11 October 2013
Americas Tax Center Weekly Roundup
Latest news — Americas
Mexico’s proposed tax reform would affect transfer pricing
The tax reform presented by President Peña Nieto to the Mexican Congress in September 2013 would affect Mexico’s current transfer pricing regime. The tax reform is expected to be debated and voted on by the Mexican Congress and a final package is expected to be approved by 31 October 2013. The proposals in the tax reform affecting transfer pricing would, among other things, make certain intercompany payments non-deductible, impose new export requirements for maquiladoras, change compliance requirements, and create a new anti-abuse rule. A Tax Alert has details.
Brazil amends transfer pricing regulations for commodities
On 17 September 2013, the Brazilian Federal Revenue Office (SRF) enacted Normative Instruction (IN SRF) 1,395/2013, with the intention of amending and clarifying IN SRF 1,312/2012, which provided guidance on the PCI (Price Valuation on Imports Method) and PECEX (Price Valuation on Exports Method) methods. The new normative instruction clarifies the definition of a commodity for transfer pricing purposes, offers additional guidance for pricing adjustments, clarifies the definition of transaction date, and makes a number of other changes. A Tax Alert has details.
Peru extends deadline to file 2012 transfer pricing informative return and transfer pricing technical study
On 5 October 2013, the Peruvian tax authorities published Resolution 301-2013/SUNAT in the Peruvian Official Gazette, extending the deadline for filing the 2012 transfer pricing informative return and the transfer pricing study from October 2013 to November 2013. The resolution also included the following provisions: (1) instructions for filing the transfer pricing formal requirements, (2) reasons to reject the filing, and (3) issuance of a proof of filing form. The provisions of the resolution became effective on 6 October 2013. A Tax Alert has details.
Canada releases draft legislative proposals on character conversion transactions and synthetic dispositions
The Canadian Department of Finance’s recently released draft legislative proposals include a measure aimed at ensuring that derivative transactions cannot be used to convert ordinary income into capital gains through so-called "character conversion transactions." The proposals also include a measure to ensure that the tax consequences of disposing of property cannot be avoided by entering into an arrangement that is economically equivalent to a disposition of the property – a synthetic disposition arrangement (SDA). A Tax Alert has details.
OECD meets with businesses on BEPS action plan
On 1 October 2013, the OECD held a meeting with the Business and Industry Advisory Committee (BIAC) to the OECD on the Action Plan on Base Erosion and Profit Shifting (BEPS). The OECD-BIAC meeting was the first formal opportunity for business representatives to engage with the OECD on the Action Plan and the 15 focus areas. In the Action Plan, the OECD expressed a commitment to consult with the business community as it works to develop recommendations in each of the focus areas. A Global Alert provides details.
OECD seeks input on country-by-country reporting
On 3 October 2013, the OECD published a memorandum seeking input on the development of an approach for country-by-country reporting of income, taxes paid and economic activity. The memorandum notes that country-by-country reporting "will be an essential element" of the transfer pricing documentation proposals that are under development, and it identifies various implementation issues that will need to be addressed. The main purpose of the memorandum is to facilitate the public consultation relating to transfer pricing issues the OECD will hold in November. A Tax Alert has details.
This week's tax treaty news in the Americas
- Barbados and Malta: tax treaty protocol signed
- Canada and Malaysia: intentions expressed to negotiate tax treaty
- Chile and UK: Chilean Congress approves social security agreement
- Mexico and Indonesia: tax treaty protocol signed
- Mexico and Kuwait: investment protection agreement signed
- Panama and UK: tax treaty ratified
This week’s Global Tax Alerts
- OECD seeks input on country-by-country reporting (8 October 2013)
- Spain introduces measures to promote R&D activities and to support small and medium size companies (7 October 2013)
- OECD meets with business on base erosion and profit shifting action plan (4 October 2013)
- CJEU dismisses approach of Belgian tax authorities regarding accounting valuation of assets (4 October 2013)
- Normative Instruction 1,395/2013 amends Brazilian transfer pricing regulations for commodities (4 October 2013)
- Canada releases draft legislative proposals regarding character conversion transactions and synthetic dispositions (4 October 2013)
- Japan's tax reform outline announced (4 October 2013)
- Mexico's proposed tax reform affects transfer pricing (4 October 2013)
- Transfer pricing in transactions: the current state of play (17 October)
Tax authorities around the world continue to increase scrutiny of transfer pricing, and one of the main triggers for transfer pricing examination is business restructuring. Nonetheless, businesses restructurings may be necessary to lower costs, improve supply chain efficiency and pursue new opportunities – despite the potential exposure to transfer pricing examination. Further, acquisitions and spin-offs trigger the same kinds of transfer pricing decisions. The next BorderCrossings webcast will focus on all aspects of transfer pricing in transactions. Register here.
Recently archived webcasts now available on-demand
- International Tax Talk discussion on interest deductibility and related issues
The deductibility of interest on borrowings has recently come under greater scrutiny in many countries and is seen as a cornerstone issue in the current base erosion and profit shifting (BEPS) debate. In a recent International Tax Talk webcast, EY’s Global Tax Desk team focused on thin capitalization and the related debt/equity characterization issues that may arise under select foreign tax regimes in relation to related and non-related party borrowings. The countries/regions discussed included: Germany, Benelux, India and China. Watch it on-demand here.
EY industry, service and issue publications
- EY Mega trends shaping the Indian commercial vehicle industry
- Megatrends shaping the Latin American light vehicle market
Strategic Growth Markets