Strategizing International Tax Best Practices – by Keith Brockman

Archive for July, 2018

ATO: Tax Risk Governance

The referenced link is a Best Practices portrayal of tax risk management and governance overview as published by the Australian Tax Office (ATO).

The outline summarizes:

  • Director’s Summary
  • Board-level responsibilities
  • Managerial level responsibilities
  • Tax control framework
  • Testing of controls
  • Self-assessment procedures

The outline is a valuable review of the tax processes and controls that demand a more formal approach, with the advent of subjective guidelines, anti-avoidance rules, etc.  

https://www.ato.gov.au/Business/Large-business/In-detail/Key-products-and-resources/Tax-risk-management-and-governance-review-guide/

 

OECD: Financial instruments draft

Under the mandate of the Report on Actions 8-10 of the BEPS Action Plan (“Aligning Transfer Pricing Outcomes with Value Creation”), Working Party No. 6 (“WP6”) has produced a non-consensus discussion draft on financial transactions.

Comments are due by September 7, 2018.  The treasury function, guarantees, intra-group loans, cash pooling transactions and captive insurance are the broad agendas discussed.

The guidance is not intended to prevent countries from implementing approaches to address capital structure and interest deductibility under domestic legislation, nor does it seek to mandate accurate delineation under Chapter I as the only approach for determining whether purported debt should be respected as debt.

As this guidance is critical for establishing if an instrument is true debt, as well as transfer pricing implications for financial relationships, this discussion draft is critical to review and provide relevant comments.

The OECD’s discussion draft is referenced herein for review.

 

http://www.oecd.org/tax/transfer-pricing/BEPS-actions-8-10-transfer-pricing-financial-transactions-discussion-draft-2018.pdf

OECD: New guidance on profit-split and hard-to-value intangibles

The OECD published the final report on revised guidance to apply the transactional profit split method, as part of BEPS Action 10.  This guidance provides the final text, based on comments received.

Additionally, OECD published final guidance for tax administrations for determining the proper approach to apply for hard-to-value intangibles.  This text is included as an annex to Chapter VI of the Transfer Pricing Guidelines.  This approach should promote consistency and, hopefully, minimize double taxation.

The text of these reports are provided for reference, as they are a must read for transfer pricing professionals.

http://www.oecd.org/tax/transfer-pricing/revised-guidance-on-the-application-of-the-transactional-profit-split-method-beps-action-10.pdf

http://www.oecd.org/tax/transfer-pricing/guidance-for-tax-administrations-on-the-application-of-the-approach-to-hard-to-value-intangibles-BEPS-action-8.pdf

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