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Kirsten White Shell International Limited UK Head of Tax

MAXIMISING THE EFFICIENCY AND MEETING THE TRANSFER PRICING OBLIGATIONS IN THE MULTINATIONAL GROUP. Kirsten White Shell International Limited UK Head of Tax. The Transfer Pricing Journey for MNE’s. The journey varies for each MNE, but might look something like this..... . 1985 – 1995

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Kirsten White Shell International Limited UK Head of Tax

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  1. MAXIMISING THE EFFICIENCY AND MEETING THE TRANSFER PRICING OBLIGATIONS IN THE MULTINATIONAL GROUP Kirsten WhiteShell International LimitedUK Head of Tax

  2. The Transfer Pricing Journey for MNE’s.... The journey varies for each MNE, but might look something like this..... 1985 – 1995 Cross-border transactions increase significantly 1995 - 2005 Dramatic increase in TP requirements incl documentation 2005 - 2010 TP audits and international tax disputes increase 2010 Need for certainty and cost pressures intensive How do I best manage these disputes? CAN WE DO THIS MORE EFFICIENTLY? What is transfer pricing? What are the transfer pricing requirements? MAP / APA ? Can I create value for my company? How do I document?

  3. Transfer Pricing - Compliance issues for MNE’s • Preparing, maintaining Transfer Pricing documentation is an increasing administrative and cost burden • One report: 100-300 pages depending on type of transaction • hundreds of reports • Reviewed annually on key parameters; • Refreshed every 2-3 years, more frequently if business model changes; • Global Transfer Pricing approach, with per country localised subset Trends to maximise efficiency.... • - Global Transfer Pricing policies are developed. • -- Off-shoring transfer pricing reports.-shoring of Transfer Pricing report preparation is increasing.

  4. International Tax Disputes....where are we today? • Need for certainty higher than ever before. • As globalisation accelerates and given current economic climate, more disputes will surface; • Allocation of profits between countries is core problem, MNE’s do not mind paying taxes as long as it is not twice on the same profit; • As a result, double taxation and non-deductibility of costs are not the exception but a reality an MNE faces in today’s world; • As individual countries have different views on arm’s length remuneration no aligned view can be expected; • Producing more and more detailed TP documentation will not solve the problem but only give rise to more questions. Footer: Title may be placed here or disclaimer if required. May sit up to two lines in depth.

  5. Are MAP’s and APA’s the answer? Partly, but MAP’s and APA’s have their limitations.... • Tax treaty required • Costly • Can take years to conclude. • Inflexible in application • Loss of control by the MNE • Timing issues Footer: Title may be placed here or disclaimer if required. May sit up to two lines in depth.

  6. Is there a better way forward? • Current trend for “enhanced relationships” in several countries including UK, NL and Australia has led the MNE to disclose transfer pricing uncertainties at an earlier stage. • Some MNE’s are experience good dialogue on the matter. Can at times come to an agreement that is more flexible and time efficient than the traditional APA process • But often the conversation is repeated in different countries. • Proposal being worked by HMRC and others of joint working on MNE issues. • Way of working is far more efficient for all.... • One conversation • Provision of same information to all fiscal authorities • No double taxation for the MNE. • Faster in coming to an agreement (hopefully!) Footer: Title may be placed here or disclaimer if required. May sit up to two lines in depth.

  7. Questions?

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