Tag Archive for transfer pricing

Cloud Computing and Other High Tech Tax Issues

Cutting edge activities challenge tax rules written with different business methods and products in mind. For example, cloud computing raises issues as to how longstanding tax provisions, such as the research tax credit and Section 199 manufacturing deduction apply. This and other current tax topics relevant to high tech companies and their tax advisers are on the agenda for the 31st Annual TEI-SJSU High Tech Tax Institute, November 9 & 10, 2015 in Palo Alto. Additional topics include BEPS Relevance, M&A activities, state tax haven activities, European Union hot topics and how these topics also affect the income tax provision on financial statements.

For the complete agenda and list of speakers, as well as to register, please visit Read More

Written by | Posted in BEPS

BEPS – The View From Around the World

We hear a lot about the OECD’s BEPS project (base erosion and profit shifting) and its action items. What is the relevance of “country-by-country” reporting for transfer pricing documentation? Does the statement on harmful tax practices mean that the US should adopt a patent box? The 31st Annual TEI-SJSU High Tech Tax Institute, scheduled for November 9 and 10, 2015 in Palo Alto, will address these questions and more. A BEPS panel will include attorneys from China, Ireland and the U.S. to share how other countries are responding the BEPS project and what it means for your company or clients.  Another panel with practitioners from the UK and Ireland will explore hot topics in the EU. Heather Maloy, (former) Commissioner for the IRS Large Business & International Division will also be speaking, along with numerous other experts on hot tax topics for high tech Read More

Written by | Posted in BEPS • Transfer Pricing

U.S. Multinationals Being Pursued By African Revenue Authorities With Large Tax Assessments

U.S. Multinationals Being Pursued By African Revenue Authorities With Large Tax Assessments

 

Learn what Dr. Daniel Erasmus/Transfer Pricing Expert, Tax Risk Management and International Tax Attorney will be discussing at the upcoming TaxConnections Internet Tax Summit.  Listen to his transfer pricing example about reducing significant tax exposure for Multinationals in this video.

 

 

Join Us Online-Internet Tax Summit

 

 

 

 

Written by | Posted in Internet Tax Summit - 2015 • Tax Risk Management • TaxConnections • Transfer Pricing

How Are You Preparing For BEPS?

International Tax Review / TPWeek interviewed 180 leading in-house tax professionals to discover their opinions on the Base Erosion and Profit Shifting (BEPS) project and what shape their transfer pricing strategies are taking as final BEPS guidance draws near. As the Infographic shows below, the approach of these tax executives proved to be very interesting.

Where do you and your tax organization stand on being prepared for BEPS? Are you being proactive in your approach for responding to BEPS? Are you doing nothing at all until the project is finalized?

See Infographic below: Read More

Written by | Posted in OECD • Tax Planning • Transfer Pricing

Transfer Pricing: 25% Rule of Thumb Not Applicable To Determining Royalty Rates

Attached please find a recent U.S. Court of Appeals for the Federal Circuit case (September 16, 2014 in VirnetX, Inc. v. Cisco Sys., Inc.) in which a U.S. court finds again the “25 percent rule of thumb” to determine royalty rates inadmissible:

“[W]e agree with the courts that have rejected invocations of the Nash theorem without sufficiently establishing that the premises of the theorem actually apply to the facts of the case at hand. The use here was just such an inappropriate “rule of thumb.” Previously, damages experts often relied on the “25 percent rule of thumb” in determining a reasonable royalty rate in a hypothetical negotiation. That rule hypothesized that 25% of the value of the infringing product would remain with the patentee, while the remaining 75% would go to the licensee. [W]e held the “25 percent rule of thumb” to be inadmissible Read More

Written by | Posted in International • OECD • Transfer Pricing

The Basics of Offshore Tax Planning For Canadian Corporations – Part 4

Transfer Pricing Issues

As is the case with most major counties, Canada has rules in its tax laws aimed at preventing income from being shifted to other jurisdictions by unreasonable transfer pricing [1].

To date, most of the activity of the CRA and reported tax cases has focused more on inbound transfer pricing issues involving charges by multi-national corporations to Canadian subsidiaries. However, the rules can certainly be applied in connection with outbound tax planning of the type being outlined in this series [2].

If the CRA successfully applies these rules, they could lead to a reassessment of Read More

Written by | Posted in Corporate • International • Transfer Pricing

Comparison of Holding Regimes: Latvia vs. Ireland – 4:4!

What is common to Facebook, LinkedIn, EA, Apple and PayPal? Most of you already know or suspect – first, these businesses work in e-commerce; but what is the key? They use companies in Ireland; the first two have even established their group headquarters in Ireland. A respected Irish tax consulting company highlighted the 10 most significant advantages of this globally popular holding-company jurisdiction in a recent article. In considering these 10 Irish advantages, using sports terminology I challenge you to a game: which holding regime scores more (is better) – the Latvian one or the Irish one?

