Australia

Details

  • Service: Tax, Global Transfer Pricing Services, Topics, Base Erosion and Profit Shifting
  • Type: Regulatory update
  • Date: 24/09/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Damian Preshaw

Damian Preshaw

Director, Tax

+61 3 9288 5658

dpreshaw@kpmg.com.au

Transfer Pricing – key focus area of OECD BEPS project 

by Damian Preshaw, Transfer Pricing Specialist

It is clear that concern about non-arm’s length transfer pricing practices by multinational enterprises (MNEs) is a key focus area of the Organisation for Economic Cooperation and Development’s (OECD) Action Plan on Base Erosion and Profit Shifting (BEPS) as 5 of the 15 action items are either directly targeted at, or have significant crossover with, transfer pricing:

Intangibles
Deliverable: Changes to OECD’s Transfer Pricing Guidelines (OECD TP Guidelines) and possibly to OECD’s Model Tax Convention (OECD MTC)
Timing: September 2014 and September 2015

 

Risks and Capital
Deliverable: Changes to OECD TP Guidelines and possibly to OECD’s MTC
Timing: September 2015

 

Other high-risk transactions
Deliverable: Changes to OECD’s TP Guidelines and possibly to OECD’s MTC
Timing: September 2015

 

Limit Base Erosion via interest deductions and other financial payments
Deliverable: Changes to OECD TP Guidelines
Timing: December 2015

 

Documentation
Deliverable: Changes to OECD TP Guidelines and recommendations regarding the design of domestic rules
Timing: September 2014

 

On 30 July 2013, the OECD issued the following documents for comment:

 

  • Revised Discussion Draft on Transfer Pricing Aspects of Intangibles
  • White Paper on Transfer Pricing Documentation.

 

Comments are due by 1 October 2013.

 

While changes to the OECD’s TP Guidelines arising from the BEPS project would require Income Tax Regulations to be made to enable the ATO to have regard to such changes, it is nevertheless worth highlighting that deliverables in relation to intangibles and documentation are only twelve months away.

 

To prepare for coming changes, taxpayers should:

 

  • stay up-to-date with international developments relating to BEPS
  • review existing transfer pricing documentation to identify potential material gaps
  • analyse proposed international related party dealings with an eye to whether they are likely to conform with potential changes
  • discuss these developments with your KPMG transfer pricing specialist.
 

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