Transfer Pricing Highlights – November/December 2014

Thomson Reuters Tax & Accounting Newsletters, ONESOURCE December 10, 2014


Welcome to the November/December edition of the ONESOURCE Transfer Pricing newsletter, your monthly source for the latest transfer pricing news. Each edition will feature articles and insight to keep you apprised on current events in the transfer pricing industry, as well as exciting things we are working on at ONESOURCE.

As 2014 comes to a close, we’d like to extend our holiday wishes and thank you for being a part of the Thomson Reuters community. We look forward to sharing additional transfer pricing insights with you in 2015. If there is anything you would like to see featured, please contact us.

What’s New

U.S., OECD Seek to Smash ‘Cash Box’ With Coordinated Effort on Intangibles

Robert Stack of U.S. Treasury asserted that the OECD BEPS initiative was designed to smash the "cash box", which is a colorful way of saying limit the profits sourced to low tax jurisdictions. Stack noted two popular transfer pricing arrangements: (a) the migration of intangible assets to tax haven affiliates; and (b) the use of tax haven affiliates to lease out property such as oil drilling rigs.

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OECD PE Focus Group Considering Four Proposals to Tackle Commissionaires

OECD BEPS Action 7 focuses on the issue of permanent establishment status when its real concern seems to be a significant reduction in profitability after a distribution affiliate is converted to a commissionaire status. The example noted is that of a medical device distributor where we would submit the reduction in profitability may be better addressed by an appropriate transfer pricing evaluation.

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Section 367(d) holds that for any outbound transfer of intangible assets, the U.S. affiliate should receive compensation equal to the fair market value of the transferred intangible assets. The IRS has restated this proposition in light of reorganizations such as corporate inversions.

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G20 leaders commit to finalizing BEPS in 2015 and exchanging tax information by 2017/2018

G20 leaders agreed that strengthening the resilience of the global economy and stability of the financial system are crucial to sustaining growth and development. They are taking actions to ensure the fairness of the international tax system and to secure countries’ revenue bases.

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Ask the Transfer Pricing Expert

Question: What does Argentina’s Federal Administration of Public Revenues (AFIP) mean by triangular transfer pricing and how does this relate to its dispute with a multinational corporation?

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If there is anything you would like to see featured or addressed, please contact us.