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Quantera Global Newsletter – April 2020

In this Newsletter we would like to keep you up to date on relevant Transfer Pricing developments in an
accessible manner.

We are pleased to keep you informed about the most important national and global developments in tax
law that are (closely) related to the transfer pricing world.

Please feel free to contact us if you have any questions.
You may send an e-mail to marketing@quanteraglobal.com or call us at +31 88 221 5800 and we will introduce you to the relevant professional.


Developments and blogs:

  • Corona virus and transfer pricing:
    • The spread of the Coronavirus (COVID-19) and the related restrictions introduced by governments have a significant impact on the worldwide economy. In these uncertain times, cash management can be more important than ever before.

Read our blog on this topic here.

  • Country by Country reporting (CbCR)
    • On February 6, 2020, the OECD invited interested parties to review the country-by-country reporting. On March 9, 2020, the OECD has released 79 public comments in response to this request. The OECD has also announced the cancellation of a planned public hearing on this issue due to the Corona virus.

 

  • Quantera Global expands to the Baltic market

Read our announcement here.

  • Risk management
    • The OECD stated in Action 13 that it was important that countries take the compliance cost for companies into account. It however remains a challenge to be fully compliant and stay within a reasonable budget. Therefore, a cost-benefit analysis and compliance strategy are recommended.

Read our blog on this topic here.


News around the world:

  • Australia:
    • The Australian court has validated that the term “associate” is broader than the clear legal control concepts. The concept of sufficient influence should be taken into account.
    • The Australian government has tried to simplify CbCR for MNE’s by using a number of data validations before the CbCR is accepted. This may increase administration costs the first time an MNE files its CbCR but should improve the accuracy.
  • Denmark: the Danish Ministry of Taxation has proposed to include a filing requirement for transfer pricing documentation from FY 2020 onwards.
  • India: the Indian government has proposed to expand the scope of the “equalisation levy” in the Finance Bill 2020. The equalisation levy would include e-commerce supply or services. The levy will be in effect as of April 1, 2020.
  • Mexico: the Mexican 2020 tax reform has introduced measures which will be in effect as of January 1, 2020. The tax reform includes rejecting payments to low-tax jurisdiction (< 75% of the Mexican tax rate, i.e. 22.5% taking into account Mexican deduction possibilities) as well as limitation on deduction of interest (max. 30% of the adjusted tax profit).
  • Netherlands: in response to the Corona virus the Netherlands, as well as other countries, have enacted several tax measures. For the Netherlands this includes, amongst others, deferral of tax payments, reduction of interest on (overdue) tax and revision of provisional assessments.
  • Nigeria: the Prime Plastichem transfer pricing case has shown that although CUP analyses are generally preferred by tax authorities, they will not automatically be accepted. A CUP analysis requires a robust comparability analysis. Furthermore, taxpayers should be consistent in use of methods from year to year.
  • Poland: the Polish government has increased the information required for their transfer pricing risk assessment. One of the new requirements is filing through a simplified reporting format which limits the room for explanations. Penalties may reach EUR 5 million.
  • Portugal: the OECD announced that Portugal has deposited its instrument of ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) with the OECD’s Secretary-General. The instrument will enter into force on June 1, 2020.
  • South Africa: the National Budget Speech on February 26 has led to amongst others proposed limitations on interest expense deduction to 30% of earnings as well as limitations on loss carryforwards. Furthermore, it was proposed to change the definition of affected transactions for transfer pricing purposes.
  • United Kingdom: the draft legislation and guidance of the UK digital services tax was adjusted. The tax will apply as of 1 April 2020 and HRMC has confirmed that further guidance will be published.
  • United States: the US Department of Treasury has released its 2nd quarter update to priority tax guidance plan on March 6, 2020. Transfer pricing implications remain limited.

 

Quantera Global Academy:

  • Because of Coronavirus we will host the free-of-charge webinar “Transfer Pricing answers for Corona times” on Wednesday April 15 from 15:00 – 17:00 CET.
  • Interested? Please register by sending an e-mail to qgacademy@quanteraglobal.com and we will share the dial-in link accordingly.
  • Not available on 15 April? Please let us know if you would like to have a personal talk and have a look at our blog on this topic as mentioned above.

This information is intended only as a general update for interested persons and should not be used as a basis for decision-making. For further details please contact Quantera Global, Eindhovenseweg 128, 5582 HW Waalre, the Netherlands,
phone: +31 88 221 58 00, e-mail: marketing@quanteraglobal.com

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