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.
Quantera Global news, developments, and blogs:
Quantera Global team update
We are very pleased to announce the well-deserved promotion of the following Quantera Global team members as of 1 January:
Managing Director: Maikel Verhoeven
Director: Emile Monfils
Senior Manager: Adriaan van der Heijden
Senior Analyst: Tiddo Benders
Quantera Global specialties
In the past month, we performed several challenging and interesting projects worth mentioning, such as:
- Several strategic sessions with different clients to brainstorm about their transfer pricing policies, challenges, opportunities, concerns, and specific questions they may have
- The implementation of Profit Split analyses
- Determining at arm’s length interest rates on intercompany loan transactions and determining the remuneration of flow-through companies
If you would like to know more about these topics, please feel free to contact us.
Dutch article on preventing mismatches
Recently, Stefan Ubachs, Director at Quantera Global, shared his views on the Dutch Bill Preventing mismatches in the application of the arm’s length principle in a Dutch NTFR article (2021/4079).
QG Academy Webinars
In 2020 we started hosting free-of-charge webinars on a variety of Transfer Pricing topics and we are continuing these webinars in 2022. We currently have the following webinars scheduled:
- 8 February: Transfer Pricing documentation & Coperitas
- 14 April: Transfer Pricing and Financial Transactions
- 18 May: Benchmark studies
- 29 November: Outlook 2023
- 8 December: Outlook 2023
To register for one or more webinars, please visit our website https://www.quanteraglobal.com/group-sessions/.
You can watch our previous webinars here.
News around the world:
On 17 December, the Federal Court of Appeal ruled in favour of the Australian Revenue Service (ATO) in the case with Singapore Telecom Australia Investments Pty Ltd. The ATO successfully argued that parts of the intercompany interest payments exceeded the arm’s length standard and were therefore non-deductible.
Belgium and France
Belgium and France signed a new tax treaty on 9 November. The new treaty is better adapted to the current challenges of international taxation and complies with new international standards, in particular those of the OECD Base Erosion and Profit Shifting Project (BEPS). The new tax treaty will enter into force in January 2023 at the earliest.
- On 3 December, the Supreme Court of Canada ruled in a decision (Case No. 2021 SCC 51) that Canadian company Loblaw Financial Holdings qualified for Canadian tax exemption in respect of its foreign subsidiary, Glenhuron, a bank based in Barbados. The Supreme Court ruled that the arm’s length requirement of the exception from the foreign accrual property income was met, as Loblaw and Glenhuron were not conducting business with each other.
- The Prime Minister of Canada has announced several high-level tax policy objectives. The objectives include a digital services tax fallback plan, additional rules on tax avoidance and higher income taxes for banks and insurance companies with a turnover of more than 1 billion CAD as well as a “Canada recovery dividend”.
On 20 December, the Cyprus Tax Department announced that the deadline for the submission of the local CbC report for fiscal year 2020 is postponed to 31 January 2022.
On 22 December, the European Commission proposed a Directive to ensure a minimum effective tax rate for large multinationals with global activities. The European Commission aims to implement OECD’s Pillar two. Once the EU Member States unanimously agree upon the proposal, the Directive may be further implemented
The Finnish Parliament approved the proposed amendments of the Finnish transfer pricing rules. The amendment aligns the Finnish transfer pricing with the OECD transfer pricing guidelines and are effective as of 1 January 2022.
On 23 December, Ireland published updated Mutual Agreement Procedure (MAP) guidelines for the resolution of cross-border tax and transfer pricing disputes. The new guidelines state that ongoing MAP proceedings under a tax treaty or EU Arbitration Convention will cease if a taxpayer submits a MAP request under the EU dispute resolution mechanism.
On 20 December, the Maltese government opened a consultation to obtain feedback on draft transfer pricing rules regarding Unilateral Transfer Pricing Rulings and Advance Pricing Agreements. The intention is to use the feedback for transfer pricing rules that will be published by the end of 2022 and implemented from 2024 onwards.
- On 13 December, the OECD released the second batch of updated transfer pricing country profiles for Austria, Belgium, Bulgaria, France, Georgia, Germany, Indonesia, Ireland, Italy, Latvia, Malaysia, Mexico, Peru, Poland, Seychelles, Singapore, South Africa, and Sweden.
For the first time, country profiles have also been included for Albania, Kenya, and the Maldives, bringing the total number of countries covered to 63. The transfer pricing country profiles contain up-to-date and harmonised information on key aspects of transfer pricing legislation and practice, provided by countries themselves in response to a questionnaire.
- On 14 December, the OECD released the 2020 peer review assessment report. According to the report, 95 out of 131 countries reviewed did not receive flags for improvement regarding the implementation of the OECD minimum standard on exchange of information on tax rulings. However, 36 countries remained in default.
- On 20 December, the OECD released Pillar Two model rules for domestic implementation of the 15% global minimum tax. The OECD released the much-anticipated Global Model Rules with a commitment to finalize the commentary and safe harbours by early 2022. The rules are divided into ten chapters.
On 10 December, the South African Revenue Service (SARS) released a high-level model and draft legislation for the implementation of an Advance Pricing Agreement (APA) program. Only bilateral APA applications will be accepted. The agency stresses the importance of establishing an APA program to provide clarity and certainty to taxpayers. However, the agency adds that the scarcity of transfer pricing expertise in the country has been a barrier. Feedback on the proposed model and draft legislation can be submitted until 31 January 2022.
On 30 December, the US Internal Revenue Service published final regulations regarding the treatment of debt instruments as a result of the IBOR-transition. The main conclusion is that there will not be a tax realization event for a covered modification. A covered modification includes the situation where an IBOR based rate is replaced.