2 August 2013
Americas Tax Center Weekly Roundup
Latest news — Americas
OECD issues Revised Discussion Draft on the Transfer Pricing Aspects of Intangibles
On 30 July 2013, the OECD issued a Revised Discussion Draft on the Transfer Pricing Aspects of Intangibles, updating the initial discussion draft issued in June 2012. Key changes include: (1) new guidance on the transfer pricing treatment of local market features, location savings, assembled workforce and group synergies; (2) an amendment to the proposed definition of "intangible" for transfer pricing purposes; (3) guidance on how the funding of intangible development should be remunerated at arm’s length; and (4) new guidance on payments between related parties for the use of the company or group name. A Tax Alert has details.
Costa Rica introduces transfer pricing regulations
Through a presidential decree expected to be published shortly, Costa Rica will introduce transfer pricing regulations applicable to individuals or business entities that conduct related-party transactions. The new rules define the arm’s length principle and related parties, regulate the criteria for comparability analyses, establish transfer pricing methodologies, and empower the competent authority to adjust prices when taxpayers do not comply with the arm's length principle. Companies doing business in Costa Rica should review their intercompany transactions and determine whether they are within the scope of the rules and whether they comply with the arm’s length principle. A Tax Alert has details.
Peru clarifies when nonresidents must obtain a Tax Identification Number
The Peruvian Tax Administration (SUNAT) has established that nonresidents doing business in Peru must obtain a Tax Identification Number (RUC, by its Spanish acronym) when the following conditions are met: (1) the nonresident does not have a taxable presence in Peru (e.g., a branch or permanent establishment); (2) the payor is a Peruvian resident; and (3) the income is subject to Peruvian taxation as Peruvian-source income, but it is not subject to Peruvian withholding tax. A Tax Alert has additional details.
Canadian court decision exposes potential pitfalls in obtaining double tax relief
A recent decision of the Federal Court of Canada exposes a number of potential pitfalls for Canadian companies seeking to resolve double taxation arising from transfer pricing on transactions with non-arm’s length parties. Ultimately, the Federal Court’s decision, although decided on largely procedural grounds, substantively left the applicant in the position of being subject to double taxation. A Tax Alert discusses the decision and considers what lessons it provides for Canadian taxpayers.
Chile-Australia Double Taxation Convention enacted
On 23 July 2013, the Chile-Australia Double Taxation Treaty was published in the Official Gazette. The treaty, which was signed on 10 March 2010, is in line with OECD guidelines. In Chile, the treaty will be effective for taxes on income earned and amounts paid, credited to an account, put at the disposal or accounted as expenses on or after 1 January 2014. A Tax Alert has details.
Barbados and Singapore sign income tax treaty
On 15 July 2013, Barbados and Singapore signed their first income tax treaty. The treaty will enter into force upon exchanging notifications of ratification and become effective, in the case of Barbados, on or after 1 January following the year in which the treaty enters into force. In the case of Singapore, the treaty will be effective with respect to tax chargeable for any year of assessment beginning on or after 1 January in the second calendar year following the year in which the treaty enters into force. A Tax Alert highlights pertinent features of the treaty.
EY's 2013 Global Transfer Pricing Survey is now available
According to EY’s 2013 Global Transfer Pricing Survey, Navigating the choppy waters of international tax, transfer pricing remains the number one tax issue facing multinational companies, but their focus has shifted toward risk management. This latest survey of tax directors and international tax practitioners was conducted with 878 multinationals from 26 countries.
This week's tax treaty news in the Americas
- Bahamas and US: FATCA agreement negotiations announced
- Colombia and EU: trade agreement enters into force
- Colombia and Korea: tax treaty ratified
- Ecuador and Singapore: tax treaty details available
- Mexico and Panama: negotiations on free trade agreement
- Panama and UK: tax treaty signed
- Uruguay and Romania: tax treaty details available
This week’s Global Tax Alerts
- OECD invites public comments on the White Paper on Transfer Pricing Documentation (1 August 2013)
- OECD issues Revised Discussion Draft on the Transfer Pricing Aspects of Intangibles (31 July 2013)
- Significant changes proposed to Portugal's Corporate Income Tax law (31 July 2013)
- Australia and Switzerland sign revised income tax treaty (31 July 2013)
- New Ukraine and Cyprus Treaty may take effect 1 January 2014 (30 July 2013)
- India's Mumbai ITAT rules that blueprints to be used in future satisfy "make available" test (30 July 2013)
- Costa Rica introduces transfer pricing regulations (30 July 2013)
- Peruvian Tax Administration clarifies when nonresidents must obtain a Tax Identification Number (TIN) (30 July 2013)
- Teletech decision exposes potential pitfalls in obtaining double tax relief (29 July 2013)
- Belgian administrative circular letter reinforces secret commissions tax as the exception and not the rule (26 July 2013)
- France postpones debates on anti-tax avoidance package to September 2013 (26 July 2013)
- Update on Russia's actions to implement FATCA (25 July 2013)
- Singapore and Barbados sign a new income tax treaty (25 July 2013)
- Chile - Australia Double Taxation Convention is enacted (25 July 2013)
EY upcoming webcasts
- Tax insights on engineering, procurement and construction agreements in Brazil (6 August)
To stay competitive in the international market, Brazil is developing key infrastructure ventures throughout the country. Add to that the infrastructure projects required to host upcoming international events — primarily the World Cup in 2014 and the Olympic Games in 2016. In this environment, the interest of global players to participate in Brazilian infrastructure bids has grown significantly and the tax issues can get complicated. An upcoming webcast (in English) will discuss relevant tax-efficient structures, available tax benefits and incentives, and tax best practices for infrastructure financing and structuring. Register here.