TP Ticker – April 2018 (2)
TJN Report on CbCR
On 24 April 2018, the Tax Justice Network published a report by Markus Meinzer and Christoph Truavetter on the development of tax transparency for multinational enterprises. In their paper, the authors outline how the first respective UN proposals in the 70s finally developed into the current country-by-country reporting. In their analysis, they are highly critical of the role that the big four accounting firms and industry lobbying played in these developments.
The report can be accessed on the website of the TJN here: https://taxjustice.net/wp-content/uploads/2020/11/MeinzerTrautvetter2018-AccountingTaxCBCR.pdf
Indian Case on Royalty Fees
In a recent case, the Bangalore Tribunal decided about the arm’s-length nature of royalty and service fee payments from an Indian taxpayer to its related parties in Singapore. In its examination of the facts, the court accepted the conclusion of the Indian tax administration that the cost benefit analysis for the payments was insufficient that the respective services were not provided by the Singaporean related parties but rather by an individual, who owned controlling interest in the Indian taxpayer, “was a key person who provided services”. This conclusion was partially based on information that the Singaporean tax administration had provided. Accordingly, the court determined the arm’s-length price for the transactions to be zero.
The text of the order is available: https://www.taxpundit.org/forum/income-tax-appellate-tribunals/5448-filtrex-technologies-pvt-ltd-vs-acit
Hong Kong BEPS Bill
The Legislative Council of has published first draft amendments to the Inland Revenue (Amendment) No. 6 Bill 2017, also known as “BEPS Bill”. Important transfer pricing related topics of this first draft include: 1) An announcement that a future draft will include provisions for exempting certain domestic transactions from the transfer pricing rules, 2) clarification that documentation has to be prepared within 9 months after the year-end of the respective year (58C), 3) recognition of the OECD concept of an “arm’s-length range” (Part 8AA), and 4) certain clarifications related to thresholds and deadlines for local surrogate filing of CbCR.
The drafts can be found online here: http://www.legco.gov.hk/yr17-18/english/bc/bc02/papers/bc0220180425cb1-847-2-e.pdf