transfer pricing update
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Transfer Pricing Update. Ian Dykes 11th December 2007. Agenda. Background Global Trends Transfer Pricing in Scandinavia Transfer Pricing legislation in Iceland?. Background. Organisation for Economic Co-operation & Development 30 member states including Iceland - PowerPoint PPT PresentationTRANSCRIPT
Transfer Pricing Update
Ian Dykes
11th December 2007
PricewaterhouseCoopers UK LLP 11 December 2007Page 2Ian Dykes
Agenda
• Background
• Global Trends
• Transfer Pricing in Scandinavia
• Transfer Pricing legislation in Iceland?
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Background
Organisation for Economic Co-operation & Development
• 30 member states including Iceland
• Transfer Pricing guidelines for Multinational Enterprises and Tax Administrations - The Arm’s Length Principle
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Global Trends
• Number of countries with:• Formal TP rules >= 46• TP-specific penalties >= 23• Formal TP documentation requirement >= 20• Requiring information to be attached to
the tax return? >= 31
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Snapshot
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Convergence
• Increasingly similar local documentation requirements• Acceptance of ‘generic’ information such as functional
analysis• Common language• Pan-regional searches
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Scandinavian TP Legislation Comparison: Tax Return Disclosure
Denmark
Extensive disclosure requirements for large enterprises
Finland
Disclosure required for related party transactions and requirement to prepare formal Transfer Pricing documentation
Norway and Sweden
No specific disclosure required
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Scandinavian TP Legislation Comparison: Formal Documentation
Denmark, Finland and Sweden
Extensive formal documentation required, including:
• Details of controlled transactions
• Functional and risk analyses
• Justification of methods
• Lists and copies of intercompany agreements
• Contracts with tax authorities where the (Danish) tax authorities are not a party
Norway
• No formal requirements
• Recommended to file “sufficient information about the transactions” as part of the tax return to avoid general tax penalties and chance to audit
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Scandinavian TP Legislation Comparison: TP Specific Penalties
Denmark
Two-tier transfer pricing specific penalties for:
1. No/inadequate documentation
2. Adjustments
Finland
Penalties for no/inadequate TP documentation
Norway and Sweden
None
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Denmark
No formal programme, informal APAs available, MAP APA for treaty countries.
Finland
No formal APA programme, Advanced rulings can be used in a TP context
Norway
No formal programme, MAP APA for treaty countries.
Sweden
No formal APA programme, Advanced rulings can be used in a TP context, MAP APA for treaty countries.
Scandinavian TP Legislation Comparison: Advanced Pricing Agreements (APAs)
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Scandinavian TP Legislation Comparison: Summary
Denmark Norway Sweden Finland
Disclosure
Formal Documentation TP Specific Penalties APAs
Soon 2010
Ruling
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Icelandic Transfer Pricing legislation?
Considerations:
• Favourable tax system for businesses, or
• Protection of the tax base
• Investment in expertise is critical
