Quantera Global Newsletter – January 2021

We are pleased to share 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. Send an e-mail to TPnews@quanteraglobal.com or call us at +31 88 221 5800 and we will introduce you to the relevant professional.

Quantera Global news, developments, and blogs:

  • Release of OECD Guidance on the transfer pricing implications of the COVID-19 pandemic

On 18 December, the OECD released the much-anticipated Guidance on the transfer pricing implications of the COVID-19 pandemic. The guidance specifically clarifies and illustrates the practical application of the arm’s length principle regarding the following four issues: comparability analysis, losses and allocation of COVID-19 specific costs, government assistance programs, and advance pricing agreements.

Feel free to contact us if you want to know more about this topic and the potential impact on your company.

  • Quantera Global on television

Our company will be part of the broadcast of “Barometer” on Sunday 24 January at around 10 AM CET (RTL Z), in which we will provide insight in our company.

  • Webinars

In 2020 we started hosting free-of-charge webinars on a variety of Transfer Pricing topics. This became an instant success. Therefore, we will continue these webinars in 2021. Below you can find an overview of the webinars that are currently scheduled:

  • 19 January What to expect for 2021*
  • 28 January: Operational Transfer Pricing (in collaboration with our strategic partner Advance Tax Compliance)
  • 18 February: The good hope (our view on transfer pricing developments)
  • 2 March: Transfer Pricing specifics for the UK and Brexit
  • 25 March: Transfer Pricing Risk Management: compliance & organization
  • 17 June: Transfer Pricing Risk Management: APAs & MAPs

* On 3 December 2020, we presented the first edition of “What to expect for 2021”. Due to the success of this webinar, and the many expected developments in the field of Transfer Pricing during 2021, we decided to offer this webinar for a second time.

To register for one or more webinars, please send a short e-mail to QGAcademy@QuanteraGlobal.com indicating for which webinar you would like to register.

You can watch previous webinars by clicking on this link.

News around the world:

  • Australia
    • The Australian Taxation Office (‘ATO’) has released an updated version of the Law Administration Practice Statement regarding APAs, which contains important questions and answers on the subject.
    • On 10 December, the ATO released an updated practical compliance guide regarding interest-free cross-border financing arrangements between related entities. The updated guidance helps taxpayer determine the Transfer Pricing risks of such agreements.
    • On 17 December, the ATO released an updated version of the practical compliance guidelines regarding a safe harbour for small taxpayers that have entered into loans with related entities. The guidance outlines the minimum and maximum interest rates that these taxpayers then can use as safe harbour for fiscal year 2021. This safe harbour applies to taxpayers whose intercompany loan balance remains below 50 million AUD, during the entire fiscal year.

 

  • Benin

On 8 December, the Benin parliament introduced a new tax ruling procedure that came into effect as of 2021. Taxpayers can request a ruling, by submitting an accurate description of the related transaction. The ruling will be legally binding to the Benin tax authority, as long as the legal conditions are respected.

 

  • Bulgaria

On 8 December, Bulgaria made amendments to the mandatory transfer pricing documentation rules. The date on which the Local File must be submitted was changed to 30 June of the year following the fiscal year. The Master File must be submitted one year after the submission deadline of the Local File. The new filing deadlines have been aligned with the recent change in the corporate income tax return date.

 

  • Denmark

In Denmark, the parliament passed a bill that requires taxpayers to annually submit the Master File and Local File no later than 60 days after the deadline of the tax return. This requirement has come into effect as of fiscal years starting from 1 January 2021. If taxpayers do not meet this requirement, they can be fined. The Danish tax authorities can also reassess the taxable income by a discretionary assessment.

 

  • Egypt

In Egypt, a law has been amended that introduces more rigid penalties related to transfer pricing documentation. Penalties for non-compliance with regard to submitting a CbCR- report or notification will amount to 2% of the total value of the taxpayer’s intercompany transactions during the relevant fiscal year. Non-compliance fines regarding the Master File and Local File can amount to 3% of the total value.

 

  • Ghana

In Ghana, the old transfer pricing regulations that were first published in 2012 have been replaced with the 2020 transfer pricing regulations. The new guidance contains, amongst others, provisions from the OECD BEPS-project and includes safe harbour rules for certain intercompany transactions.

 

  • Germany

The German Ministry of Finance published new transfer pricing guidance that elaborates on the taxpayer’s obligation to cooperate with tax authorities concerning income allocation. German law and regulations already incorporated these provisions, but taxpayers still had to wait for the corresponding guidance. Taxpayers must cooperate with tax authorities to determine the amount of income that must be allocated. It also provides guidance on the question to what extent the German tax authority can estimate the German taxable amount, in case of non-compliance.

 

  • Ireland
    • In Ireland, the Revenue Commissioners released an updated manual that sets out their policy for taxpayers that want to rely on private rulings that were agreed upon in 2015, for periods after 1 January 2021.
    • On 23 December, the Revenue Commissioners also released a Tax and Duty Manual regarding the Irish DAC6 requirements. The deferral period, that was provided in the wake of COVID-19, ended on 31 December, and the filing portal was subsequently opened on 1 January of this year.

 

  • Italy

On 16 December, the Italian tax authority issued regulations regarding dispute resolution mechanisms. This includes templates and guidance on Mutual Agreement Procedures (‘MAPs’).

 

  • OECD
    • On 16 December, the OECD published information regarding the state of implementation of the Hard-to-Value Intangibles (‘HTVI’) approach by members of the Inclusive Framework on BEPS. The introduction of HTVI was part of the BEPS project in 2015 and aims to protect both taxpayers and tax authorities from the absence of information.
    • On 18 December, Germany and Pakistan deposited their instrument of ratification of the MLI. This further increases the amount of bilateral tax treaties that are covered by the MLI.

 

  • Peru

The Peruvian tax authority announced that multinational groups must file the CbCR-reports for fiscal years between 2017 and 2019, before the end of January 2021. This is the result of the OECD’s decision that Peru has complied with the security and confidentiality standards, and therefore is allowed to receive the automatic exchange of information.

 

  • Russia
    • Russia has unilaterally cancelled the tax treaty with the Netherlands, after negotiations to raise the tax on dividend payments came to a standstill. In the months leading up to this decision, Russia successfully negotiated changes to their tax treaty with Cyprus and Malta. The Dutch Ministry of Finance mentioned that the Russian cancellation of the Russian-Dutch tax treaty will become effective as of 2022.
    • In Russia, the tax law was revised, also including new safe harbours for intercompany loans. The Russian law provides a range of minimum and maximum interest rates on intercompany loans. If intercompany loans are within this range for the fiscal years 1 January 2020 – 31 December 2021, no transfer pricing documentation will need to be drafted for these transactions. If it is outside the range, a transfer pricing analysis will need to be conducted.

 

  • Thailand

The Thai Ministry of Finance has clarified its countries’ transfer pricing rules. When analysing transactions between related parties, the internal CUP should be the starting point of the analysis. If such comparables are not available, information between independent parties should be used. For this second option, foreign and domestic companies and transactions can be selected. A wide application of the conditions of the transactions can be taken into account.

 

  • United Kingdom

The UK tax authority (‘HMRC’) has confirmed that the UK will not be a party of the EU Arbitration Convention after 31 December 2020. This is one of the consequences of the UK leaving the European Union.

 

  • Vietnam

From 20 December 2020 onwards, new transfer pricing rules have become in effect in Vietnam. Changes were made to the benchmarking process, CbCR-requirements, as well as the way the arm’s length range is calculated. The new transfer pricing rules also broadened the definition of related parties and includes new safe harbour rules.