The UN Committee of Experts on International Cooperation in Tax Matters published the UN Practical Manual on Transfer Pricing for Developing Countries in 2012. A new Subcommittee was formed on Article 9, Associated Enterprises, which will draft additional chapters on intra-group services, management fees and intangibles. The letter for assistance is referenced herein:
The Subcommittee invites input into the Manual for this drafting exercise, and aims to consider such comments in the update of the Manual. Input from developing countries in particular is requested, and non-governmental organizations and academics in the policy and administration of transfer pricing, to provide clear and workable guidance.
The letter reiterates the operation of Article 9 of the UN Model Convention and the arms-length principle embodied therein.
As stated at the conclusion of the letter, “As agreed during the 2013 Annual Session of the UN Committee, wide input is sought into the next update of the Manual to ensure its effectiveness for developing countries seeking to address transfer pricing issues in accordance with Article 9.”
Written input is requested no later than 28 February 2014, with any questions addressed to Michael Lennard, Secretary of the UN Tax Committee.
This request aids transparency, and comprehensive understanding, into the evolving issues of intra-group services, management fees and intangibles.
All multinationals should consider this important request, and follow developments of the UN Committee as it receives comments and drafts additional guidance. It is noted that the letter sought to emphasize the arms-length principle of transfer pricing.
The U.N. Committee of Experts on International Cooperation in Tax Matters (U.N. Committee ) is responsible for drafting the U.N. model tax treaty and the Practical Manual on Transfer Pricing for Developing Countries. The U.N. Committee’s work on international tax and transfer pricing developments should be watched closely by the international tax community. Additionally, developments on important topics should be compared with that of the OECD, including its Revised Draft on Transfer Pricing Aspects of Intangibles (03 August post), White Paper on Transfer Pricing Documentation (31 July post) and the Base Erosion and Profit Shifting Action Plan (19 July post).
The attached link provides reference to its provisional agenda for the 21-25 October 2013 session, the appointment of 25 members to the U.N. Committee for a 4-year term expiring on 30 June 3017 and the U.N. Model Double Taxation Convention.
The 9th session of the U.N. Committee will address U.N. Model Tax Convention issues, including the following:
- Article 4 (Resident): Application of treaty rules to hybrid entities
- Article 5 (PE), including international VAT cases
- Article 7 (Business Profits): Force of attraction principles
- Article 9 (Associated Enterprises): Commentary update
- Article 26 (Exchange of information)
- Other topics, including provision on taxation of fees for technical services, issues for the next update of The Practical Transfer Pricing Manual for Developing Countries, and The Manual for Negotiation of Bilateral Tax Treaties between Developed and Developing Countries.
The 25 members were appointed by U.N. Secretary-General Ban Ki-moon and will act in their personal capacity. A detailed biography of each member is included in the press release; a listing of their name and current position is provided herein for quick reference.
- Mr. Khalid Abdulrahman Almuftah, Deputy Director, Revenues and Tax Dept., Ministry of Economy and Finance, Qatar
- Mr. Mohammed Amine Baina, Chief, Division for International Cooperation, Dept. of Taxation, Ministry of Economy and Finance, Morocco
- Ms. Bernadette May Evelyn Butler, Legal Adviser, Ministry of Finance, Bahamas
- Mr. Andrew Dawson, Head, Tax Treaty Team, HMRC, UK
- Mr. El Hadj Ibrahima Diop, Director of Legislation and Litigation Studies, Ministry of Economy and Finance, Senegal
- Mr. Johan Cornelius de la Rey, Legal Officer, Legal and Policy Division, South African Revenue Service (SARS)
- Ms. Noor Azian Abdul Hamid, Director, Multinational Tax Dept., Inland Revenue Board (IRBM), Malaysia
- Ms. Liselott Kana, Head, Dept. of International Taxation, Internal Revenue Service, Chile
- Mr. Toshiyuki Kemmochi, Director, Mutual Agreement Procedures, National Tax Agency, Japan
- Mr. Cezary Krysiak, Director, Tax Policy Dept., Ministry of Finance, Poland
- Mr. Armando Lara Yaffar, Director General, Int’l Affairs, Dept. of Revenue, Ministry of Finance and Public Credit, Mexico
- Mr. Wolfgang Karl Albert Lasars, Director, International Tax Section, Federal Ministry of Finance, Germany
- Mr. Tizhong Liao, Deputy Director General of Tax Treaty, Dept. of International Taxation, State Administration of Taxation, China
- Mr. Henry John Louie, Deputy to the Int’l Tax Counsel (Treaty Affairs), U.S. Dept. of the Treasury
- Mr. Enrico Martino, Head, International Relations, Dept. of Finance, Ministry of the Economy and Finance, Italy
- Mr. Eric Nii Yarboi Mensah, Chief Tax Treaty Negotiator, Ghana Double Tax Treaty Convention Team
- Mr. Ignatius Kawaza Mvula, Assistant Director, Zambia Revenue Authority
- Ms. Carmel Peters, Policy Manager, Inland Revenue, New Zealand
- Mr. Jorge Antonio Deher Rachid, Tax and Customs, Embassy of Brazil, Washington, D.C.
- Mr. Satit Rungkasiri, Director General, Revenue Dept., Ministry of Finance, Thailand
- Ms. Pragya S. Saksena, Joint Secretary, Tax Policy and Legislation, Central Board of Direct Taxes (CBDT), Dept. of Revenue, Ministry of Finance, India
- Mr. Christoph Schelling, Head, Division for International Tax Affairs, State Secretariat for Int’l Financial Matters, Swiss Federal Dept. of Finance
- Mr. Stig B. Sollund, Director General and Head of Tax Law Dept., Ministry of Finance, Norway
- Ms. Ingela Willfors, Director, Int’l Tax Dept., Ministry of Finance, Sweden
- Mr. Ulvi Yusifov, Head, Int’l Treaties Division, Int’l Relations Dept., Ministry of Taxes, Azerbaijan
It will be interesting to observe the interaction of new U.N. Committee members, and most importantly the initiatives addressed against the backdrop of the OECD’s recent developments.