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Transfer Pricing Update

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

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Transfer Pricing Update

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  1. Transfer Pricing Update Ian Dykes11th December 2007

  2. Agenda • Background • Global Trends • Transfer Pricing in Scandinavia • Transfer Pricing legislation in Iceland? Ian Dykes

  3. 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 Ian Dykes

  4. Global Trends • Number of countries with: • Formal TP rules >= 46 • TP-specific penalties >= 23 • Formal TP documentation requirement >= 20 • Requiring information to be attached tothe tax return? >= 31 Ian Dykes

  5. Snapshot Ian Dykes

  6. Convergence • Increasingly similar local documentation requirements • Acceptance of ‘generic’ information such as functional analysis • Common language • Pan-regional searches Ian Dykes

  7. 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 Ian Dykes

  8. 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 Ian Dykes

  9. Scandinavian TP Legislation Comparison: TP Specific Penalties Denmark Two-tier transfer pricing specific penalties for: • No/inadequate documentation • Adjustments Finland Penalties for no/inadequate TP documentation Norway and Sweden None Ian Dykes

  10. Scandinavian TP Legislation Comparison: Advanced Pricing Agreements (APAs) 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. Ian Dykes

  11. Scandinavian TP Legislation Comparison: Summary Ian Dykes

  12. Icelandic Transfer Pricing legislation? Considerations: • Favourable tax system for businesses, or • Protection of the tax base • Investment in expertise is critical Ian Dykes

  13. Contact Details Ian Dykesian.dykes@uk.pwc.com +44 (0)121 265 5968

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