The global business environment of 2021 looks very different to how it was this time last year. As expected, the COVID-19 pandemic created significant losses for many businesses. Guidance from the OECD was very much welcomed as businesses sought to work out the best ways to address the impact of the pandemic on TP arrangements.
Businesses across the globe continue to face a range of specific TP challenges. Tax experts in Sweden have the added burden of having to comply with Swedish VAT regulation while following the OECD TP Guidelines, which seems like an almost impossible task.
Russian tax authorities issued guidance in February 2021 on auditing intra-group services, and DAC6 implementation in Italy has introduced compliance activities for intermediaries and taxpayers where intra-group arrangements are required.
However, it is not all doom and gloom. COVID-19 has brought about the adoption of digital technologies and transformation quicker than expected and Indonesia is one country, among many, that has seen significant progress in its digital economy.
MNEs are looking to the future beyond the pandemic and are continuing to rise to the challenges of TP documentation requirements that for many includes a detailed value chain analysis, a vital framework for companies when planning and defending TP policies in the future. Of course, reporting requirements also extend to some Latin American countries, which must comply with BEPS Action 13.
There has been a steady increase in international tax disputes, with mutual agreement procedures (MAPs) increasingly becoming the preferred method to resolve TP disputes. However, in South Korea, there are cases in which TP issues cannot simply be addressed by MAP.
Looking further afield at global mobility, it can be argued that the implementation of the BEPS project by the Multilateral Instrument exacerbates tax and employment problems related to the international mobility of employees.
We hope you enjoy reading the 21st edition of our Transfer Pricing guide.
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