Australia withdraws Draft on Centralized Operating Models

In June 2020, the Australian Taxation Office (“ATO”) withdrew its Practical Compliance Guideline that was aimed at regulating transfer pricing risk in relation with centralized operating models, so called ‘hubs’.  The guidelines were supposed to establish a risk framework connected with either reduced – for low-risk structures – or increased compliance structures, where a higher than low risk was found to exist.  It would not have provided any safe harbor; thus, even low risk structures could have been subject to transfer pricing adjustments while it was in principle possible to justify the transfer pricing for transactions with higher risk.  The draft was originally published in 2018 and now officially withdrawn, as from the comments received, the ATO concluded that it is not the best means of communicating respective guidance.  Further, more targeted guidance is under development. The withdrawn draft practical compliance guideline can at this time still be found on the website of the ATO here: https://www.ato.gov.au/law/view/document?docid=DPA/PCG20171DC2/NAT/ATO/00001