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Issue No. 3 - 2018 of the International Transfer Pricing Journal is now available online.

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Nexus Requirements for Taxation of Non-Residents’ Business Income
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Principles of Transfer Pricing
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Number 3 - 2018 contains the following:
ARTICLES
International
The International Compliance Assurance Programme and Joint Audits: A New Epoch of Transfer Pricing Tax Audits?
Björn Heidecke and Leonie Slagter

This article discusses two new, internationally coordinated regulations that address the problem of double taxation: the joint tax audit and the International Compliance Assurance Programme. It gives an outlook on whether those two measures could start a new epoch of transfer pricing tax audits.

International
Attribution of Profits to a Permanent Establishment of a Company Engaged in Online Sales of Goods through a Local Warehouse
Jean-François Dutriez

This article discusses the allocation of profits to a permanent establishment of a company engaged in online sales of goods through a local warehouse as a result of the OECD BEPS Action Plan. It also provides calculation examples that illustrate different permanent establishment situations.

International
The Attribution of Profits to a Dependent Agent PE – If the Dependent Agent Is a Commissionaire (Wholly-Owned Subsidiary) of the Principal
Piotr Drobnik

In this article the author proposes – based on numeric examples – an attribution of profits to a dependent agent PE where the PE is created by a commissionaire. The topic is discussed as a result of recent changes to the definition of “dependent agent PE” under BEPS Action 7 and in the context of 2016 and 2017 OECD “profit attribution” discussion drafts. The analysis takes into account the impact of the revised TP Guidelines on risk under BEPS Actions 8-10 and the overlap between the concepts of significant people functions under the AOA and risk control functions under the revised TP Guidelines. The discussion will be based on three scenarios: (i) where the contractual allocation of risks and assets is aligned with the actual control over them, (ii) where there is a mismatch between the contractual arrangements and the control over the risks and assets and (iii) where the revised TP Guidelines and PE profit attribution rules interact with each other in cases of a mismatch outlined above.

International
Transfer Pricing of Intra-Group Cash-Pooling Arrangements Through the Lens of Business and Economic Reality
Krzysztof Łukosz, Ala Ursu and Martin Druga

This article provides a business perspective on the transfer pricing of intragroup cash-pooling arrangements, in particular with regard to the commercial rationality of the parties’ conduct and assessing the options realistically available. The authors describe a series of business-driven analyses focused on liquidity, which can be used to examine the commercial rationale of keeping liquidity cash positions in the group cash pool system by individual subsidiaries. This article also explains the importance of maintaining a healthy liquidity position from the general corporate finance theory perspective and provides market evidence behind the healthy levels of current ratios among a number of companies across variety of economic sectors.

International
Global Transfer Pricing Conference 2018: Transfer Pricing Developments around the World
Alfred Storck, Raffaele Petruzzi, Karol Dziwiński and Sayee Prasanna

This article highlights key points discussed during the third Global Transfer Pricing Conference titled “Transfer Pricing Developments around the World”, organized by the WU Transfer Pricing Center at the Institute for Austrian and International Tax Law at WU (Vienna University of Economics and Business) and summarizes the topics analysed during the eight sessions of the event.

RECENT DEVELOPMENTS
Australia
Diverted Profits Tax: A Multinational Nightmare
Anton Joseph

Following the example of the United Kingdom, Australia introduced a penal tax to discourage the diversion of profits by multinationals. In the current situation, where there is a growing demand to regulate large companies in certain aspects of their activities, it is no surprise that Australia has decided to impose a very high rate of tax on diverted profits.

Belgium
The Implementation of the 30% EBITDA Rule in Belgium: An Angle with a Twist
David Ledure, Jean-Charles Paquot and Michaël Van der Velden

This article examines the implementation of the new interest limitation rule.

Brazil
Recent Case Law on Transfer Pricing: Still in Need of an Autonomous Concept of “Production”
Luís Eduardo Schoueri and Ricardo André Galendi Júnior

This article discusses the recent Eli Lily case, as decided by the Brazilian Administrative Court. It provides a brief overview of the Brazilian transfer pricing method applicable to this case and describes the tax assessment by the tax authorities before analysing the decision of both the Administrative Court and its Superior Chamber.

Finland
Distributors with Losses
Merja Raunio

Loss-making Finnish subsidiaries are one of the target groups of the Transfer Pricing Unit within the Finnish Tax Administration. The transfer pricing of Finnish subsidiaries with continuous losses has not been accepted to fulfil the arm’s length criteria and, in some cases, the tax authorities have created a deemed services transaction between the Finnish group company and an unidentified foreign associated enterprise. Helsinki Administrative Court published an interesting ruling on the topic in December 2017.

Venezuela
Venezuelan Tax Courts Released Their First-Ever Transfer Pricing Decisions
Carlos M. D’Arrigo

This article discusses several court cases relating to transfer pricing issues in Venezuela.

CUMULATIVE INDEX
GLOBAL COVERAGE OF TRANSFER PRICING ISSUES
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