Recent years have witnessed a quickening pace of globalization and a concomitant increase in cross-border business. In addition, competition between globally operating multinational enterprises (MNEs) continues to intensify.
Digitalization is accelerating these developments. We have also experienced an increasing amount of 'competition' between the tax administrations of the countries in which the MNEs operate, aimed at securing their 'fair share' of the taxable income generated along the value-creation chain. The OECD BEPS initiative and its final report in October 2015 containing measures against base erosion and profit shifting is one key element that needs to be mentioned in this context.
These developments have a tremendous impact on the arm's length principle as the basic benchmark of globally applied transfer-pricing regulations. This principle governs the allocation of income within an MNE between the involved legal entities (including permanent establishments) in different jurisdictions and hence their tax liabilities in those jurisdictions.
However, what is lacking is one universally applicable set of rules. The OECD's Transfer Pricing Guidelines, which the great majority of jurisdictions accept, are only guidelines and recommendations. Inevitably, therefore, the interpretation of those guidelines and the extent to which they are reflected in legislation and practice varies from country to country.
For these reasons, at Moore Global we believe it will be useful for you as member firms and your clients to have an overview on recent developments in key countries by means of this Transfer Pricing Brief, of which this is the first issue.
We hope that you may find it valuable for your practice. If you have any queries related to transfer-pricing matters, especially in relation to its key areas such as price setting, functional and risk analysis, benchmark analysis, preparing a Master File, a Country File and potentially even a Country-by-Country Report, the Moore Global network and its strong Transfer Pricing Expert Group will be pleased to help and provide you
If you have any queries related to the particular issues and countries mentioned in this Brief, please do not hesitate to contact the experts whose names and contact details appear at the foot of each article.
Please click here to download the brief.
