Asia Pacific Transfer Pricing Guide 2024

HMRC recently released Transfer Pricing Guidelines for Compliance, a clear framework for compliance to provide tax-payers with more guidance but with increased scrutiny and potential risks for those who fall short.

Discover the new Transfer Pricing framework in Cyprus created by WTS Cyprus, covering TP rules, documentation, filing obligations, and statutory requirements.

On March 22, 2024, the Federal Council approved the Act to Strengthen Growth Opportunities, Investment and Innovation as well as Tax Simplification and Fairness (Growth Opportunities Act, WtChancenG).
 

In this latest edition of the WTS Transfer Pricing Newsletter, our colleagues from 13 countries provided an update on recently introduced legislations and cases.

How data analytics can add value using the example of a global transfer pricing documentation project

With a view to facilitating transfer pricing reporting properly, the Hungarian Ministry of Finance has published a 25-page document at the end of March.

New year, new legislation – which means that this year, just like at the beginning of every year, the focus is on changes to the tax rules. One of the most important changes affecting most Hungarian taxpayers in 2023 is the amendment of the transfer pricing documentation rules.

The Finance Ministry published an announcement dated 20 Dec 2022 on the base rate and margin notice for transfer pricing purposes in personal income tax (PIT) and corporate income tax (CIT). The announcement came into force on 1 January 2023.

New rulings regarding local research tax credits paving the way for consistently deducing the local research tax credits and/or similar subsidies from any R&D cost-plus services provided by eligible French companies

The Superior Court of Justice has decided that, until further legislative measures are taken, the so-called PRL 60 method must be calculated in a specific way. Our article sheds light on the decision and elaborates on the main practical implications.

The Argentine Tax Court has recently ruled on an interesting Transfer Pricing case, concerning the timing of benchmarking a transfer of goods. Further details about this case can be found in the article.

Provisional Measure (MP) 1152, published on December 29, 2022, substantially amended the Brazilian transfer pricing rules currently in force for transactions carried out between related parties, with the purpose of aligning them with the OECD Guidelines.

The new law significantly tightens obligations to cooperate with the revenue authorities in the area of transfer pricing.

The draft legislation provides for regulations to be introduced that would require taxpayers to produce (and provide upon request) TP documentation in a specified format in line with the OECD recommended approach (such as Master file and Local file). In addition, HM Revenue & Customs proposed the introduction of a Summary Audit Trail. The UK had previously implemented the Country-by-Country Reporting requirement.

The Indonesian government introduced an additional three Transfer Pricing methods that provide further guidance on certain related party transactions. Our colleagues summarize the key aspects of this legislative development.

Since 2018, the Senegalese government has instituted reporting and documentary obligations in Transfer Pricing in accordance with the OECD BEPS actions 8-10, 12 and 13. However, it must be recognized that Transfer Pricing tax litigation is not yet abundant in Senegal, even though the regulatory framework is constantly being strengthened as a result of the various tax reforms that have already been discussed in previous issues of this newsletter.

July 4, 2022 saw the Saudi Tax Authority, Zakat, Tax & Customs Authority, issue a document for public consultation regarding proposed amendments to the Transfer Price bylaws to be applied to Zakat payers. The document was valid for public consultation until July 30, 2022. Zakat, Tax & Customs Authority has issued results relating to the public comments received on the public consultation platform.

The interest of the Polish Tax Authorities in benchmarking studies increases. Benchmarking studies are being carefully audited and regularly challenged during the tax controls, resulting in tax assessments and further tax proceedings before the administrative courts.

The Italian Tax Agency has issued instructions, through Circular Letter No. 16/E of May 24, 2022, with respect to the correct and practical use of the "arm's length range" for the application of the Italian Transfer Pricing rules.

Based on the recent decision of the Austrian Financial Court, liability commissions must be charged from the start of the loan agreement, reductions in the Transfer Pricing with respect to deliveries of goods must be credibly demonstrated and the arm's length interest must be charged for supplier credits.

Intra-group financing in Austria, alongside the interest rate, a particular strong focus is placed by the tax authorities on whether the debt instrument might be re-qualified into “hidden equity”. Thus, there should be documentation on the capital structure of the borrower, transparency of the loan agreement as well as the arm's length character of the terms and conditions.

