November/December 2018  
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International Transfer Pricing Journal - November/December 2018
 
This free e-mail service informs you about the contents of the forthcoming edition of International Transfer Pricing Journal.

Issue No. 6 - 2018 of the International Transfer Pricing Journal is now available online.

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Number 6 - 2018 contains the following:
ARTICLES
International

Retroactive Application of the OECD Transfer Pricing Guidelines for Interpretation in Transfer Pricing Issues

Johan Hagelin

The position of soft obligations as legal sources is a continuously discussed topic in international law. As policy documents, guidelines and non-binding agreements often are regularly updated, the question of the applicability of different editions to various points in time may arise. The OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines) were revised most recently in July 2017, and these timing issues therefore appear in, for example, the undertaking of historical transfer pricing reviews and audits of years prior to the release of the updated OECD Guidelines. This article explores the arguments for using the new edition of the OECD Guidelines by comparison to an approach discussed in literature on finding guidance from different versions of the OECD Model Tax Convention (OECD Model) and its Commentary.

China

Luxury Market – China P&L or Chinese P&L?

Janice Ng, Yvonne Fan and Curt B. Kinsky

This article aims to present a comprehensive picture and dissect the multiple facets of the rationale behind luxury shopping behaviours of Chinese consumers. Specifically, it discusses in depth why Chinese consumers make luxury purchases abroad and how their preferences for particular brands are determined. Further, this article argues that the revenue and expenses associated with luxury goods purchased by Chinese consumers and those associated with luxury goods purchased in China should be viewed separately and that commingling these two concepts could result in a double-tax situation.

International/Netherlands

Financial Transactions: Dutch Guidance versus the OECD Discussion Draft

Mark Bonekamp and Flor Snel

On 3 July 2018, the OECD published a discussion draft on the transfer pricing of financial transactions. The Discussion Draft is follow-up work from the OECD/G20 BEPS Action Plan, more specifically Actions 8-10, as far as financial transactions are concerned. On 11 May 2018, the Dutch Deputy Minister of Finance published the updated Dutch transfer pricing decree (the 2018 Decree), which also includes guidance on financial transactions.

This article compares the guidance on financial transactions in the 2018 Decree to the guidance provided in the Discussion Draft. The article is not intended to be a fully comprehensive overview of all items discussed in the Discussion Draft, but mainly focuses on the overlap with the 2018 Decree.

International

Digitalization of Traditional Business Models: Transfer Pricing Implications of Business Restructurings

Sayee Prasanna

This article recognizes the need for augmenting the application of arm’s length analysis in light of digitalization of business models and recent litigation surrounding business restructurings. The author recommends the integration of digital themes in undertaking function, asset and risk (FAR) analyses and suggests modifications to conventional entity characterizations. The author also proposes and discusses the implementation of a “digital intensity test” to improve comparability analysis

European Union

The Link between Transfer Pricing and EU Customs Valuation Law: Is There Any and How Could It Be Strengthened?

Juha Tuominen

The primary purpose of this article is to investigate the link between transfer pricing rules and EU customs valuation rules under the currently applicable EU customs law. Moreover, it aims to present different potential solutions which could be considered in order to solidify the link between the two different topics.

International

How to Deal with Risks in the Context of Two-Sided IP Valuations after BEPS?

Andreas Riedl and Kai Schwinger

The authors analyse the impact of BEPS Actions 8-10 (aligning transfer pricing outcomes with value creation) on the remuneration of intellectual property (IP) for MNEs. They especially analyse the OECD’s approach of bilateral IP valuations and how to handle risks when conducting such a valuation.

RECENT DEVELOPMENTS
Australia

Diverted Profits Tax: Growing Pains

Anton Joseph

Since its introduction in 2017, Diverted Profits Tax has caused apprehension and confusion. The rush to step ahead of the OECD’s BEPS initiatives and impose this tax will continue to stir debate for some time to come.

India

BMW Ruling – Driven Home Safely!

Sunny K. Bilaney

The author reviews a recent transfer pricing ruling in relation to BMW India’s payment of market survey charges and technical support service fees to its associated enterprise. The author highlights some important aspects that should have been considered by the tax authorities and tribunal before they drove their way to conclusion.

India/United States

US Base Erosion and Anti-Abuse Tax vis-à-vis Indian Transfer Pricing Regime: Impact on Indian Enterprises

Akash Santosh Loya

The base erosion and anti-abuse tax (BEAT) is an innovative tax that was introduced by the US Congress under the Tax Cuts and Jobs Act 2017 in order to curb base erosion. The tax is charged on transactions undertaken by a US taxpayer with a foreign related person. However, there is a blanket imposed over each and every transaction between a US taxpayer and a foreign related person. No consideration is given to the strong transfer pricing regime adopted by countries such as India, which ensures that if an Indian entity is undertaking a transaction with a US entity, the transaction will take place at arm’s length price and the tax base of US is not eroded.

International

Transfer Pricing for Sub-Saharan African Countries

Till Reinfeld and Heather Marwei

This article highlights the current transfer pricing issues with specific focus on sub-Saharan African countries. It discusses the challenges faced by those countries with respect to transfer pricing and the recommendations thereof.

International

Transfer Pricing and Customs Valuation of Know-How Transfer Agreements

Miguel Adolfo Rodríguez Cuadros

This article explains the treatment of transfer pricing and the customs valuation of know-how transfer agreements from a supply chain management perspective. When third companies transfer their know-how to related companies that are involved in cross-border transactions, the paid value for having used the know-how could be taxed at the end with customs duties and other import taxes (e.g. import VAT).

CUMULATIVE INDEX
GLOBAL COVERAGE OF TRANSFER PRICING ISSUES
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