BDO Transfer Pricing News June 2023

It is rare for an issue of our Global Transfer Pricing newsletter not to be dominated by news of the OECD’s project on the taxation of the digital economy. But in this issue, domestic consultations take centre stage.

Most recently, the UK launched a public consultation on the reform of UK law in relation to transfer pricing, permanent establishments and diverted profits tax, and a few days earlier Canada published its own consultation on reforming and modernizing Canada's transfer pricing rules. And the Australian tax authorities continued to focus on multinational enterprises and their intangible assets arrangements with their release of an updated draft Practical Compliance Guideline on intangible arrangements for public consultation and comments. Australia’s Treasury Department also released exposure draft legislation on changes to Australia’s interest limitation (thin capitalisation) rules.

The U.S. also has been fine-tuning its transfer pricing rules, specifically in the area of advance pricing agreements (APAs). The IRS followed the release of its annual APA report with the publication of interim guidance to IRS Treaty and Transfer Pricing Operations (TTPO) employees on the process for review and acceptance of APA submissions.

While more mature transfer pricing regimes such as those in the UK and Canada are tweaking their existing rules, other countries find themselves at the beginning of their transfer pricing journeys. Case in point – the United Arab Emirates, which recently introduced transfer pricing rules as part of their new corporate tax rules.

As for the OECD project, particularly Pillar One, we expect news soon as the OECD announced that an agreement in principle on Pillar One is “on track” for July 2023, after which it would be open for signature and then ratification.

Content

• Australia:
  • ​ATO’s continued focus on MNEs and arrangements with intangible assets
  • Proposed interest limitation rules - all roads lead to transfer pricing?
• Canada: 
  • Comparables and COVID 19
  • Finance Canada launches consultation on transfer pricing rules
• South Africa: Is your value chain optimised to keep up with current economic developments?
• United Arab Emirates: New transfer pricing rules introduced
• United Kingdom: HMRC launches transfer pricing, PE, DPT consultation
• United States: 
  • IRS issues guidance on review, acceptance of APA submissions
  • IRS’s annual report shows decline in number of executed APAs

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