Strategizing International Tax Best Practices – by Keith Brockman

In what may be the next int’l trend in risk assessment, the Australian Tax Office (“ATO”) has quantified, in sector tables, stated ranges of distributor profit margins by which a taxpayer’s risk will be determined for potential review/audit.  A Reportable Tax Position schedule will be the reporting vehicle for such self-assessment, effective for years ending on or after June 30, 2018.

The guidance is likely to affect the ATO’s starting position for unilateral APA, Mutual Agreement Procedure and bilateral APA discussions.

All inbound distributor arrangements are subject to reporting.  As a result, many multinationals may further consider an APA going forward.

General distributor results are as follows:

High risk: Less than 2.1%

Medium risk: 2.1% – 5.3%

Low risk: Above 5.3%

EY’s Global Tax Alert provides additional guidance on this important development:

https://www.ey.com/Publication/vwLUAssets/Australian_Taxation_Office_releases_final_guidance_on_compliance_approach_to_distributor_profit_margins_-_Action_required/$FILE/2019G_000801-19Gbl_TP_Australia%20-%20Guidance%20to%20distributor%20profit%20margins%20-%20Action%20required.pdf

 

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: