November/December 2017  
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International Transfer Pricing Journal
 
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Issue No. 6 - 2017 of the International Transfer Pricing Journal is now available online.

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Number 6 - 2017 contains the following:
ARTICLES
Germany

New Ordinance on Transfer Pricing Documentation Requirements Provides Detailed Guidance on the Implementation of BEPS Action 13 in Germany

Roman Dawid, Isabel Ruhmer-Krell, Courtney Masters and Christoph Sommer

The latest version of the Ordinance on the nature, content and extent of documentation required under section 90(3) of the General Tax Code (Gewinnabgrenzungsaufzeichnungs-Verordnung) (“GAufzV new version”), provides detailed guidance for taxpayers on the implementation of BEPS Action 13 in Germany. This article gives the reader a comprehensive discussion and explanation of the new guidance, and provides a critical evaluation thereof. The authors further put forth their view that certain of the amendments to the GAufzV new version provide requirements that are more restrictive than those of the OECD/G20 recommendations as contained in the Final Report on Action 13. This ultimately increases the risk for taxpayers that their documentation will be deemed unusable by German tax authorities and that – albeit explicitly claimed to the contrary by the German legislator in the justification of the GAufzV new version – they will need increased resources and efforts to comply with the new documentation requirements.

International

Country-by-Country Reporting – All Smoke and Mirrors or the BEPS Project’s First Success?

Tim Meijer, Stef Kerkvliet and Bas van Stigt

On 6 September 2017, the OECD issued a report on the implementation of country-by-country reporting. In this article, the authors outline the key clarifications and the new guidance provided in that report and discuss the impact thereof.

International

Related Parties as Used in Transfer Pricing

Jow Lee Ying and Yong Sing Yuan

There is a need to provide more clarity about the meaning of the term “associated enterprise” in article 9 of the OECD Model Tax Convention (OECD Model), as it serves the objective of the elimination of economic double taxation and ensures that transactions between associated enterprises are conducted at arm’s length. Given the increasing focus on transfer pricing, a rise in the number of transfer pricing disputes is expected, and correspondingly article 9 of the OECD Model and the relevant tax treaties will be applied more often and to a greater extent to eliminate economic double taxation.

China (People's Rep.)

Managing Transfer Pricing Risks by Multinational Companies in China

Abe Zhao

In the past year, the Chinese tax authorities have issued three new circulars to outline their position and approach in dealing with transfer pricing issues. This article seeks to identify the specific areas that are likely to draw heightened attention from the Chinese tax authorities from now on and provides recommendations on how to prepare for the new audit environment.

RECENT DEVELOPMENTS
Belgium

Transfer Pricing Audits in Belgium: Controversial Outcome?

Peter Van Rompaey

This article analyses the application of article 207 of the Belgian Income Tax Code, which contains an anti-abuse provision, in a cross-border situation. It describes the utilization of article 207 by means of five examples and sets forth the legal framework. Next a series of research questions will be discussed concerning the position of the Belgian tax authorities and whether the anti-abuse provision is in line with both Belgian and international legal principles.

China (People's Rep.)/International

A Rethink of Location-Specific Advantages with an Analysis of the Chinese Approach

Claire (Xue) Peng

This article aims to provide an overview of the current debate on location-specific advantages (LSAs) and their implications for the future of transfer pricing research. With a special focus on the Chinese approach to LSAs, it compares the views of the OECD, the United Nations and the United States. Furthermore, it analyses LSAs from a conceptual, economic and transfer pricing perspective. In particular, this article identifies three issues arising from the LSA debate, namely the conflict between taxing MNEs and the arm’s length principle, the data constraints on local comparables and the increased concerns regarding marketing activities
Germany

Cross-Border Intra-Group Financial Transactions: Evidence from Germany

Stefan Greil and Dirk Schilling

Literature provides evidence of profit shifting in multinational enterprises (MNEs), particularly with intercompany debt. Therefore, the authors conducted a broad empirical survey focusing on specific issues regarding cross-border intra-group financial transactions. This article aims to analyse empirical evidence of the behaviour of MNEs in Germany with regard to cross-border intra-group financial transactions, and introduces and evaluates the respective empirical results in order to provide the first significant insights regarding this (not only) tax-relevant issue.

India

One Step Towards a Non-Adversarial Tax Regime: Safe Harbour Rules in India

Mansi Agrawal

The Indian government introduced safe harbour rules in 2013, which were revised in 2017 to align with the OECD Base Erosion and Profit Shifting (BEPS) Project, with the objective of easing the process of doing business and to achieve a non-adversarial tax regime in India. The author provides guidance on the safe harbour rules in India, as well as the thought process behind making amendments in the safe harbour provisions.

India

Sun Pharma’s IPR Issue – A Narrow Escape!

Sunny K. Bilaney

The author reviews the findings and order of the Income Tax Appellate Tribunal regarding the transfer of intellectual property rights in the case of Sun Pharmaceuticals India.

United States

Interstate Transfer Pricing in the United States

Kevin A. Diehl

On average, United States courts issue one important transfer pricing case annually and are even less likely to comment on interstate transfer pricing issues. Uniquely enough, the state of Indiana has had two transfer pricing issues considered in the courts, Rent-A-Center East, Inc. v. Indiana Department of State Revenue and Columbia Sportswear USA Corp. v. Indiana Department of State Revenue, which resulted in two verdicts in favour of the taxpayers and two losses for the Indiana Department of State Revenue. Their rulings show how interstate transfer pricing principles generally apply in all US states.

United States

Proper Transfer Pricing Rates between the United States and Puerto Rico: Wal-Mart Puerto Rico, Inc. v. Zaragoza-Gomez

Kevin A. Diehl

An important transfer pricing case, Wal-Mart Puerto Rico, Inc. v. Zaragoza-Gomez, discusses how transfers between related entities in the United States and Puerto Rico should be valued. The case is a good example of transfer pricing valuations in today’s business environment in general and it demonstrates that Wal-Mart utilizes the proper transfer pricing valuation steps.

CUMULATIVE INDEX
GLOBAL COVERAGE OF TRANSFER PRICING ISSUES
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