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

Issue No. 2 - 2018 of the International Transfer Pricing Journal is now available online.

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Number 2 - 2018 contains the following:
ARTICLES
International
Dealing with Data in a Digital Economy
Sylvia de Jong, Willem Neuvel and Ágata Uceda

The OECD initiated on 22 September 2017 a public consultation to further investigate key issues related to tax challenges raised by the digital economy and solutions to address these challenges. The submissions of different commentators to the public consultations have not been discussed thoroughly yet and the authors of this article examine these submissions here. The authors discuss the comments provided specifically on value creation, intangibles and the role of data in the digital economy from the point of view of different stakeholders: tax advisors, businesses and non-profit organizations.

International
Value Creation Analysis for Transfer Pricing Purposes
Brigitte Baumgartner

The author presents a practical and pragmatic option to perform value creation analysis for transfer pricing purposes. Following Michael Porters concepts, this article addresses five steps that can help the reader understand and follow an economic analysis to align a transfer pricing policy with a company strategy.

International
Improving the Effectiveness of the International Advance Pricing Agreement Process
Zahra Mulachella

This article examines various factors of international advance pricing agreements that are assessed from the perspective of the general standards of the programmes of five selected countries.

International
Cost Contribution Arrangements and Funding Activities
Tetiana Polonska

This article examines the level of return a financing participant of a development CCA is entitled to and the factors that can impact such return. The author discusses the prevailing role of risks over the functions for the assessment of a funder’s remuneration at a particular stage of IP development by analysing private equity examples.

RECENT DEVELOPMENTS
Brazil
The Brazilian “Sixth Method” and BEPS Action 10: Transfer Pricing Control on Commodity Transactions
Marcus Lívio Gomes and Débora Ottoni Uébe Mansur
Aggressive tax planning, i.e. the act of sending profits to low-tax jurisdictions, is a reality. All countries in which significant economic activities are carried out make an effort to fight against it, using instruments such as transfer pricing rules, as well as those defined in the OECD Action Plan on Base Erosion and Profit Shifting (BEPS). The legal control of transfer pricing over commodity transactions represents a special challenge for developing countries – traditional commodity traders – for which such transactions constitute a significant source of revenue. This revenue comes not only from the trade transactions, but also from their taxation. This article aims to analyse the Brazilian “sixth method” for transfer pricing in commodity transactions in comparison with the guidelines established by Action 10 of the OECD BEPS Project. The goal is to determine whether Brazilian legislation is in line with the guidelines provided by the OECD, mainly with regard to compliance with the prestigious arm’s length standard as a criterion for allocating profits in transactions between related parties, and whether Brazilian legislation is efficient in its final scope for combating base erosion.
Hungary
New Hungarian Transfer Pricing Documentation Obligations
Sándor Szmicsek

Hungarian transfer pricing rules have undergone significant changes recently, and transfer pricing itself is one of the focus areas of tax audits. As a major sign of the changing trends, the Ministry of National Economy has recently issued a new decree regarding the transfer pricing documentation obligations. In this article, the author discusses the consequences of the decree and the requirements for preparing transfer pricing documentation from 2018.

Italy
The Italian Branch Exemption Regime in Light of the Most Recent Domestic and International Developments
Simone Zucchetti, Giulio Tombesi, Armando Tardini and Oreste Lanfranchi

Changes to the definition of a permanent establishment in Italian legislation, the OECD BEPS Project and the Multilateral Instrument have led to extensive discussions about the rules to be observed when attributing profits to a permanent establishment. In this light, the authors analyse the new Italian branch exemption regime.

Japan
2018: A Key Year for Transfer Pricing Compliance and Enforcement, for Companies and Branches
Karl Gruendel, Keith Thomas and Mark Brandon

This article addresses two categories of recent significant changes to Japanese international tax rules: the implementation of the BEPS Action 13 recommendations and changes to Japan’s rules regarding permanent establishments.

Netherlands
The Zinc Case – Burden of Proof and Business Restructurings in the Netherlands
Harmen van Dam, Willem Jan Tom and Freek Braken

This article presents an overview of the decision in the Zinc case. It will discuss the three subjects examined in this case: business restructurings, the Dutch transfer pricing documentation requirements and (their relation with) the burden of proof.

Pakistan
Issuance of CbC Reporting and TP Documentation Requirements

Ikramul Haq

Pakistan, in the wake of signing the Multilateral Convention on Mutual Administrative Tax Matters, has implemented BEPS Action 13 by making changes in the Income Tax Ordinance 2001 and the Income Tax Rules 2002. This article highlights the amendments made and explains the ensuing treatment of CbC reporting and TP documentation requirements.

Sweden
Court Case on Profit Margin within an Arm’s Length Range and a Margin Stated in an Agreement
Anders Forslund and Philip Liljeblad

This article focuses on the matter of profit margin and arm’s length range. The authors discuss the application of substance over form in Swedish domestic tax law and the importance of what is stated in an agreement.

United States
Evolution of Advance Pricing Agreement Processes: Current and Future Experience in the United States
Mark Thomas, Kristina Novak, Cym Lowell
The international tax world has never been more dynamic for both tax authorities and multinational enterprises alike, with rapid commercial and technological advances, increased transparency, fundamental changes to longstanding tax paradigms, and various (often bold) measures by governments to protect their tax bases. Transfer pricing will remain the principal international tax issue, and a familiar tool – advance pricing agreements – may be more important than ever.
CUMULATIVE INDEX
GLOBAL COVERAGE OF TRANSFER PRICING ISSUES
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