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International Transfer Pricing Journal
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Issue No. 3 - 2017 of the International Transfer Pricing Journal is now available online.

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Number 3 - 2017 contains the following:

China (People's Rep.)

Transfer Pricing Documentation Requirements
Andreas Riedl and Thomas Steinbach

The authors compare the documentation standard arising from the BEPS Action 13 Final Report with the documentation standard that was introduced in China under Bulletin 42. The differences between the two standards are presented and the possible intentions of Bulletin 42 are discussed in detail.

Revised Guidance on Intercompany Financing
Marc Rasch

On 27 December 2016, the Luxembourg tax authorities issued revised guidance on intra-group lending activities financed by borrowings. Circular L.I.R. 56/1-56bis/1 has been aligned with Actions 8 to 10 under the OECD BEPS Project and replaces the previous Circulars L.I.R. 164/2 and 164/2 bis from 28 January 2011 and 8 April 2011 respectively.

United Kingdom
UK View on Revised PE Standards in the Multilateral Instrument
Sonia Watson, Nick Palazzo-Corner and Stefan Haemmerle

The authors assess why the United Kingdom – given its active leadership throughout much of the BEPS project – would elect not to implement the revised PE standards through the multilateral instrument.

Transfer Pricing Documentation for Permanent Establishments
Giulio Vernia

The author outlines new challenges for the tax departments of multinational enterprises (MNEs) arising from the obligations under the newly revised OECD Guidelines. In the current framework of increasing scrutiny by tax authorities, such challenges are especially relevant in the case that an MNE’s presence in a given country is limited to a permanent establishment. The evolution towards the currently applicable law on transfer pricing documentation for permanent establishments and the level of implementation of the new provisions in a sample of significant countries are also presented.

Is a Letter of Comfort a Chargeable Intra-Group Service?
Sunny Kishore Bilaney

The author considers the situation where a parent or regional holding company issues a letter of comfort to a bank or financial institution that lends money to the borrowing subsidiary. The differences between a letter of comfort and an explicit guarantee are discussed, along with the attendant transfer pricing implications.

Implementation of Transfer Pricing Rules in Light of the BEPS Project in Latin and Central America

At the initiative of Ms Sophia Castro, the International Transfer Pricing Journal presents a series of articles on the status of the implementation of transfer pricing rules and the impact of the OECD/G20 BEPS Project in Latin and Central America.

Changes in the Transfer Pricing Landscape and Impact of the BEPS Project
Eliete Ribeiro and Henrique de Conti

The author reviews recent changes in the Brazilian transfer pricing landscape, as well as the implementation of various recommendations from the OECD BEPS project.

Setting New Guidelines on Transfer Pricing
Sandra M. Pineda Guevara
Since its accession to the OECD in May 2013, Colombia has initiated various institutional reforms proving its clear intention to implement the OECD’s standards and best practices from the BEPS project. Within this context, in December 2016, the Colombian tax authorities enacted Law 1,819, which introduced major changes to the transfer pricing regime. However, a Regulatory Degree, which establishes the content and filing details of these new tax liabilities in Colombia, is still expected to be released.
Cross-Border Royalties in Tax Avoidance

Anton Joseph

The perceived misuse of cross-border royalties has been addressed in the ruling of the Full Federal Court in the Tech Mahindra case, as well as a Taxpayer Alert issued by the Australian tax authorities.

Decree Issued on Country-by-Country Reporting
Costas Markides

A Ministerial Decree was issued in December 2016 which provides details on the application of country-by-country reporting in Cyprus.

An Assessment of the Draft Rule Limiting the Deduction of Royalties
Björn Heidecke and Rainer Holst

On 25 January 2017, a draft bill was published of a rule limiting the deduction of royalty payments to foreign related parties. The intention of the draft bill is to disadvantage the use of such IP box regimes that are not in compliance with the OECD’s modified nexus approach. The draft bill provides guidance under which conditions the deduction of royalty payments is limited.

Transfer Pricing Amendments in Budget 2017
Sunny Kishore Bilaney

Budget 2017 introduced significant changes to Indian transfer pricing regulations. These changes are made in response to recommendations under Action 4 of the OECD/G20 BEPS report and also with the aim to align transfer pricing regulations to global best practices.

New Transfer Pricing Documentation Requirements and Country-by-Country Reporting
Yeni Mulyani

A new Transfer Pricing Documentation Regulation was issued on 30 December 2016. The author provides insight into what motivated Indonesia to implement this new regulation, how it works and the outlook for the Indonesian transfer pricing regime.

Changes in Transfer Pricing Legislation and Practice
Krzysztof Lasiński-Sulecki

The author considers changes to Polish transfer pricing rules and critically analyses recent approaches of the tax authorities towards the interpretation of transfer pricing provisions. Both legislative changes and interpretative approaches are partly connected with the BEPS Final Reports released in late 2015 by the OECD, which are aimed at reducing possibilities of tax avoidance.

Amendments to Transfer Pricing Provisions
Vladimir Didenko

A new law came into effect from 1 January 2017 that affects numerous transfer pricing areas, including the criteria for controlled transactions; requirements regarding transfer pricing documentation and the annual transfer pricing report; transfer pricing methods and their application; sources of information for application of the arm’s length principle; the penalty regime; and the assessment of tax liabilities.