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International Transfer Pricing Journal
 
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Issue No. 5 - 2017 of the International Transfer Pricing Journal is now available online.

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Number 5 - 2017 contains the following:
ARTICLES
International
OECD Multilateral Convention to Prevent BEPS: Implementation Guide and Initial Thoughts

Caroline Silberztein, Benoît Granel and Jean-Baptiste Tristram

The final version of the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) was published at the end of November 2016, and the signing ceremony took place in Paris on 7 June 2017, during which 67 countries covering 68 jurisdictions signed the instrument. Cameroon and Mauritius joined the initial signatories on early July 2017.

In this article, the authors provide a general description of the MLI, discuss the step plan to analyse whether a given tax treaty provision will be impacted by the instrument and offer some personal concluding remarks.

International/OECD

Rise of a New Standard: Profit Location in Countries of Important Intangible Functions Managers

Andrea Musselli and Alberto Musselli

This article looks into the arm’s length principle as it has been re-formulated in the new chapter VI of the OECD Guidelines, along the lines of the OECD Final Report on Actions 8-10 and related documentation on BEPS. The authors summarize the major changes of the revised (and materially different) arm’s length principle, analyse the particulars of Example 17 included in the new chapter VI of the OECD Guidelines and discuss the effect of the changes on enforcing the rules on return claims on profits from intangibles.

International
Attribution of Profits to Permanent Establishments: The 2008 Article 7 versus the 2010 Article 7 of the OECD Model Tax Convention
Alexandra Wintsch

This article compares the 2008 article 7 with the 2010 article 7 of the OECD Model Tax Convention, illustrates the similarities and differences using a case study and briefly deals with the implementation of the 2010 article 7 in the double tax treaty network of Switzerland, Germany and Austria.

International
Group Synergies and the Shapley Value Analysis: A Game Theory Approach

Svetlana Batrakova and Andreas Hoefele

The OECD Transfer Pricing Guidelines acknowledge the importance of accounting for MNE group synergies for transfer pricing purposes. This article proposes a practical game theory approach to arrive at an equitable distribution of the profits related to group synergies between members of an MNE group, based on the measurable contribution of the parties.

International

Cross-Border Employment: Aligning Corporate Income Tax, Transfer Pricing and Wage Tax

Mark Bonekamp, Peter Karman and Maurits Stuyt

The authors assess how cross-border employment arrangements require a closer look in the post-BEPS era. As the definitions of “permanent establishment” and “economic employer” have been widened, both transfer pricing and wage tax issues are to be mapped and analysed by corporate, multinational taxpayers. This article discusses a number of issues involved with aligning corporate income tax, transfer pricing and wage tax.

RECENT DEVELOPMENTS
Australia

Commissioner Issues Draft Practical Compliance Guideline on Cross-Border Related-Party Financing Arrangements

Michael Butler, Jessica Pengelly and Liyao Wang

The authors summarize recent draft guidance issued by the Australian Tax Office for scoring the risk of cross-border related-party financing arrangements.

Cyprus
Decree Issued on Country-by-Country Reporting
Costas Markides

A Ministerial Decree was issued on 26 May 2017 which provides additional details on the application of country-by-country reporting in Cyprus, replacing the Decree initially issued on 30 December 2016.

Available online only.

India

India: Three-Tier Transfer Pricing Documentation

Sunny K. Bilaney

India has adopted three-tier transfer pricing documentation for fiscal year 2016/17. However, the specific rules and format for the Master File and country-by-country report have yet to be provided. This article provides up-to date information and practical guidance on a myriad of questions and issues relating to transfer pricing documentation and the compliance requirement in India under the new documentation regime.

India
Final Guidance on Place of Effective Management

Vispi T. Patel and Kejal P. Visharia

The Indian economy has been growing at a relatively fast pace over the last decade and still has the potential to grow. This results in a market that represents an enormous opportunity for global businesses that have responded by swiftly setting up operations in the country, in all sectors of the economy. Local businesses, too, have grown and have begun to aggressively expand their footprint across the world.

Italy

The Italian “Web Tax”: The New Administrative Procedure for Multinational Enterprises to Disclose Hidden Permanent Establishments in Italy

Simone Zucchetti, Armando Tardini, Oreste Lanfranchi

This article will first analyse the (improperly defined) Italian “web tax” procedure and will proceed to focus on the current and future legislative framework governing the PE status, followed by an analysis of the criteria and methodologies that may possibly be chosen (including within the web tax procedure) in order to determine the fair profit share to be attributed to the disclosed PE.

Netherlands

EU Directive on Exchange of Information about Advance Rulings Implemented in Legislation

Rijkele Betten

By an act of 21 December 2016, the Netherlands has implemented EU Directive 2015/2376/EU regarding the automatic exchange of information about rulings. The legislation has been in force since 1 January 2017. This article sets out the workings of this automatic exchange of information about rulings and the published experiences with it so far.

Pakistan

In Search of Suitable Transfer Pricing Method for Active Pharmaceutical Ingredients – A Case of Pakistan

Najeeb Memon

This article is concerned with finding an appropriate transfer pricing method for determining the arm’s length price of active pharmaceutical ingredients (APIs in related-party transactions). It examines the available transfer pricing methods and sets out the appropriateness of each method for a particular type of transaction. Further, this article reviews pharmacology literature for the comparison of innovator and generic APIs and it also reviews commonly cited case law from selected developed jurisdictions and from Pakistan.

Urugay
The New “Transparency Law” and the Implementation of the Base Erosion and Profit Shifting Project on Uruguayan Transfer Pricing Regulations: Theory and Problems to Come

Juan Bonet and Agustina Galeazzi

In order to align with the standards of the OECD BEPS Action Plan, in particular with Action 13 on transfer pricing (TP) documentation, but also with Actions 8-10, aimed to ensure that TP outcomes are in line with value creation, Uruguay has passed a law (effective for fiscal years beginning on or after 1 January 2017), which incorporates the country-by-country (CbC) report and the Master File into the current TP regulations. This article will describe the new regulations and the Uruguay TP status and will discuss how the new law in force creates several interpretation issues which may create future mismatches when interacting with other jurisdictions.

CUMULATIVE INDEX
GLOBAL COVERAGE OF TRANSFER PRICING ISSUES
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