Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘OECD Draft Handbook’

TEI’s comments: OECD Draft Handbook on Transfer Pricing Risk Assessment

Tax Executives Institute (TEI) has provided comments to the OECD Draft Handbook on Transfer Pricing Risk Assessment, for which the relevant links are provided for reference.  A link to TEI is also included in the Recommended Links page of this blog.

http://www.oecd.org/ctp/transfer-pricing/Draft-Handbook-TP-Risk-Assessment-ENG.pdf

Click to access TEI%20Comments%20-%20OECD%20Draft%20Handbook%20on%20Transfer%20Pricing%20Risk%20Assessment%20-%20FINAL%20to%20OECD%2011%20September%202013.pdf

These comments are useful in comprehending the complexity of transfer pricing risks and documentation concerns, especially against the backdrop of OECD’s recent White Paper on Transfer Pricing Documentation (31 July post) and its Revised Draft for the Transfer Pricing of Intangibles (3 August post).  International tax executives should review OECD’s proposals and public comments from TEI and other organizations to develop a risk framework for new transfer pricing challenges and country-specific initiatives.

OECD Draft Handbook on Transfer Pricing Risk: Public information

Click to access Draft-Handbook-TP-Risk-Assessment-ENG.pdf

OECD published this draft handbook on April 30, with comments due by Sept. 13.  I highly recommend reviewing the entire handbook.  Section 4.5 of the Handbook outlines the use of publicly available information for identifying overall risk assessment.  We are all aware of this information, although I will share some thoughts on being proactive in forming Best Practices around this topic.

Company website:

  • Does tax review the web content on a regular basis to ensure there are no innocent misstatements to defend.
  • As the web content is updated for marketing, sales and other relevant information, does tax receive a copy of the updates prior to releasing them to the public.
  • Are any of the statements on your website in conflict with your stated transfer pricing or other tax methodologies.
  • Does the website contain information on legal presence in each country; if so, what is the alignment process with tax.

Statutory financial information:

  • Many countries provide this information to the public; are these financials reviewed to ensure consistency with transfer pricing methodologies either internally or an external advisor. 
  • Additional disclosures increase every year; how familiar are you with new disclosures on a global basis.  Is there a process that can be implemented to identify tax sensitive information.
  • An individual with tax training should review this information prior to finalization to ensure there are no PE, transfer pricing or other tax risk areas addressed.

Coordination of Publicly Available Information:

  • Is there a central index listing all publicly available company information on a global basis.
  • Is this a process for which someone can be a champion to ensure timely updates.
  • If tax disclosures are prepared for public use, are the disclosures of taxes paid by country, etc. consistent with the statutory financial information that is available.  Should there be a process to rationalize, or explain, any discrepancies.
  • Are press releases reviewed by tax to ensure consistency of tax methodologies and minimization of potential tax risks.
  • Is issuance of publicly available information centralized or decentralized, depending on the content.
  • If comments are issued on this draft, who ensures the content is internally consistent since it will be on the OECD website.

 

 

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