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Quantera Global Newsletter – July 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 TPnews@quanteraglobal.com  or call us at +31 88 221 5800 and we will introduce you to the relevant professional.


Quantera Global news, development and blogs:

  • 7 year anniversary
    Quantera Global celebrated its 7 year anniversary in June and is looking forward to continue its journey for hopefully many more years to come.
  • TP Risk Assessment Tool
    Our new Transfer Pricing Risk Assessment Tool is now available. The tool consists of 15 questions and provides you automatically with a risk indication of your transfer pricing position and practical solutions for the identified risks. Interested? Please contact your Quantera Global contact person or send an e-mail to info@quanteraglobal.com.
  • Debate on BEPS, Transfer Pricing, EU State Aid and the developments in the Netherlands
    Quantera Global took part in a discussion on EU state aid and the future of transfer pricing with prominent Dutch tax specialists. For more information, please read our blog here.
  • TP risk management in the post-COVID-19 era
    During the COVID-19 pandemic stimulus packages have been implemented all over the world. The bill needs to be paid in the future and governments will likely knock on the taxpayer’s door. For more information, please read our blog here.
  • Controversy in a post-Corona era
    To support our clients and relations in the mitigation of tax audits, questions and disputes in a post-Corona era, we hosted a webinar which included topics such as:

    • The impact of increased transparency post-BEPS;
    • Choices in strategy towards controversy: proactive vs. reactive; and
    • Set-up of a robust Tax Control Framework.

You can find the recordings of our webinars here.

Please find below the schedule for our upcoming free webinars:

  • July 9:                 Transfer Pricing developments in Germany
  • August 26:          Introduction to Transfer Pricing
  • September 22:   Developments and Year-End topics
  • October 8:          Financial Transactions
  • October 29:        IP
  • November 18:    Digital Economy
  • December 3:      What to expect for 2021

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


News around the world:

  • Australia:
    •  A high-level guidance regarding transfer pricing and the impact of COVID-19 was issued by the Australian Taxation Office, relating to the preparation of transfer pricing documentation to support the arm’s length nature of intercompany arrangements.
    • The Australian Taxation Office updated their guidelines for the mutual agreement procedure (MAP) and arbitration arrangements. This includes an aimed timeframe for the MAP procedures of two years. Furthermore the Tax Authority has published a table with a list of tax treaties which have (or are expected to have) arbitration provisions.
  • Belgium:
    • The mandatory disclosure of reportable cross-border arrangements is postponed to 2021. The effective date of 1 July 2020 does not get postponed, but only the deadlines for the DAC6 reporting obligations are postponed.
    • Because of the ongoing pandemic, the Belgian Tax Authority has introduced a draft law which makes it possible for losses that arise during the COVID-19 pandemic, to be carried back. Furthermore, in the following years a ‘recovery reserve’ is allowed to be formed, which is exempt from taxable profit.
  • Cyprus:
    Legislation implementing exit taxation and hybrid mismatch rules has been adopted which will retroactively apply as of 1 January 2020.
  • Denmark:
    In the Denmark vs. Adecco A/S case, the Supreme Court overturned the decision of the High Court and ruled in favour of Adecco. The Supreme Court held that the royalty payments had the nature of deductible operating costs and did not consider that a royalty rate of 2% was not at arm’s length.
  • EU:
    The EU Council has granted EU member states the option to postpone the deadline by six months for filing and exchanging information to meet mandatory disclosure requirements for intermediaries and other taxpayers under DAC6.
  • Italy:
    • A decree regarding tax dispute resolution procedures was issued in Italy, widening the scope of the mutual agreement procedures (MAP). The decree applies to MAPs submitted as of 1 July 2019 concerning fiscal year 2018 and onwards.
    • A recent court ruling confirmed the use of the Authorised OECD Approach (AOA) for the attribution of profits to a permanent establishment, which profits are determined by performing a functional, asset and risk (FAR) analysis.
  • Israel:
    In the first Circular of 2020, the Israel Tax Authority (ITA) released guidance regarding the burden of proof in TP audits and compliant Transfer Pricing documentation. It describes the formal position of the ITA. For instance, lack of reasoning and explanation of a chosen TP-method will lead to inadequate documentation and no shift of burden of proof towards the ITA.
  • Kazakhstan:
    Kazakhstan has ratified the implementation of the MLI, which will enter into force on 1 October 2020.
  • Luxembourg:
    The Tax Authority in Luxembourg has issued a guidance concerning the MDR, providing clarifications around certain definitions and concepts (e.g. intermediaries and reporting process).
  • Mexico:
    • The Mexican Tax Authority issued a series of new rules that provide additional guidance on Mexico’s taxation of digital services and transactions performed on technological platforms. These rules include the option for computing withholding tax on daily income and an electronic format for non-residents concerning the payment of VAT and information transferrals.
    • On May 5th the US tax court ruled in favour of the IRS in the Whirlpool case regarding the Maquiladora structure. In the case concerning a Luxembourg affiliate no Transfer Pricing implications have been discussed by the Mexican court. If legal, it will make lowering the Maquiladora’s profit even more enticing.
  • Netherlands:
    An updated decree on the MAP was issued, which clarifies processes and policies as well as their interpretation of the mutual agreement procedures.
  • Nigeria:
    The Minister of Finance issued an Order to provide guidance on the definition of Significant Economic Presence (SEP) in relation to taxation of income derived from Nigeria by foreign companies.
  • Panama:
    The submission date for the transfer pricing report has been postponed in light of the COVID-19 pandemic to 30 September 2020.
  • Poland:
    Legislation amending various tax laws has been approved in Poland effective as of 1 July 2020 and 1 January 2021. The legislation concerns the tax treatment of hybrid transactions and hybrid entities, “call-off stock” arrangements, and the automatic exchange of information on cross-border arrangements.
  • Saudi-Arabia:
    The Saudi-Arabia Tax Authority has updated its Transfer Pricing guidelines providing its view on the scope of the arm’s length principle, the rebuttable presumption of effective control, de-minimis materiality thresholds, comparables, and the de-facto owner of intangibles and on TP documentation requirements.
  • Thailand:
    Thailand has signed Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Convention) and thereby joining the international efforts against tax avoidance and evasion.
  • USA:
    The US Supreme Court denies the petition for certiorari for the Altera case concerning the inclusion of stock-based compensation costs in a cost-sharing arrangement.
  • Vietnam:
    The new withholding tax rules applicable to non-resident enterprises selling goods and services into Vietnam via digital and e-commerce supply chains have been postponed by six months and will come into effect in Vietnam as of 1 January 2021.

 

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: TPnews@quanteraglobal.com

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