Transfer Pricing Alert

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Transfer Pricing Alert December Issue has been released.

We would like to proudly announce that Hi-Su Lee, former Minister for Taxation of the Ministry of Strategy and Finance, has joined EY Han Young as a vice-president. Dr. Lee is an expert on taxation, international finance, and economic policy. Dr. Lee received his Bachelor of Economics at Yonsei University, attended Graduate School of Public Administration at Seoul National University, and Ph.D. on Economics at the University of Washington.  Dr. Lee’s experience extends from working at the Ministry of Strategy and Finance, former Commissioner of the National Tax Tribunal, former Executive Director of the International Monetary Fund (IMF), and President & CEO of Korea Enterprise Data.

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  • OECD releases discussion draft on low value-adding intra-group services
    On 3 November 2014, the Organisation for Economic Co-operation and Development (OECD) released a Discussion Draft in connection with Action 10 on transfer pricing for low value-adding intra-group services under its Action Plan on Base Erosion and Profit Shifting (BEPS). The document, titled BEPS Action 10: Proposed Modifications to Chapter VII of the Transfer Pricing Guidelines Relating to Low Value-Adding Intra-Group Services (the Discussion Draft), contains proposed modifications to the OECD Transfer Pricing Guidelines relating to such services. 
  • OECD issues updated guidance under BEPS Action 8 on TP aspects of intangibles
    On 16 September 2014, the Organisation for Economic Co-operation and Development (OECD) released, as part of a series of deliverables pursuant to the Action Plan on Base Erosion and Profit Shifting (BEPS), draft recommendations under Action 8 (Transfer Pricing Aspects of Intangibles). The report entitled, Guidance on Transfer Pricing Aspects of Intangibles (the Report) contains revised standards for transfer pricing of intangibles and additional standards with respect to comparability and transfer pricing methods.



TP Alert 2014 Issues
November 2014 (pdf, 2.3mb)
  • Korea NTS Will Introduce a Simplified APA Program for foreign SMEs in order to lighten the burden of tax audit on foreign SMEs
  • France France releases new transfer pricing form with initial deadline of 20 November 2014
  • Slovakia Slovakia issues new guidance on transfer pricing documentation
  • Malaysia Malaysia announces 2015 Budget Proposal


October 2014 (pdf, 4.4mb)

Action 13 of the Action Plan on Base Erosion and Profit Shifting(OECD, 2013) recognises that enhancing transparency for tax administrations by providing them with adequate information to conduct transfer pricing risk assessments and examinations is an essential part of tackling the base erosion and profit shifting (BEPS) problem. This document contains revised standards for transfer pricing documentation and a template for country-by-country reporting of income, earnings, taxes paid and certain measures of economic activity.

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The country-by-country report requires multinational enterprises (MNEs) to report annually and for each tax jurisdiction in which they do business the amount of revenue, profit before income tax and income tax paid and accrued. It also requires MNEs to report their total employment, capital, retained earnings and tangible assets in each tax jurisdiction. Finally, it requires MNEs to identify each entity within the group doing business in a particular tax jurisdiction and to provide an indication of the business activities each entity engages in. 

The guidance on transfer pricing documentation requires MNEs to provide tax administrations high-level global information regarding their global business operations and transfer pricing policies in a “master file” that would be available to all relevant country tax administrations. It also requires that more transactional transfer pricing documentation be provided in a local file in each country, identifying relevant related party transactions, the amounts involved in those transactions, and the company’s analysis of the transfer pricing determinations they have made with regard to those transactions.

Taken together, these three documents (country-by-country report, master file and local file) will require taxpayers to articulate consistent transfer pricing positions, will provide tax administrations with useful information to assess transfer pricing risks, make determinations about where audit resources can most effectively be deployed, and, in the event audits are called for, provide information to commence and target audit enquiries. This information should make it easier for tax administrations to identify whether companies have engaged in transfer pricing and other practices that have the effect of artificially shifting substantial amounts of income into tax-advantaged environments. The countries participating in the BEPS Project agree that these new reporting provisions, and the transparency they will encourage, will contribute to the objective of understanding, controlling, and tackling BEPS behaviours.

