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

The partnership model was looking antiquated even before the UK chancellor’s expected tax raid on LLPs was revealed. An additional tax burden may finally kill it off
The US’s GILTI regime will not be forced upon American multinationals in foreign jurisdictions, Bloomberg has reported; in other news, Ropes & Gray hired two tax partners from Linklaters
APAs should provide a pragmatic means to agree to an arm's-length outcome for an Australian entity and for the ATO, the tax authority said
Overall revenues and average profit per partner also increased in the UK, the ‘big four’ firm revealed
Increasingly complex reporting requirements contributed towards the firm’s growth in tax, it said
Sector-specific business taxes, private equity tax treatment reform and changes to the taxation of non-residents are all on the cards for the UK, authors from Herbert Smith Freehills Kramer predict
The UK’s Labour government has an unpopular prime minister, an unpopular chancellor and not a lot of good options as it prepares to deliver its autumn Budget
Awards
The firms picked up five major awards between them at a gala ceremony held at New York’s prestigious Metropolitan Club
The streaming company’s operating income was $400m below expectations following the dispute; in other news, the OECD has released updates for 25 TP country profiles
Software company Oracle has won the right to have its A$250m dispute with the ATO stayed, paving the way for a mutual agreement procedure
Gift this article