs for efficient transferpricing audits
value chain analysis example
Value Chain analysis - EXAMPLE
  • Source: UN - Eighth Session of the Committee of Experts on International Cooperation in Tax Matters
  • 15–19 October 2012, Geneva
function and risk matrix example
Function and Risk matrix - EXAMPLE
    • Source: UN - Eighth Session of the Committee of Experts on International Cooperation in Tax Matters
    • 15–19 October 2012, Geneva
  • http://www.un.org/esa/ffd/tax/eighthsession/Appendix-II_Documentation%20with%20ICC%20doc_20121007_v5_ML.pdf
segment analysis example1
SEGMENT ANALYSIS: EXAMPLE
  • Source: UN - Eighth Session of the Committee of Experts on International Cooperation in Tax Matters
  • 15–19 October 2012, Geneva
selection of fields with high reassessment probability illustration
SELECTION of FIELDS WITH HIGH REASSESSMENT PROBABILITY: ILLUSTRATION
  • Source: Deloitte Germany 2010
tools for dispute avoidance or alternative dispute resolution

Advance Price Agreements (APAs)

Alternative administrative procedures, e.g.Safeharbors

«Enhanced engagement approach»: the UK and Netherlandsexamples

Tools for dispute avoidance or alternative dispute resolution
uk example
UK example
  • Source: HMRC site - International Manual at INTM480540 et seq. http://www.hmrc.gov.uk/manuals/intmanual/intm480540.htm
the netherlands example
THE NETHERLANDS EXAMPLE
  • Source: HM Site – Horizontal monitoring within the Medium to Very Large Business Segment http://download.belastingdienst.nl/belastingdienst/docs/horizontal_monitoring_very_large_businesses_dv4061z1pleng.pdf
recent recommendations

Observation: overalleffect of BEPS structures is to associate more profit withlegalconstructs and intangible rights and to shift riskintra-group, reducingshare of profit associatedwith substantive operations

  • Improvements or clarifications to transferpricingrules to addressspecific areas wherecurrentrulesproduce « undesirableresultsfrom a policy perspective »
    • Currentproject on intangibles
    • Simplifiedappication of the TP guidelines
    • Documentation requirements
  • Measuresin relation to the shifting of risks and intangibles, the artificialsplitting of ownership of assetsbetweenlegalentities: Germany and Sweden examples

See Business restructurings and Transfer Pricing in Sweden and Germany hj.diva-portal.org/smash/get/diva2:159038/FULLTEXT01 -

Företagsomstruktureringar och internprissättning i Tyskland och Sverige

Recentrecommendations
german legislation on shifting of functions example
German LEGISLATION on SHIFTING OF FUNCTIONS - EXAMPLE

No

General TP principlesapply

Event characterizing a "Relocation of functions" (§1 of the Decree Law FVerIV)

Yes

TaxPayerprovethat no Essential Intangible asset & advantages are transferred or thatindividualprices complies with the overall value

Yes

General TP principlesapply

No

Evidence that "Overallresult of individualprices = value of the package as a whole"?

Package deal assumed – Transfer Package valuationrequired

Yes

Relocation of Functions (sec. 1 par 3 sentences 9-10 FTA)

Source: Germany's Transfer Pricing Provisions;: A conflictwithInternationallyAgreedPrinciples? Hartmut FörsterTax Management Jan. 28, 2010

Available Comparables for the transfer package as a whole?

Base the Transfer Package valuation on comparables

Yes

Taxpayer has to determine the range of agreement based on the profit expectations of both parties

If no adjustment clause has been agreedupon, the provision on assumingsuch clause apply. Assumptioncanberefuted by Tax payer

Most reliableprice in the range as substantiated by Tax Payer, otherwisemean value

slide22

Thank you for your attention !

Name: Morgan Guillou

Contact: morgan.guillou@ec.europa.eu