contacts transfer pricing for the energy industry in - pwc · 2015-08-15 · profile of tax...
TRANSCRIPT
Service recharges/Time writing Financing
Transfer pricing
governa nce
People
ControlsProcess
Tech
nology
Identification of all TP
Trigger Events
Validation, Control and
Review
FunctionalAnalysis and
High-levelTP Policy
TP Implementation
/production
Assessment and Selection
of Final TPPolicy
BusinessLogic
Documentation
Core TP Documentation
1. In
dust
ry p
racti
ce
2. Transfer pricing and WH
T
3. Current economic climate
Service recharges/Time writing – We can help you with the design, implementation and defence of your Service recharges/Time writing TP policy. This includes identification of the cost base and classification of costs to be recharged to service recipients, identification of benefits received, which aims to support deductibility for recipients of the charges and execution of benchmarking using commercially available databases and a review of internal comparable data.We can also help you manage your value chain in a tax effective manner, taking into consideration key value drivers, as well as the impact of the latest BEPS developments.Defending a tax authority challenge – We can help you be prepared in case of disputes by identifying and managing tax risks from the outset.Setting up TP policies that comply with the arm's length principle – We can help you with:• Coordinating TP planning advice, including health checks
to identify and analyse priorities and develop policies;• Resolving particularly complex TP problems and
implement solutions across your markets; and• Advance pricing agreements and rulings to agree the
pricing policy with the tax authorities in advance.
Quasi-equity is used to finance local Exploration and Development operations. A common issue with this funding is whether tax authorities will accept arguments for interest free lending to affiliates. In Africa and Middle East, this can also have Withholding Tax (WHT) implications on deemed interest payments in certain locations.In order to assess whether some or all of the funding would have been provided in the form of a loan at arm’s length, it is necessary to consider all of the facts and circumstances including:• The borrowing company’s production projections and
projected net cash flows from assets with proven reserves;
• The nature and terms of the funding, including the purpose of the loan, the quantum of the loan, the specific uses to which the funding was put by the borrowing entity and any other relevant terms; and
• Any existing third party funding within the group, including examples where third party funding has been sought and declined and the reasons.
Contacts
Then Now
Alan McCraeHead of UK Energy Tax
T: +44 (0) 20 7213 4004E: [email protected]
Mohamed SerokhPartner, Middle East Transfer Pricing Leader
T: +971 (0) 4 304 3956E: [email protected]
Pierre V. Tchol KaldjobTP, Co-ordinator
T: +44 (0) 20 7804 4917E: [email protected]
Szymon WlazlowskiDirector, TP, Energy & Utilities
T: +44 (0) 20 7212 1889E: [email protected]
Victoria HorrocksPartner, TP, Energy & Utilities
T: +44 (0) 20 7804 7084E: [email protected]
Africa – Oil and Gas contactsOur offer
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2015 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
150416-101525-DC-OS
Country Representative Email TelephoneAngola Pedro Calixto [email protected] +244 923 418 127
Cameroon Nadine Tinen [email protected] +237 77 93 71 58
Congo Emmanuel Le Bras [email protected] +242 06 658 36 36
Cote d'Ivoire Dominique Taty [email protected] +225 20 31 54 67
Equatorial Guinea Sebastien Lechene [email protected] +240 333 091 434
Ethiopia Steve Okello [email protected] +254 20 285 5116
Gabon Laurent Pommera [email protected] +241 07 12 25 88
Ghana George Kwatia [email protected] +233 302 761 500
Guinea Mohamed Lahlou [email protected] +224 30 45 14 43
Kenya Titus Mukora [email protected] +254 20 285 5395
Liberia George Kwatia [email protected] +233 302 761 500
Madagascar Andriamisa Ravelomanana [email protected] +261 20 22 217 63
Mozambique Joao Martins [email protected] +258 21 350 400
Namibia Stefan Hugo [email protected] +264 61 284 1102
Nigeria Taiwo Oyedele [email protected] +234 805 750 9237
Senegal Pierre Michaux [email protected] +221 33 849 05 00
Sierra Leone George Kwatia [email protected] +233 302 761 500
South Africa Jan-paul Borman [email protected] +27 11 797 4260
Tanzania David Tarimo [email protected] +255 0 22 219 2600
Uganda Francis Kamulegeya [email protected] +256 0 31 235 4400
Zambia Jyoti Mistry [email protected] +260 97 774 0641
Transfer Pricing for the Energy Industry in Africa and Middle EastDarcy White
Partner, Middle East and Africa Energy Tax Leader
T: +971 (0) 4 304 3113E: [email protected]
With the current economic and energy industry contexts, ensuring effective recharges of costs and efficient funding of operations is key.
Please contact Mohamed Serokh or Darcy White for any transfer pricing matter pertaining to the Middle East.
Recent changes
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NowThen
Uncertain and volatile demand
Abundant supply from both conventional and non-conventional sources
‘Volatile pricing’ around $50 per barrel
Resource-dependent developing countries keen to protect their tax revenues
Profile of tax transfer pricing elevated due to Base Erosion and Profit Shifting (BEPS) actions, communications from NGOs and high-profile cases
Stable supply from (predominantly conventional) sources
High and stable prices
Predictable tax environment
Limited tax transfer pricing risks
High and stable demand for oil and gas (both LNG and dry)
Key TP highlights Africa Middle East
Con
go
Cot
e d’
Ivoi
re
Equa
tori
al
Gui
nea
Ethi
opia
Fren
ch
Gui
ana
Gab
on
Gha
na
Gui
nea
Con
akry
Guy
ana
Ken
ya
Libe
ria
Mad
agas
car
Bah
rain
3
Egyp
t
Iraq
4
Jord
an 4
Kuw
ait
Leba
non
Liby
a 4
Om
an
Qat
ar
Saud
i A
rabi
a
UA
E 3
Pale
stin
ian
Terr
itor
ies
4
Doc
umen
tati
on Statutory TP documentation requirements? – – – – – –
TP documentation recommended in practice? – – – – – –TP documentation must be prepared in country’s official/local language (if other than English)? – – – – – –
Met
hods
TP methods consistent with the OECD Guidelines? – – – – – –
Pan-European comparables generally accepted? – – – NP NP – NP NP NP – –
Foreign comparables generally accepted? – 2 – – – – –
Serv
ices
Intercompany management fees generally tax deductible? – 1 1 1 1 – 1
Specific restrictions on the deductibility of senior executive costs? – – Fees for other intercompany charges generally tax deductible? – –
Mark-up generally allowed? – –
Deb
t
Safe harbour rules for thin capitalisation? 1 – – –
Safe harbour rules for tax deductibility of interest rates? 1 – – –
Limits on interest recharges? – – –
Oth
er
Intercompany service charges subject to WHT? – – –
Intercompany interest charges subject to WHT? – – –
Deemed transfers subject to WHT? – 1 1 1 1 1 – –
Any foreign exchange controls applicable? – – – The above table was populated by undertaking a desktop review of the local legislation in each of the above jurisdictions. It is necessary to contact the local PwC office in each jurisdiction for confirmation and sign-off prior to use this information on live engagements.
1 On a case by case basis as specifics local practices, regulations and requirements may apply2 Middle East and Africa comparables3 There is currently no tax (nor transfer pricing) regime in Bahrain and the UAE and accordingly the above questions are not applicable4 There is currently no transfer pricing regime in these countries and accordingly, transfer pricing questions are not-applicable. However, these countries currently have corporate tax regimesNP Not Preferred