15/02/11 7:13 PM
2 | Global Transfer Pricing Review
15/02/11 7:13 PM
Introduction | 3
The long term growth in international trade, combined
with the challenging global economic environment and
growing fiscal deficits has many governments extremely
focused on tax base protection. This has heightened
government scrutiny of transfer pricing matters,
including issues such as attribution of losses, business
restructuring, intellectual property migration, financing
transactions and others. Given this focus, transfer pricing
rules and regulations are rapidly evolving.
Notably, the Organisation for Economic Co-operation and
Development (OECD) Council approved on 22 July 2010 the 2010 version of Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. The 2010 version is the first substantial revision of the OECD Guidelines since they were first issued in 1995. Notable changes include:
• Adoptionofa“mostappropriatemethod”standardforchoice of transfer pricing method, replacing the previous hierarchy thatpreferred“traditionaltransactionalmethods”suchasthe ComparableUncontrollablePricemethodover“transaction
profitmethods”suchastheTransactionalNetMarginMethod; • Substantialadditionalguidanceoncomparability,nowappearing inChapterIII;and
• AdditionofChapterIX,containingadetaileddiscussionofthe transfer pricing treatment of business restructurings.
KPMG member firms anticipate significant variations in the pace at which the revised Guidelines will affect local transfer pricing rules and tax authority practices. While some countries may
quickly adopt the revisions either formally or in practice, others will study the new text carefully before deciding whether, and to what extent, to adopt the changes made. KPMG member firms
will monitor these developments and include them in our updates to the Global Transfer Pricing Review.
Keeping track of current and future reforms will be a challenge. From detailed transfer pricing regulations to strict documentation requirements, sophisticated audit practices to significant
penalties for noncompliance, global companies face an
increasingly complex environment and are looking for transfer pricing advice in planning, implementation, risk management, documentation and dispute management.
Some of the key elements for companies confidently managing
their transfer pricing issues include:
• Planning:developingeconomicallysupportabletransfer pricing policies and executing forward-looking tax planning
with long-term tax benefits.
policies, procedures, controls and systems for setting,
monitoring, and testing intercompany transactions.
• Complianceanddocumentation:managingriskwithinthe current environment of detailed transfer pricing regulations, strict documentation requirements, sophisticated audit
practices, and significant penalties for noncompliance.
• Controversy:resolvingtransferpricingdisputesthrough advance pricing agreements, competent authority
negotiations, arbitration, and litigation support.
By bringing together our resources and aligning our knowledge of global developments, KPMG’s Global Transfer Pricing Review is designed to help multi-national companies stay current with transfer pricing rules world-wide.
Compiled from information supplied by various KPMG member
firms professionals who provide transfer pricing services, the review offers a broad-ranging look at transfer pricing compliance requirements in 64 countries.
You can obtain regular...