In this latest edition of the WTS Transfer Pricing Newsletter, our colleagues from 13 countries provided an update on recently introduced legislations and cases.

Kenya’s 2022 Finance Act amended various provisions of the income tax law.

Continuing on an ambitious internationalization and integration process

April 2022 saw the Brazilian Federal Revenue Service and the OECD present a proposal for the new Brazilian TP system

More than 5 years after the signature of the Multilateral Instrument (MLI) on June 7, 2017, Senegal deposited its instrument of ratification of the Multilateral Convention on May 10, 2022.

In practice, there is little room for MNEs to reconcile the sometimes conflicting opinions of the two authorities.

The Argentine Income Tax law includes a large number of “deemed affiliated” companies. All of them must be scrutinized in the annual Transfer Pricing report, which needs to be filed mandatorily with the Argentine Revenue Service.

At the TP Minds Conference which took place in June 2022 in London, senior tax officials and TP practitioners shared their experiences of dispute avoidance and resolution and other TP-related matters.

The Italian Tax Agency recently issued a ruling (No. 78/E dated December 31, 2021) analyz­ing the application of the DAC6 legislation with respect to TP adjustments.

The European Commission is working on a proposed directive (ATAD3) which will bring measures to prevent the misuse of shell entities for tax purposes.

Hungarian TP rules are to change significantly in accordance with the bill submitted to the Hungarian Parliament in the summer of 2022.

Recent case law regarding intercompany cash pool interest rates in a decision involving the SAP Group. 

The TP documentation must be submitted to the DTA no later than 60 days after the deadline for filing of the corporate income tax return.

The new info from May 5, 2022 presents the current legal opinion of the Austrian tax author­ities with regard to bilateral MAP and AP.

In this latest edition of the WTS Transfer Pricing Newsletter, our colleagues from 14 countries have provided an update on recently introduced legislations and cases.

How transfer pricing disputes are handled in the Netherlands and the relationship between transfer pricing and other tax codes.

In the Czech Republic, transactions between related parties are regulated by the requirement to comply with the arm’s length principle.

In 2021, the United Kingdom’s Financial Conduct Authority announced several changes to the benchmark settings currently published by the ICE Benchmark Administration

Intercompany financing is common among the MNEs. For any borrowing from related parties, the Chinese borrowers must pay interest to them.

Following a public consultation on TP documentation, the UK government decided to introduce new legislation and require the largest MNE with presence in the UK to maintain a transfer pricing Master File, Local File and supporting Summary Audit Trail. The new requirements could take effect from April 2023.

Effective 1 January 2022, the Netherlands have implemented a ground-breaking legislation to end its long-standing practice of allowing unilateral downward TP adjustments.

On 26 November 2021, Italian Revenue Agency published Circular Letter no. 15/E (the “Circular”) providing clarifications on the TP documentation rules contained in the Instruction.

Every Irish entity must prepare a Local File. Companies are allowed to prepare a consolidated ‘Country File’ for all Irish entities of an MNE group.

In a series of rulings in 2019 and 2020, the German Federal Fiscal Court has abandoned its decades-long ruling practice on implicit group support and the blocking effect of para. 9 OECD Model Tax Convention.

The notions of “main entrepreneur” and “routine entity” are often used, as it is the routine entity’s margin which will be set, with the entrepreneur receiving the residual profit/loss.

Section 4 of the Austrian TP Documentation Law (VPDG) contains a notification obligation in connection with CbCR.

In this latest edition of the WTS Transfer Pricing Newsletter, our colleagues from 15 countries have provided an update on recently introduced legislations and cases.

On 7 October 2021, the Austrian Federal Ministry of Finance published the final version of the Austrian Transfer Pricing Guidelines (Austrian Guidelines 2021). In 2010, the Austrian tax authorities published the transfer pricing guidelines based on the OECD Guidelines from 2010 for the first time.

In Austria, the draft of the revised Austrian Transfer Pricing Guidelines 2020 was published. Our Austrian colleagues outline the changes and consequences.