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 happy to announce that as of October Simone Vos has joined the Dutch Quantera Global team as a Junior Manager. Simone gained experience in a big-4 environment before joining our team. Welcome to Quantera Global, Simone!
Our team in Portugal welcomed Sofia Xavier as a Transfer Pricing Manager. Sofia worked for a big-4 company in the past and is looking forward to starting at Quantera Global. Welcome to the team!
Blog on aligning your Transfer Pricing policy with Pillar Two
On 8 October 2021, 136 jurisdictions reached agreement on the key aspects of the two pillars of the OECD’s initiative to address the tax challenges of the digitalization of the economy. Pillar one introduces a new taxing right for market jurisdictions, whereas Pillar two introduces a global minimum tax for MNEs falling under the scope of the new rules. For more information, you can read our blog on this topic here.
Webcast with “The InsurTech Queen”
Recently Arnas Laurynas, Managing Director at Quantera Global, shared his views on transfer pricing with “The InsurTech Queen”. Check this interesting webcast here.
News around the world:
Austria
The Austrian Ministry of Finance published the final version of the revised Austrian transfer pricing guidelines on 7 October, replacing the 2010 guidelines. Austria refers to all OECD transfer pricing methods, but in individual cases other methods may also be used if they are in line with the arm’s length principle and prove to be more suitable than the methods recognized by the OECD.
China
On 29 October, The State Administration of Taxation released its annual report on China’s 2020 Advance Pricing Agreement (APA) program, with statistics for the period from 2005 to 2020.
Cyprus
The Cypriot tax authorities announced on 7 October that the bilateral Competent Authorities Agreement (CAA) for the exchange of country-by-country reports (CbCR) between Cyprus and the United States, which is still under negotiation, is expected to be finalized. This will be effective for Reporting Fiscal Years beginning on or after 1 January 2021.
Denmark
On 6 October, the Danish government published a draft bill largely abolishing the requirement to include domestic controlled transactions in transfer pricing documentation. The bill is expected to come into force for fiscal years beginning on 1 January 2021 or later.
Dominican Republic
For the country-by-country reports, the Dominican Republic issued specific regulations on 5 October through General Rule 08-2021. The General Rule is in line with the model included in BEPS Action 13 on transfer pricing documentation and country-by-country reporting.
Ireland
- On 21 October, the Irish government published the Finance Bill 2021, which includes legislative changes relating to transfer pricing, measures to prevent tax avoidance, planned tax treaty ratifications, and various other previously announced measures in the areas of corporate and international tax.
- Just days after the OECD deal, the Irish government announced its intention to adopt a two-tier corporate tax rate. While retaining the current 12.5% rate for other companies, the new arrangement would add a 15% rate for companies that are in-scope of the agreement’s minimum tax pro-visions.
Italy
Italy issued draft legislation for a new patent box regime by Decree-Law No. 146 of 21 October 2021. The key measures of the Decree-Law provide for the introduction of a new simplified patent box regime that allows qualifying taxpayers to claim an additional deduction of 90% of R&D costs incurred in relation to qualifying intellectual property. Where a taxpayer opts for the simplified regime, it must be applied for at least five years.
Netherlands
- The Dutch government intends to submit a proposal to further tighten the generic limitation of interest deduction (earnings stripping measure) by reducing the deduction percentage from 30% to 20% of the fiscal EBITDA. This is stated in a letter dated 28 September from the State Secretary for Finance in response to questions about tax avoidance by Blackstone.
- On 11 October, the Dutch government issued a decree containing several policy positions about the application of the hybrid mismatch measures of the EU Anti-Tax Avoidance Directive 2 (ATAD 2). The decree covers four topics and provides several examples for clarification.
- The high corporate tax rate will be increased from 25% to 25.8% in 2022. This is stated in the second memorandum of amendment to the Tax Plan 2022.
OECD
- 136 countries have agreed on a major reform of the international tax system. The countries have agreed that when thresholds are met, multinationals will pay at least 15% tax from 2023 onwards in the countries where they are located. The new minimum tax rate will apply to companies with annual consolidated revenue of more than 750 million euros.
- According to an OECD report published on 18 October, more than 100 jurisdictions have a domestic legal framework in place to require country-by-country reporting by large multinational companies.
- On 18 October, the OECD released the seventh batch of Phase 2 peer review reports for dispute resolution under BEPS Action 14, which monitors the implementation of the BEPS Minimum Standard of Brazil, Bulgaria, China, Hong Kong, Indonesia, Russia, and Saudi Arabia (the assessed jurisdictions).
Singapore
On 23 October, the Inland Revenue Authority of Singapore (IRAS) issued an updated version of its e-tax guide on “avoidance of double taxation agreements” to add guidance on arbitration provisions in Singapore’s double tax treaties. The guidance notes that arbitration clauses in the Singapore’s tax treaties cover situations where the competent authorities of the countries involved fail to resolve an issue through the Mutual Agreement Procedure (MAP).
Thailand
On 30 September. the director-general of the Thai tax authorities issued a statement regarding the documentation that corporate taxpayers must provide to support their analysis of their related party transactions. The documentation requirements meet the requirements of the OECD transfer pricing guidelines.
United Nations
In October, the United Nations (UN) Committee of Experts on International Cooperation in Tax Matters published, among other things, a Handbook on the Avoidance and Resolution of Tax Disputes. It provides a comprehensive guide to various mechanisms for preventing and resolving tax disputes. The handbook has been prepared with a focus on the least developed countries and their specific challenges.
This information is intended only as a general update for interested persons and should not be used as a basis for decision-making.