The specific content of the various documents reflects an effort to balance tax administration information needs, concerns about inappropriate use of the information, and the compliance costs and burdens imposed on business. Some countries would strike that balance in a different way by requiring reporting in the country-by-country report of additional transactional data (beyond that available in the master file and local file for transactions of entities operating in their jurisdictions) regarding related party interest payments, royalty payments and especially related party service fees. Countries expressing this view are primarily those from emerging markets (Argentina, Brazil, China, Colombia, India, Mexico, South Africa, and Turkey) who state they need such information to perform risk assessment and who find it challenging to obtain information on the global operations of an MNE group headquartered elsewhere. Other countries expressed support for the way in which the balance has been struck in this document. Taking all these views into account, it is mandated that countries participating in the BEPS project will carefully review the implementation of these new standards and will reassess no later than the end of 2020 whether modifications to the content of these reports should be made to require reporting of additional or different data.

Effective implementation of the new reporting standards and reporting rules will be essential. Additional work will be undertaken over the next several months to identify the most appropriate means of filing the required information with and disseminating it to tax administrations. In that work, due regard will be given to considerations related to protection of the confidentiality of the information required by the reporting standards, the need for making the information available on a timely basis to all relevant countries, and other relevant factors.

- OECD/G20 Base Erosion and Profit Shifting Project :Guidance on Transfer Pricing Documentation and Country-by-Country Reporting


September 2014 (pdf, 2.5mb)
  • India India releases 2013-14 Annual Report covering transfer pricing and international tax developments 
  • Singapore Singapore Tax Authorities releases consultation paper on proposed transfer pricing documentation guidance
  • China Notice regarding the launch of tax anti-avoidance investigations on remittance of substantial amounts of service fees and royalty payments


August 2014 (pdf, 1.5mb)
  • India India Finance (No.2) Bill 2014 contains proposed amendments to transfer pricing provisions 
  • OECD, BEPS Update OECD releases report on impact of BEPS in low income countries
  • Malaysia Malaysia requires transfer pricing documentation confirmation


July 2014 (pdf, 2.8mb)
  • Hong Kong Hong Kong concludes its first bilateral Advanced Pricing Arrangement with the Netherlands/ Korea tax treaty signed
  • Czech Republic Czech Republic announced to introduce mandatory reporting of related party transactions as part of the tax return
  • OECD - EY Survey Tax Risks Accelerating Worldwide, With Companies Concerned About The Potential For Uncoordinated BEPS “Tax Chaos”


June 2014 (pdf, 646.2kb)
  • Vietnam Active TP audits in Vietnam awakens local Korean Companies
  • India India’s Mumbai Tribunal confirms levy of penalty in case of a TP adjustment
  • Greece Greece reforms mandatory contents


May 2014 (pdf, 1.9mb)
  • China China’s SAT suggests UN adopting disclosure requirement for service fees
  • India India’s APAs under negotiation with U.K. and Japan
  • France French TP documentation regulation increased enforcement


April 2014 (pdf, 2.1mb)
  • China China’s SAT favors applying a Profit split method to remunerate the Location Savings
  • India Delhi Tribunal rules on transfer pricing aspects of intra group financing transactions
  • Guatemala Guatemala Tax Administration confirms transfer pricing compliance for 2013
  • Nigeria Nigerian Tax Authorities issue transfer pricing guidance and forms


March 2014 (pdf, 2mb)
  • Korea Tax Tribunal ordered reassessment of arm’s length price regarding guarantee fee
  • USA IRS releases transfer pricing audit roadmap
  • Republic of South Africa South Africa aligns secondary transfer pricing adjustment with international standards
  • El Salvador El Salvador introduces changes in transfer pricing information return


February 2014Special  (pdf, 585.9kb)
  • Korea 2013 Essential guide to contemporaneous transfer pricing (“TP”) documentation in Korea
  • Korea Contemporaneous TP documentation Q&A”


February 2014 (pdf, 2.5mb)
  • India Revision of Korea-India Tax Treaty (double taxation avoidance) authorized
  • India India’s Delhi Tribunal rules on application of Profit Split Method
  • OECD, BEPS Update OECD releases draft country-bycountry reporting template for comment
  • France New French transfer pricing package entails a second, contemporaneous documentation requirement
  • Georgia Georgia’s Ministry of Finance issues transfer pricing instruction and documentation requirements


January 2014 (pdf, 1.5mb)
  • Korea Tax Tribunal concedes as appropriate the application of the CUP Method
  • Netherlands Dutch State Secretary of Finance publishes Decree on transfer pricing and application of arm’s length principle
  • Indonesia Directorate General of Tax of Indonesia released "Technical Audit Guidelines for Taxpayers with a Special Relationship"


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