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Global Transfer Pricing Overview

Sean FoleyGlobal Transfer Pricing LeaderOctober 2016

2© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services.

BEPS Action 13: Country implementation summary

CbCR Final Legislation

United States

Implemented Draft bills/Public discussion draft Intention to Implement

CbCR / MF / LF Final Legislation

Mexico

CbCRDraft legislation

Canada


Australia

China

CbCR / MF /LFFinal Legislation


Denmark


Poland

Norway

CbCRFinal Legislation

France

CbCRFinal Legislation

IrelandCbCR / MF /LF

Final Legislation

Japan

CbCRDraft

South Korea

MF / LF Final

South Africa

CbCRIntentions

Nigeria

CbCR / MF / LFIntentions

New Zealand


Taiwan

CbCRFinal

Portugal

MF / LF Intention

CbCR / MF / LF Draft Legislation

SwedenCbCR / MF / LF Draft Legislation

Finland


SingaporeIsrael

United Kingdom

Source: KPMG International member firms

CbCRDraft

MF / LF Intention

CbCR / MF/LFIntentions

Chile

Switzerland

CbCRDraft

MF / LF Intention

Russia

CbCR / MF / LFDraft Legislation

Romania

CbCRIntention

MF / LF Final

CbCRIntentions

Bermuda

Austria


Belgium


CbCRDraft Legislation

Italy


Netherlands

CbCRIntentions

Jersey


Luxembourg


Malaysia


Indonesia


Spain

India

CbCRFinal

MF / LF Draft

CbCRDraft

MF/LF Intention

CbCR / MF/LFIntentions

Peru CbCR/LFDraft

MFIntention

CbCR / MFDraft legislation

Uruguay

CbCRFinal

MF / LF Intention

Germany

CbCR/MFDraft

LF Intention


Country-specific considerations—China—Australia—Belgium —Poland—U.S.

Presenter

Presentation Notes

China: The MF requirements are broadly in line with the BEPS proposals and includes an additional requirement to provide the name and the location of the legal entity preparing and filing CbCR for the group. The Chinese LF rules include elements in addition to what the BEPS LF requires (e.g., Value Chain Analysis, location specific advantages, etc.). Australia: The ATO is proposing to implement two 'tiers' of the LF, which will limit the information to be disclosed, based on the size of international related party dealings (IRPDs), overall revenue of the Australian entity and transfer pricing risk of the entity. The LF requirements are in addition to existing transfer pricing compliance obligations. Belgium: LF contents will have to be provided in a specific format consisting of two parts: i) general information that will have to be completed and filed by all companies or permanent establishments satisfying one of the three thresholds (listed above); and ii) more detailed information, providing mainly qualitative and quantitative information on the various sorts of intercompany transactions, will only be completed and filed by companies or permanent establishments that have cross-border intra-group transactions exceeding in total a value of EUR one million. LF should be filed together with the Belgian income tax return. Poland: MF will need to be provided in Polish.


Global documentation on the rise

Total

20152016

52% increase


Global documentation – country snapshot


Confidentiality issues— Treaty protection for CbyC— Only local protection for Master File— Separate European transparency initiative for CbyC like data


Business impact— Requires more communication to additional stakeholders, closer

integration with business, e.g. Master File approval process— Increased technology and process focus

- Companies are looking to leverage ERP systems more and workflow management tools for tax departments

- Considering Project Management Officers (PMOs) and what to keep on-shore/off-shore.

— Risk is evolving and tax departments are looking across their organization to figure out what resources to leverage, e.g. internal audit function to monitor permanent establishment risk


Master File: skinny or thick? — How detailed is the supply chain? — Leveraging publicly available and TP documentation files to start, but

have had to draft significant new content to complete the draft MF. This is much more time and resource consuming than originally contemplated by most clients.

— On average ~40-50 pages or more but there are examples of MFs exceeding 1000 pages for large conglomerates

— Use where possible charts, diagrams, tables to convey information as English is not the first language of many tax authorities

Disputes in a BEPS world


Disputes: going up


OECD MAP statistics

— MAP inventory has increased from 2,352 in 2006 to 5,423 in 2014.— Germany reported the highest number of open MAP cases, with 1029 at year-end, followed by

the United States, with 956 pending cases. France was in third place with 549 cases in inventory.

0

1000

2000

3000

4000

5000

6000

2006 2007 2008 2009 2010 2011 2012 2013 2014

Global Inventories of Mutual Agreement Procedure Cases

Global inventories of Mutual Agreement Procedure Cases


ArbitrationOECD BEPS Action 14 — Final BEPS Action 14 package includes commitment by 20 countries to provide for mandatory

binding MAP arbitration in their bilateral tax treaties: Australia, Austria, Belgium, Canada, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Slovenia, Spain, Sweden, Switzerland, the UK and the US

US treaties with binding arbitration

— All have “last-best-offer” (baseball-style) arbitration occurring after 2 years of unsuccessful MAP negotiations

— Only arbitrations to have occurred to date involved Canada

In Force Not In Force

Belgium Japan

Canada Spain

France Switzerland

Germany


APAs – available in more than 50 countriesAlbaniaAndorraAustraliaAustriaBelgiumCanadaChinaColombiaCosta RicaCzech RepublicDenmarkDominican RepublicEgyptFrance

GeorgiaGermanyGreeceGuatemalaHondurasHong KongHungaryIndiaIndonesiaIsraelItalyJapanLatviaLithuaniaLuxembourg

KazakhstanMalaysiaMexicoNetherlandsNew ZealandNigeriaPeruPolandPortugalRomaniaRussiaSingaporeSlovakiaSouth KoreaSpain

source: KPMG Global Transfer Review

Sri LankaSwedenSwitzerlandTaiwanTanzaniaThailandTurkeyUgandaUkraineUnited KingdomUnited StatesUruguayVenezuelaVietnam

Thank youContact:Sean F. FoleyE: [email protected]

mailto:[email protected]

© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The KPMG name, logo are registered trademarks or trademarks of KPMG International.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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