Transfer Pricing Links 09/06/2014
News Analysis: Political Reality Catches Up With BEPS Tax Analyst (M Herzfeld)
“In January French President François Hollande, attempting to deflect attention from revelations of his scandalous affair with a French actress, proposed a radical shift away from the tax policies of the leftist wing of his Socialist Party.
After pursuing a multiyear agenda of tax increases and, most recently, a special 50 percent payroll tax on salaries in excess of €1 million, Hollande on January 14 proposed a substantial reduction of French corporate taxes. (Prior coverage: Tax Notes Int’l, Jan. 27, 2014, p. 314.) Not wishing to be known as the leader of a country that is referred to as the “sick man of Europe,” and hoping to remain employed, Hollande hit on corporate tax reduction as the way to jump-start the French economy.1
Hollande is certainly not the first head of state to turn to tax cuts and incentives to promote domestic fiscal growth, but the irony here is compounded when one looks at his policies to date and his election platform. His about-face serves as a lesson to the OECD as it seeks to encourage its member countries and nonmember countries in the G-20 to sign on to the base erosion and profit-shifting initiative, which could limit their ability to provide tax incentives to their own citizens and tax residents.”
Tax Analysts Exclusive: Revised Transfer Pricing Discussion Draft Kept Under Wraps Tax Analyst (M Burow)
“On or around April 18, the OECD released a copy of a revised draft on action 13 (transfer pricing) of the base erosion and profit-shifting action plan to working party members and official consultative members in advance of the May 19 public consultation on transfer pricing documentation and country-by-country (CbC) reporting.
The document instructed delegates to review the revised draft and provide written comments on or before May 1 and to bring their own copies of the draft to a meeting, the date and location of which are unknown, because there would be no printed copies available in the meeting room.”
Prepared Remarks Of John A. Koskinen Commissioner Internal Revenue Service Before The U.S. Council For International Business-OECD International Tax Conference Washington, D.C. June 3, 2014
“ Thank you to the U. S. Council for inviting me to be here today. I’m honored to have the opportunity to participate in this important discussion about international tax issues.
Although I have been IRS Commissioner for only a few months, I have quickly come to appreciate the great importance of focusing on the international tax compliance of both business and individual taxpayers. And I’ve come to understand that it is not possible to overstate the challenge that globalization poses to tax administration for the United States and I’m sure for many other jurisdictions as well. Rapid and extensive globalization of markets, business models, and financial systems has presented taxpayers and tax administrations with challenges and opportunities of all sorts.”
Guidelines on Transfer Pricing – Frequently Asked Questions European Commission
« What is transfer pricing?
Transfer pricing refers to the terms and conditions surrounding transactions taking place within a multi-national company. It concerns the prices charged between associated enterprises established in different countries for their inter-company transactions, i.e. transfer of goods and services. Since the prices are set by associates within the multi-national company, it may be that the prices do not reflect an independent market price. This is a major concern for tax authorities who worry that multi-national entities may set transfer prices on cross-border transactions to reduce taxable profits in their jurisdiction. This has led to the rise of transfer pricing regulations and enforcement, making transfer pricing a major tax compliance issue. The approach adopted by EU Member States to evaluate the price of inter-company transactions is that of the arm’s length principle. The arm’s length principle requires that the prices used in inter-company transactions should correspond to the prices that would have applied between independent enterprises for the same transactions (market price). »
US Business Sees Tax Rate Cut As Solution To Inversions Tax-News (M Godfrey)
“The businesses and associations that make up the RATE (Reforming America’s Taxes Equitably) Coalition have written to Ron Wyden (D – Oregon), Chairman of the Senate Committee on Finance, and Orrin Hatch (R – Utah), its Ranking Member, to insist that the solution to United States corporate tax inversions lies in reforming its “uncompetitive tax code.”
Corporate inversions have been used by US companies when bidding for (generally smaller) foreign companies as a means of moving away from the high American 35 percent corporate tax rate. Under current law, a company that merges with an offshore counterpart can move its headquarters abroad (even though management and operations remain in the US), and thereby take advantage of lower taxes as long as at least 20 percent of its shares are held by the foreign company’s shareholders after the merger.”
Robert Robillard, CPA, CGA, MBA, M.Sc. Econ.
Senior Partner, DRTP Consulting Inc.
514-742-8086; robertrobillard “at” drtp.ca
DRTP Consulting Inc. solutions go beyond transfer pricing and international tax solutions. This blog post originally appeared at rbrt.ca. The information in this blog post is general information only. Data and information come from sources believed to be reliable but complete accuracy cannot be guaranteed. DRTP Consulting Inc. or the author are not responsible or liable for any error, omission or inaccuracy in such information. Readers should seek advice and counsel from DRTP Consulting Inc. as required.