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IC Advisors Transfer Pricing Newsletter



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Singapore’s transfer pricing regime.

IC Advisors Transfer Pricing Newsletter
June 2018

OECD peer reviews show that BEPS Action 13 Country-by-Country reporting initiative is going well.

Country-by-Country (“CbC”) reporting aims to increase transparency of revenues and profits recorded by Multinational Enterprises (“MNEs”) in their subsidiaries and related entities worldwide.  With exchanges slated to begin in in June 2018, CbC reporting will see tax authorities worldwide collect and exchange information of MNEs, which includes, but is not limited to, the revenue generated, profit before income tax, income tax paid and accrued, stated capital, accumulated earnings, number of employees and tangible assets, etc.

OECD has completed the first of three annual peer reviews, which predominantly focus on the progress of implementation of CBC reporting in its members’ domestic administrative and legal frameworks as of January 2018. The second and third reviews are reviews on the exchange of information and reviews on confidentiality and appropriate use conditions respectively; and will take place in 2018 and 2019.

Highlights of the first review are:

  • A comprehensive examination of 95 jurisdictions that are members of the Inclusive Framework. Some jurisdictions were not examined as they have recently joined the Inclusive Framework or faced capacity constraints and will be reviewed in due course.
  • 60 jurisdictions have already introduced legislation to impose a filing obligation on MNE Groups, covering almost all MNE Groups that are expected to be in scope. The remaining jurisdictions are working towards finalising their domestic legal framework with the support of the OECD.
  • Where the legislation is already in place, the implementation of CbC Reporting has been found largely consistent with the Action 13 minimum standard. A few jurisdictions have received recommendations for improvement on certain specific aspects of their legislation and work has already begun to bring the provisions concerned in line with the standard.

The second peer review was launched in April 2018, which will look at the exchange of information aspects.

Australia Updates its Local File Requirements

The Australian Tax Office (ATO) has released updates on the submission requirements for the Australian Local File (ALF). There are several new requirements and key changes that must be noted. These are:

  • Expansion of the Short Form Local File: The information required for the Short Form Local File has been expanded. Companies must now explicitly identify their main business lines and functions; the strategies deployed in each business lines / functions; the extent to which each business line / function overlaps or complements. with another. This goes beyond the information currently required by the OECD guidelines on Local File submissions.
  • Third party expenses reimbursements: Taxpayers must categorise reimbursements of third party costs based on the nature of the underlying transaction.
  • Foreign exchange (FX) gains and losses: Disclosure requirements have been reduced for certain types of transactions, provided that certain criteria are met. However, additional analysis must be undertaken to determine whether the reduced disclosure applies, and where the disclosure doesn’t apply, more granular detail is required.

Upcoming seminars:

Dr. Sowmya Varadharajan will be presenting at the following full day seminars:

  • Introduction to Transfer Pricing, on June 6th 2018, organized by the Singapore Business Federation;
  • Introduction to Transfer Pricing, on June 26th 2018, organized by the Singapore Business Federation; and
  • Updates on Regional Transfer Pricing, on 17th July, organized by the Singapore Business Federation.

If you would like to attend any of these seminars, please send an email to sowmya@icadvisorsasia.com

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