Strategizing Multinational Tax Risks

The Belgian tax authorities (BTA) are accelerating their focus on transfer pricing ahead of the OECD’s recommendations from its Base Erosion and Profit Shifting (“BEPS”) Action Plan.  The transfer pricing initiatives are highlighted herein for reference and are discussed in the attached link from PwC.

http://www.publications.pwc.com/DisplayFile.aspx?Attachmentid=7092&Mailinstanceid=28847

Summary of initiatives:

• Additional transfer pricing resources, with 30 individuals assigned to transfer pricing by year-end 2013.
• A targeted action plan was started in January 2013, selecting 230 companies for a transfer pricing audit.
• Determine taxpayer selection via risk assessment by the transfer pricing audit team, leveraging on information exchange with foreign tax authorities.  Companies with significant loss carry-overs and/or volatile profit margins will reflect a high risk rating.
• The Belgian Tax Authority’s Special Investigation Tax team, re: fiscal fraud, and its transfer pricing audit team will form a collaborative centre of excellence to collect and share transfer pricing knowledge, including sharing respective databases.
• An extension of the 3 year statute of limitations is envisaged.

As evidenced by the Belgian initiatives, the focus on transfer pricing will intensify as information initiatives are being developed within a jurisdiction in addition to exchange of tax information with other tax administrations.  These initiatives dictate increased emphasis on transfer pricing documentation for risk assessment and issue consistency in response to audits as tax information is shared.