TP Ticker – October 2018 (2)

OECD MAP Statistics

On 10 October, the OECD has released global statistics on the mutual agreement procedures (“MAPs”) for 2017.  These global statistics are based on the national statistics of 85 jurisdictions and are collected under Action 14 of the BEPS project which aims at improving dispute resolution mechanisms in international tax matters. Due to a different counting method, the statistics show a decrease of the overall number of cases in the MAP inventory. However, in half of the covered countries, the MAP inventory has increased over 2017.  The statistics show that, with 30 month, transfer pricing (“TP”) cases require substantially more time for reaching a conclusion than other cases, which are closed after an average of 17 months; Action 14 requires an average conclusion of MAPs after 24 month, meaning that especially TP cases are a challenge for reaching this goal.

The press release of the OECD – which also links to the statistics – can be found on the website of the OECD here: http://www.oecd.org/tax/beps/oecd-releases-2017-global-mutual-agreement-procedure-statistics.htm

Australian Guide on Centralized Operating Models

On 11 October, the Australian Tax Office (‘ATO’) updated its practical compliance guideline on transfer pricing issues related to centralized operating models (‘PCG 2017/1’).  This guidance deals with the ATOs approach to procurement, marketing, sales and distribution functions in centralized hubs and was updated by including further guidance on how to deal with so-called ‘non-core procurement hubs’ outside Australia. Such non-core procurement hubs are understood as entities outside Australia that supply ‘indirect’ or ‘non-core’ goods or services (non-core product) to an Australian entity. The ATO considers them as low-risk, if they markup on the hub-costs of 25 percent or less. 

The updated PCG 2017/1 can be found on the website of the ATO here: https://www.ato.gov.au/law/view/document?docid=COG/PCG20171/NAT/ATO/00001#P173