In this edition of the newsletter, you will find 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 and Developments
- We are delighted to announce that we have been shortlisted for the International Tax Review’s (ITR) EMEA Tax Awards in the “Transfer Pricing Advisory Firm of the Year” category. We are very proud of the continued trust of our clients and partners in our capabilities.
- One of our colleagues recently attended the Advanced Transfer Pricing Course on benchmark studies, organised by the Institute for Austrian and International Tax Law (WU Transfer Pricing Center) in Vienna.
Quantera Global Specialties
In the past month, several challenging and noteworthy projects were successfully completed, including:
- Developing a new Transfer Pricing model for a multinational enterprise,
- Performing a business restructuring analysis, and
- Determining the intercompany procurement value mark-up based on multiple analyses.
If you would like to know more about these topics, please feel free to contact us.
Quantera Global Blogs
- On 11 June, we published a blog on Germany’s Transfer Pricing shift, covering the upcoming global implications for transparency and compliance. You can read the blog here.
- On 12 June, we published a Case Study on enabling scalable growth through a robust Transfer Pricing design for a SaaS client. You can read the Case Study here.
News from around the world:
Australia
- On 6 June, Australia’s Board of Taxation proposed updating and simplifying the Voluntary Tax Transparency Code in light of developments in the transparency landscape. The Board suggested to augment the public CbCr rules and to provide a framework for groups that do not fall within these public CbCr rules.
- On 12 June, the Australian Tax Office published additional guidance on its public CbCr rules. Although registration in Australia is not required, the guidance emphasizes on the benefits for entities that do register. These benefits consist of, but are not limited to, the following: a simplified process of submission, extensions for submitting on request, and the possibility to apply for exemptions for the CbCr obligations.
Czech Republic
The Ministry of Finance has released draft versions of the tax and information return forms required for reporting allocated and top-up taxes under the Pillar Two framework. These drafts form also incorporate upcoming changes to the Act on Top-Up Taxes, including extending the deadlines for filing the first Czech top-up tax and information returns to 18 months.
Denmark
On 3 June, the Danish Parliament amended Sections 39 and 40 of the Danish Tax Control Act, introducing simplified Transfer Pricing rules and reducing the compliance burden. The amendment will introduce new thresholds and exemptions for Danish taxpayers and will be applicable as of fiscal year 2025.
European Union
On 20 June, the Council of the European Union published the “ECOFIN report on tax issues” following the ECOFIN meeting earlier that month. The report provides an overview of the progress made by ECOFIN on multiple tax matters. Most strikingly, the Council reports that the Unshell proposal will not be further analysed as there is potential overlap between the hallmarks in the latest Unshell compromise and those of DAC6. Most delegations believe that the aims of the Unshell proposal could be achieved with clarification or amendments of hallmarks in DAC6, and therefore the Unshell proposal will be put on hold.
Hong Kong
On 6 June, Hong Kong announced the implementation of the Pillar Two rules. Hong Kong will introduce the Domestic Minimum Top-up Tax and the Income Inclusion Rule effective for fiscal years starting on or after 1 January 2025. Implementation of the Undertaxed Profits Rule is subject to further examination.
Kenya
On 12 June, the Kenyan Cabinet Secretary for the National Treasury & Economic Planning introduced multiple tax proposals, including a due date for the minimum top-up tax and giving multinationals the opportunity to enter into an Advance Pricing Agreement (“APA”) for the pricing of related party transactions.
Korea
On 9 June, the Korean Tax Tribunal ruled that companies may annually update their set of comparable companies to assess arm’s length transfer prices. In this case, the company had been audited for fiscal years 2017-2021 in which the company assessed transfer prices by comparing its profit margins to a set of comparables which was updated in each year under review. The National Tax Service (NTS) recalculated the arm’s length remuneration with companies included in all five years which led to income adjustments and a penalty. The decision by the Korean Tax Tribunal overturned the NTS approach.
Romania
On 20 June, the Romanian tax authorities published a draft order named “Notification concerning the obligation to declare and pay the domestic top-up tax”, outlining taxpayers’ obligations regarding the Pillar Two rules implemented in January 2024.
United States
On 28 June, the United States Department of Treasury published a G7 Statement on Global Minimum Tax as a sequel to the U.S. secretary of treasury’s concerns earlier this year about the Pillar Two rules. The statement highlights that after detailed discussions and analysis, including consideration of recent U.S. legislative changes (amendment of H.R. 1, OBBBA and the removal of section 899) there now is a shared understanding that a side-by-side system could improve tackling base erosion and profit shifting and provide greater stability. A side-by-side system would fully exclude U.S. parented groups from the UTPR and IIR for both domestic and foreign profits, while addressing risks related to a level playing field, base erosion, and profit shifting.
Vietnam
On 11 June, the Vietnamese government introduced changes to the approval process of bilateral and multilateral APAs. These changes delegate the authority to approve bilateral and multilateral APAs to the Minister of Finance. Approval of the Prime Minister is no longer necessary.
Final words
Thank you for taking the time to read this edition of our newsletter. I hope you found the insights and updates valuable. Do you have any questions or need further information? Contact us today to get expert advice on worldwide transfer pricing matters and developments.
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Best regards,
Adriaan van der Heijden
Director at Quantera Global
