TP Ticker – May 2018 (2)
New Tanzanian Transfer Pricing Regulations
On 27 April 2018, the Tanzanian government published new transfer pricing regulations. These regulation regulations replace the 2014 regulations and include further guidance and requirements into domestic law. Especially, they require the contemporaneous preparation of transfer pricing documentation and – for enterprises exceeding a specified amount of foreign-related-party transaction – its filing with the tax administration with the tax return. The regulations explicitly refer to the arm’s-length principle according to UN and OECD model tax conventions and covers areas such as transfer pricing methods, comparability analysis, intra-group services, and intangible transactions.
In our view, the new Tanzanian regulations are representative of the current trend in various countries to strengthen transfer pricing documentation requirements. The OECD guidelines already advise that such documentation should be contemporaneous and available until the filing of the tax return. However, domestic legislation does often not require filing of the documentation together with the tax return. Rather, they can be held at hand and the taxpayer may – depending on the jurisdiction – may even enjoy generous deadlines for submission upon request. With the current trend, it can be expected that over the next years such options vanish step by step and require a more proactive approach in transfer price setting and documentation. “The Tax Administration (Transfer Pricing) Regulations, 2018” are available on the website of the Tanzanian government here: http://trab.go.tz/documents/Transfer%20pricing%20Regulations-2018.pdf
Durch TP Decree on Functional Analysis
11 May 2018, the Dutch Ministry of Finance published a new transfer pricing decree (Nr. 2018-6865, dated 22 April 2018), replacing the previous decree from 2013 (IFZ 2013/184M, 14 November 2013). The decree provides updated guidance on its application, considering the OECD Transfer Pricing Guidelines of 2017. Important new contents of this decree include the characterization of transactions considering value creation, specific examples to deal with intangibles and risk, and guidance on the treatment on the purchase and integration of third parties.
The decree, in Dutch language, can be found online here: https://zoek.officielebekendmakingen.nl/stcrt-2018-26874.html
Revised Italian TP Guidelines
On 14 May 2018, the Italian Ministry of Finance and Economy published a decree setting out the revised Italian transfer pricing guidelines. Italy had recently modified its tax law, to incorporate the arm’s-length principle and the new decree contains general guidelines for its application. Contents include the definition of comparability and applicable transfer pricing methods.
The decree, in Italian language, can be found on the website of the Ministry of Economy and Finance here: http://www.finanze.it/export/sites/finanze/it/.content/Documenti/Varie/decreto-TP.pdf
US Report on CbCR
On 18 May 2018, the US Internal Revenue Service issued a news report covering Country-by-Country (“CbC”) reporting requirements. This news report covers frequently asked questions (FAQs), an update of the overview about the exchange of information with other jurisdictions, and information on the filing of Form 8975 and Schedule A (Form 8975) for CbC reporting. Besides general questions, the FAQs cover the topics data format and structure, exchange of information, and reporting requirements for CbC reporting under the US-regulation.
The news report can be accessed online here: https://content.govdelivery.com/accounts/USIRS/bulletins/1f110bc?reqfrom=share
OECD’s CBCR Peer Reportings
On 24 May 2018, the OECD released a first compilation of peer review reports for CbC reporting. The reports demonstrate that for effectively all jurisdictions that serve as headquarters of multinational enterprises, CbC reporting requirements were introduced. Highlights of the 756-page report include a comprehensive examination of 95 jurisdictions that are members of the Inclusive Framework. A second peer review that was started in April 2018 will focus on the exchange of information aspects of the CbC reporting system.
The OECD release can be found online here: http://www.oecd.org/tax/oecd-peer-reviews-on-beps-action-13-country-by-country-reporting-initiative-show-strong-progress-for-global-roll-out-in-june.htm
The report is available here: http://www.oecd.org/tax/beps/country-by-country-reporting-compilation-of-peer-review-reports-phase-1-9789264300057-en.htm