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Taxand discovers the ‘Real Deal’ at ITR Asia TP Forum 2014
Taxand, was a key speaker at the International Tax Review's (ITR) recent Global Transfer Pricing Forum Asia 2014, held in Singapore. The Forum covered the latest in international transfer pricing issues including the OECD BEPS project and country –by- country reporting. Taxand advisors from across Asia attended the event and provided transfer pricing expertise on a wide range of recent trends and issues. Our key pointers from the event for multinationals cover:
- BEPS for MNCs: The OECD Action Plan offers the opportunity for effective tax management. Multinationals should look at how their tax model affects their business: can old structures be replaced by new TP models and used to the advantage of the business?
- Country-by-country reporting: MNCs will soon be expected to report on all entities in all jurisdictions, with varying reporting deadlines. Companies should be proactive and start acting immediately: companies should begin work on their Master Files now with a view to drill down to Local Files next
- The Real Deal: MNCs should be aware of the actual activities of their business rather than what is vaguely captured in documentation. They should conduct full investigations into the activities of their company in order to report on actual, rather than perceived, operations of the organisation
- TP documentation: BEPS Action 13 is aimed at re-examining TP documentation with MNCs providing even more information to promote transparency. Organisations should refine information they share with tax authorities to allow for full risk assessments and ensure information is reliable to avoid dispute
- Handling TP audits: Audit strategies should pre-exist rather than being an afterthought to understand your audit risk. MNCs should consider negotiable and non-negotiable issues and self-assess business activity before submitting TP documentation to avoid potential complications
- Permanent establishments: Tax authorities are becoming more aggressive in their stance with PEs. Undertake a risk review of your group model and identify possible areas of exposure. Companies should monitor compliance of internal guidelines by reviewing international travel & relocation of personnel
- Business restructurings: Business restructurings need to be for real purpose and not solely for tax purposes – or reputational, financial and criminal damage are high risks. MNCs should ensure that any business restructuring conducted will stand the test of scrutiny
- Location specific advantages: For some industries in specific jurisdictions, LSAs are allowed and permit access to incentives, market premiums, access to growing markets, cost savings etc. Companies should thoroughly investigate instances where LSAs are permitted and analyse both the demand and supply side of any transaction when identifying LSAs
Mukesh Butani, Taxand India said: "Asian tax law is moving forward as economies in the region mature and international efforts such as the OECD's BEPS project are adopted. Singapore in particular, as the home of many regional headquarters for EU and USA multinationals, is keen on strengthening its transfer pricing documentation & arm’s length standards to meet the challenges of BEPS. "
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Transfer pricing is one area of tax where new legislation is being widely implemented in Asia and multinationals need to treat the region like the others they operate in, by making sure they have substance to their tax planning activities and proper documentation to provide to the tax authorities, in case of a dispute.