The times they are a-changin’
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The times they are a-changin’

By Tony Gorgas, KPMG’s Asia Pacific regional leader for Global Transfer Pricing Services.

The title to a famous Bob Dylan song written more than 50 years ago is quite apt with respect to capturing what is happening in the Asia Pacific (ASPAC) region in relation to the taxation of multinational enterprises (MNEs), particularly in the area of transfer pricing, and to the efforts of tax administrations to enforce the ever increasing rules and regulations in this area.

Historically, few ASPAC countries have been members of the OECD. The most recent ASPAC country to be admitted as a member was Korea in 1996. More recently, however, with changes to the global geo-political landscape and the advent of the G20 as the pre-eminent forum for global economic cooperation, large ASPAC economies such as China, India and Indonesia have played a more active role with respect to how the taxable profits of MNEs should be determined and how to counter multinational tax avoidance.

With the issue of the OECD's February 2013 report titled 'Addressing Base Erosion and Profit Shifting', followed not long after by the OECD's 'Action Plan on Base Erosion and Profit Shifting' (BEPS Action Plan), and the subsequent endorsement of the OECD's work by the G20, has come increasing realisation that multinational tax avoidance is a global issue that requires global solutions. As a consequence, the number of non-OECD and non-G20 countries participating in the OECD/G20's BEPS project has been increasing, including a number of non-OECD/non-G20 countries in the ASPAC region. This is shown in Table 1.

Table 1

ASPAC countries included in survey

OECD member

G20 member


in Forum on Tax Administration (FTA)

Participation in OECD’s BEPS-related technical work1

Signed Multilateral Competent Authority Agreement

on exchange of CbCR2

OECD Established 1961

G20 Established 1999

FTA Established 2002

BEPS project launched 2013

January 2016



Hong Kong






New Zealand



Sri Lanka




1 Source: Background brief: Inclusive Framework for BEPS Implementation, OECD, March 2016.

2 Australia, Japan and Malaysia signed on January 27 2016. China, India and Indonesia signed on May 12 2016.

The increasing participation by non-OECD and non-G20 ASPAC countries in the technical work of the OECD/G20's BEPS project and by their tax administrations in international fora and in adopting mechanisms for exchanging information to enable them to more efficiently and effectively address multinational tax avoidance, is having far-reaching impacts in the ASPAC region. These impacts are rapidly and radically changing the transfer pricing landscape with potentially significant implications for MNEs operating in the ASPAC region.

The OECD/G20 BEPS project will significantly impact MNEs operating in ASPAC countries

According to the OECD, international tax rules have revealed weaknesses that create opportunities for BEPS and estimates that the global loss of income tax could be between $100 to $240 billion annually. The losses arise from a variety of causes, including aggressive tax planning by some MNEs, the interaction of domestic tax rules, lack of transparency and coordination between tax administrations, limited country enforcement resources and harmful tax practices. In the OECD's view, this situation requires a bold move by policy makers to restore confidence in the international tax system and to ensure that profits are taxed where economic activities take place and value is created.

A key step in the direction of facilitating policy makers taking such a move was the issue of the OECD's final comprehensive BEPS package of 13 reports in October 2015 (OECD's final BEPS report). This package of measures was endorsed by G20 leaders at their November 2015 meeting in Antalya, Turkey. From a transfer pricing perspective, a key outcome of the OECD's final BEPS report was agreement on the need to introduce CbCR along with the associated Master and Local Files for large MNEs (ie those with global revenues exceeding €750 million ($830 million)) (Action 13 of the BEPS Action Plan).

As clearly shown in the country updates included in this survey, ASPAC countries are enthusiastically adopting CbCR irrespective of whether countries are members of the OECD or G20. As the following article shows, in May 2016, two-thirds of the ASPAC countries included in this survey have either already introduced, are in the process of introducing or have stated an intention to introduce CbCR, Master File and Local File.


The increasing participation by non-OECD/non-G20 ASPAC countries in the technical work of the OECD/G20's BEPS project and by their tax administrations in international fora is likely to result in increasing convergence of approaches with respect to the taxation of MNEs, particularly in relation to transfer pricing.

The end result is that the transfer pricing landscape in the ASPAC region will continue to change.



Tony Gorgas

Asia Pacific Regional Leader

KPMG's Global Transfer Pricing Services, Tax

KPMG Australia

Tower Three

International Towers Sydney

300 Barangaroo Avenue

Sydney NSW 2000

Tel: +61 2 9355 8851

Tony is the Asia Pacific Regional Leader in KPMG's Global Transfer Pricing Services (GTPS) practice and has 20 years of experience advising multinational groups on complex transfer pricing issues. With prior commercial experience negotiating arm's length pricing arrangements, Tony provides a practical interpretation of the complex technical rule book. Tony's abilities to influence and negotiate on behalf of KPMG Australia and KPMG member firm clients are the cornerstone of his reputation.

Tony's key strength is his leadership. He leads a number of transfer pricing projects in Australia and across the ASPAC region, and globally for key KPMG clients.

Tony has extensive contacts within the Australian Taxation Office (ATO). He is well experienced in negotiating favourable outcomes for clients, given his strong working relationship and reputation with the ATO's Senior Executives and Competent Authorities.

Tony has successfully concluded unique and valuable APAs (Advance Pricing Arrangements) involving business restructuring including resolution of collateral issues. He has concluded APAs on unilateral and bilateral bases, with key jurisdictions including Australia, US, UK, Japan, Korea, and he has valuable experience in the resolution of Mutual Agreement Proceedings between Competent Authorities.

Unless otherwise stated, all information in this report is based on the tax regulations for the countries reviewed as updated on or after May 1 2016, or from KPMG member firm professionals’ experience working with tax clients and tax authorities in their local countries.

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