Why country by country reporting is not compatible with transfer pricing realities

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Why country by country reporting is not compatible with transfer pricing realities

mining50.jpg

An estimated $110 billion disappeared because of transfer mispricing on the import of crude oil in the EU and US between 2000 and 2010, a recent report from Publish What You Pay (PWYP) Norway said.

The report, as covered by www.tpweek.com, says that companies in the extractive industries are using rogue transfer pricing methods to transfer profits from the source countries to the companies themselves. PWYP, which campaigns for transparency in multinational entities’ financial reporting, also said tax administrations in developing countries rarely have the resources or the ability to check that transfer pricing is in-line with arm’s-length standards.

Country by country reporting (CBCR)

PWYP has put forward a policy proposal for consideration by the EU, which would require multinationals to disclose full financial statements on a per-country basis.

Janine Juggins, global head of tax for Rio Tinto, said she does not think the PWYP report is a fair reflection of the true situation: “It is not possible to accurately quantify the proportion of transfer pricing that is correct versus the proportion that is incorrect, nor would the publication of full financial statements change this conclusion.”

“Many related party transactions take place between countries that have extensive transfer pricing legislation, and transactions with entities in low tax countries will not withstand scrutiny unless supported by the facts,” Juggins added.

Companies in the extractive industries, like all multinationals, are already subject to transfer pricing rules in every operational country that has transfer pricing legislation. They are therefore required to maintain transfer pricing documentation to comply with the relevant laws and to avoid tax penalties, and are subject to tax return filing requirements and tax audits.

To read the rest of the story, visit www.tpweek.com.

more across site & shared bottom lb ros

More from across our site

Wim Wuyts, who had been head of the specialist tax network since 2017, is moving on to a new role with WTS’s Belgian member firm
MNEs are increasingly using algorithmic tools in TP. Sahasranshu Dash argues that data ethics should therefore plug directly into the TP design process
The Institute of Chartered Accountants in England and Wales also queried whether HMRC resources could be better spent scrutinising larger entities
Grant Thornton’s Austria tax head likens his practice to an escape room, shares his football coaching ambitions, and explains why tax is cool
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 EMEA Tax Awards
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 Asia-Pacific Tax Awards
The fates of pillars one and two hang in the balance after the US successfully threw its weight around in G7 and Canadian negotiations
Rafael Tena tells ITR about the ‘crazy’ Mexican market, ditching the hourly rate, and refusing to grow his fledgling firm in an ‘unstructured way’
It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
The sprawling legislation phases out Joe Biden-era green tax incentives for businesses; in other news, the UK will reportedly maintain its DST despite US pressure
Gift this article