The Politics of Transfer Pricing

eclettertoirelandonapple

As the recent hearings in Parliament demonstrated, Transfer Pricing can damage public perceptions about a group and possibly their brand.

Transfer Pricing policies are no longer the domain of tax geeks, but are increasingly in the public domain. Groups need to assess their risk management framework for Transfer Pricing in terms of both Revenue authorities but also consumers and financial markets.

It is very frustrating for many companies who pay large tax bills that some multinationals are able to avoid doing so.”
Simon Walker, Director General, Institute of Directors, UK

Based on my experience of working with OECD and Developing country tax administrations (in the Tax and Development Taskforce), I can provide an objective risk analysis of the Transfer Pricing policies of a Group uncompromised by seeking further work on implementation or remediation.

  • Has a proper assessment of the impact of changing transfer pricing policy been made on earnings and share price?
  • What will be the outcome of the BEPS report (Base Erosion Profit Shifting)?
  • Does your group have in place contingency plans to address this?

BEPS

“The OECD will deliver a progress report to the G20 in early 2013 on actions to tackle the issue of BEPS, including strategies to detect and respond to aggressive tax planning and ensure better tax compliance. In addition to a clear need for better data and analyses, a reflection on the very fundamentals of the current rules also appears to be warranted. The reflection would primarily focus on issues around whether rules developed in the past are still fit the purpose in today’s business environment, particularly when applied to the increasingly digital economy, or whether there is a need for different solutions, as well as on options to implement reform in a streamlined manner.”

Intangible property is often taxed at very low rates – is this sustainable?

Caterpillar Case – Using a Swiss Tax Strategy to avoid U.S. Taxes