1. CAPITAL GAINS TAX EXEMPTION – LATVIA 1:0 IRELAND

This exemption has been implemented in both countries, but in Ireland it has been limited by several preconditions. For example, only EU or residents in Ireland of tax treaty Read More

Written by | Posted in Europe, Middle East • R&D Credit Services • Transfer Pricing

Advance Pricing Agreements Report Released By IRS

Report Concerning Advance Pricing Agreements (2013)

Highlights excerpted:

In February of 2012, the former APA Program was moved from the Office of Chief Counsel to the Office of Transfer Pricing Operations, Large Business and International Division of the IRS (TPO) and combined with the United States Competent Authority (USCA) staff responsible for transfer pricing cases, thereby forming the Advance Pricing and Mutual Agreement (APMA) Program.  During the last quarter of 2013, new proposed revenue procedures governing APA applications and MAP applications were released for public comment in Notice 2013-79, 2013-50 I.R.B. 653, and Notice 2013-78, 2013-50 I.R.B. 633, Read More

Written by | Posted in Transfer Pricing

Australia’s G20 Presidency To Target Transnational Enterprise Profit Shifting

A spokeswoman for Australia’s Assistant Treasurer Arthur Sinodinos has indicated that tax-base erosion and profit shifting will be a key focus of the G20 during Australia’s Presidency.

In this connection, speaking before he left for this week’s Davos conference, Australian Prime Minister Tony Abbott said “We want to … try to ensure we have less leaky national taxation systems”.

Commentators have variously encouraged the Prime Minister to push for the publication of taxable incomes of transnational companies by local tax authorities, seek a global solution to the perceived problem and to work within the OECD tax treaty framework to Read More

Written by | Posted in Australia/Oceania • OECD

Valuation of Intangible Property – Financial Reporting Versus Transfer Pricing

TaxConnections Picture - Blue CheckmarkCan the valuations used for financial reporting be used for transfer pricing and tax reporting?

Both the IRS and the OECD have pointed out that valuations of intangible assets (“IP”) for financial reporting and transfer pricing are not exactly the same, and taxpayers should not assume that financial statement auditors and tax authorities would accept one for the other.

Under US GAAP and IFRS Fair Value is the benchmark for the price that would be received to sell an asset or paid to transfer a liability between market participants at the measurement date.

For Transfer Pricing (tax reporting) purposes the Arm’s Length Standard is the benchmark to achieve the results that would have been realized between uncontrolled taxpayers.

Although similar, financial reporting and transfer pricing definitions of IP are different in several areas which often lead to different valuation results.

Aggregation Approach For Financial Reporting And Transfer Pricing

Financial reporting focuses on tangible and intangible assets acquired and liabilities assumed. Excess is recorded as goodwill. Read More

Written by | Posted in Tax Provision/Tax Reporting • Transfer Pricing

Transfer Pricing – Intangibles Valuation And Tax Planning Face More Headwind

TaxConnections Blogger - Yvette Kwong and transfer pricingTransfer Pricing – Intangibles Valuation And Tax Planning Face More Headwind

The OECD’s July 2013 revised discussion draft (“the Revised Draft”) on transfer pricing aspects of intangibles include some updates that may impact MNC’s tax planning of intangible assets (“IP”).

The Draft adopts a broad definition of intangibles and provides guidance on what is not considered intangible assets.

There was guidance on how the funding of intangible development should be remunerated based on arms’ length principles. Comparability factors to consider include the following:

•  Location savings

•  Other local market features

•  Assembled workforce

•  Multinational group synergies.

The Revised Draft adopts a more transactional approach and retains a focus on functions performed, assets used and risks assumed. Read More

Written by | Posted in Transfer Pricing

China Relaxes Procedures To Send Cash Out Of Country

iStock_000015914943XSmallAccording to a recent Deloitte webcast China is simplifying its procedures for outbound payments.

Bulletin [2013] No. 40 and Huifu [2013] No. 30 removes the requirements of tax clearance certificates for outbound payments.

Also, SAFE is allowing cross-border cash pooling for pilot multinational companies and state-owned enterprises. This allows for cross-border intercompany borrowing, lending and netting or cash pooling (within limits). Tax considerations include deductibility of intercompany interest expense, withholding tax on interest payments, and transfer pricing issues concerning intercompany charges.

Further, excess cash from the China operations of an MNC could be used to finance overseas cash needs of sister companies via equity or debt. Read More

Written by | Posted in Asia • Corporate • Tax Provision/Tax Reporting • Transfer Pricing
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