The UN Transfer Pricing Subcommittee has provided a work designed to move forward its guidance in updating the UN Practical Manual on Transfer Pricing for Developing Countries. The paper provides three attachments addressing:
- Financial Transactions, a new chapter
- Profit Splits, revised text
- Establishing Transfer Pricing Capability, Risk Assessment and Transfer Pricing Audits, revised text
All three attachments are significant and timely issues, noting the EU and other countries similar emphasis on these topics.
The paper is a valuable read in understanding UN’s direction on the above issues, and is included as a referenced link.
The UN Committee of Experts on International Cooperation in Tax Matters concluded their October meeting with several important milestones discussed. A summary of the meeting is provided, and a reference to the Handbook on Selected Issues in Protecting the Tax Base of Developing Countries are provided for reference:
- A new Article was adopted re: fees for technical services that will become a part of the new UN Model Double Tax Convention (DTC).
- A new practical Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries was adopted.
- Subcommittee on Exchange of Information presented a draft “Code of Conduct” that will be updated in the October 2016 session.
- The Committee also welcomed the work of UN DESA’s Financing for Development Office in the area of capacity-building, including the production of a “Handbook on Selected Issues in Protecting the Tax Base of Developing Countries.”
- Two new subcommittees were formed:
- Royalties re: updated Article 12 UN Model and commentary
- Mutual Agreement Procedure (MAP) to review and propose updates to UN Model
On the heels of the OECD BEPS Guidelines, the UN developments will pave the way for many developing countries that lack the time and/or resources for implementation. Accordingly, additional withholding taxes for services and withholding sources will be revealed to extract monies at source. As a result, the UN initiatives are paramount to monitor and review accordingly.
These initiatives will also provide greater capacity for global disparity, with the BEPS Guidelines and UN changes in periods of transition re: domestic legislative actions around the world.