Transfer Pricing Answer Book 2012 PDF Download

QUESTIONS: Issue One - general transfer pricing framework: A. Do your tax authorities (at a national and/or regional level) have powers to adjust transfer prices? If so, is this to an arm's length level or to a pre-ordained level or ratio? Are taxpayers obliged to satisfy themselves that their transfer prices are at arm's length? To prepare evidence of this? Are there penalties for non-compliance? Do the rules extend beyond related parties to parties with a strong business relationship, e.g. major suppliers/customers/financers? B. Do your tax authorities follow the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations in respect of the of the arm's length standard, the pricing methods which can be used and the behaviour expected of the taxpayer and the tax authorities? If not, which variations apply? C. Do the tax authorities of your jurisdiction accept, whether by practice or as per express transfer pricing regulations, multiple years' data for the purposes of comparability analyses? What is the statistical measure of the arm's length range generally accepted by the tax authorities of your jurisdiction, whether by practice or as per express transfer pricing regulations (for example the inter-quartile range or any other measure of central tendency)? D. Do tax authorities of your jurisdiction refer to comparables while conducting a transfer pricing audit which the taxpayer could not have access to while preparing its documentation? Issue Two - recent developments: A. In what ways have the tax authorities of your jurisdiction been active in transfer pricing over the last two to three years, whether in terms of carrying out more transfer pricing audits, being more aggressive, bringing cases to trial or enhancing the capacity of the tax authority with more people/more training/more access to expert input/more information resources? Have the tax authorities improved the transfer pricing compliance burden and outcome for taxpayers, for example by agreeing more rulings/APAs or making that process easier, or resolving competent authority issues faster/more constructively? B. Are there any recent disputes or cases that have impacted on the transfer pricing landscape and if so in what way? Are there any in the pipeline that are expected to have a significant impact on the transfer pricing landscape? Issue Three - documentation requirements: A. Do your tax authorities follow the EU Joint Transfer Pricing Forum template of a "master file" and "country files"? If not, is any other format prescribed? B. Must documentation be filed, and if so, when? Are there special contemporaneous documentation requirements, for example in the context of "extraordinary" situations such as restructurings? What must be available if requested by the tax authority even if it need not be filed? Is there other information that the taxpayer will be expected to have referred to in setting transfer prices even if this does not have to be recorded? C. Are there reduced compliance obligations for smaller taxpayers and/or transactions, or for simpler transactions? Issue Four - transfer pricing disputes: A. Do your tax authorities have a specific approach to transfer pricing risk assessment, either written down or made apparent through their behaviour? B. How easy and effective is it to use APAs and the MAP to avoid or help to resolve transfer pricing controversy in your jurisdiction? C. How easy to use and effective is the Competent Authority process in your jurisdiction? Issue Five - the use of transfer pricing methods in practice: A. Is there a favoured method or methods (either in law or in practice) in your jurisdiction? If so, does it favour a Traditional Transactional Method (i.e. the CUP, Resale Price or Cost Plus Method) or a Transactional Profit Method (i.e. the TNMN or Profit Split Method)? Are any other transfer pricing methods favoured? B. In which circumstances do particular methods tend to be applied by your tax authorities, for example to audit transfer pricing arrangements, in litigation, or in APAs? C. Are taxpayers allowed or expected to use the "most appropriate method" in the sense that it is the one which best fits the transactions involved, or can be used most readily with the information available, or can be applied with the fewest adjustments?