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    Multi-national enterprises should get ready for additional transfer pricing reporting requirements

    Multi-national enterprises should get ready for additional transfer pricing reporting requirements, says Nexia International.

    A new report by Nexia International, a top ten international network of independent accounting and consulting firms, outlines the new obligations for cross-border businesses to counter profit shifting.

    The evolution of international tax regimes and increasing globalisation has left numerous gaps in tax laws around the world. This has given multi-national enterprises (MNEs) the ability to reduce, and even eliminate, their corporate tax burden by ‘artificially’ shifting profits to low or no-tax jurisdictions where they have little or no economic activity. In response to such strategies, the Organisation of Economic Co-operation and Development (OECD) has identified 15 specific Action Plans on Base Erosion and Profit Shifting (BEPS).

    David Slemmer, Director at CohnReznick, a member firm of Nexia International and author of Nexia’s report explains: “Action plans include addressing tax challenges of the digital economy, preventing the artificial avoidance of ‘permanent establishment’ status, assuring transfer pricing outcomes are in line with value creation, and re-examining transfer pricing documentation.”

    BEPS Action Plan 13 (Re-examine Transfer Pricing Documentation) addresses the need for a new approach to transfer pricing documentation. It recommends that each country should adopt a standardized template requiring each MNE to file a number of reports, including a country-by-country (CbC) report that contains information on the global allocation of income, economic activity and taxes paid among the countries in which the MNE operates.”

    David continues: “In theory, governments will be able to identify whether companies have engaged in transfer pricing and other practices that have the effect of artificially shifting substantial amounts of income into tax-advantageous jurisdictions.”

    “MNEs should monitor the development of the OECD’s recommendations on implementation approaches for these new reporting requirements, closely. The OECD is expected to issue a comprehensive package establishing protocols for inter-governmental exchange of the CbC template.”


    For further information about these new requirements, a more detailed report is available at:

    https://www.nexia.com/assets/publications/Base-Erosion-and-Profit-Shifting-DavidSlemmer.pdf
     

    For more information, contact:

    David Slemmer
    CohnReznick LLP, US
    T: +1 646 625 5732
    E: david.slemmer@cohnreznick.com

    www.cohnreznick.com


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    Note to editors:

    Nexia International is a leading worldwide network of independent accounting and consulting firms, providing a comprehensive portfolio of audit, accountancy, tax and advisory services.

    Nexia International does not deliver services in its own name or otherwise. Nexia International and its member firms are not part of a worldwide partnership. Nexia International does not accept any responsibility for the commission of any act, or omission to act by, or the liabilities of, any of its members. Each member firm within Nexia International is a separate legal entity.

    Nexia International does not accept liability for any loss arising from any action taken, or omission, on the basis of the content in this article or any documentation and external links provided. Professional advice should be obtained before acting or refraining from acting on the contents of this article.

    Any and all intellectual property rights subsisting in this document are, and shall continue to be, owned by (or licensed to) Nexia International Limited.

    References to Nexia or Nexia International are to Nexia International Limited.

    For more information, visit www.nexia.com.

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