world transfer pricing 2017 to world transfer pricing, 2017. this is the fourth year tp week has pub...

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World TransferPricing 2017The comprehensive guide to theworld’s leading transfer pricing firms

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Introduction 3

Global transfer pricing introduction 5

Argentina 10

Australia 15

Austria 20

Baltic States 23

Belgium 29

Brazil 33

Bulgaria 40

Canada 43

Chile 50

China 54

Colombia 59

Czech Republic 63

Denmark 67

Finland 72

France 76

Germany 84

Greece 93

Gulf Cooperation Council 96

Hong Kong 101

Hungary 104

India 108

Indonesia 117

Ireland 123

Israel 133

Italy 136

Japan 149

Luxembourg 158

Malaysia 167

Mexico 171

Netherlands 175

New Zealand 180

Norway 184

Peru 190

Philippines 194

Poland 198

Portugal 202

Romania 206

Russia 210

Singapore 220

South Africa 223

South Korea 226

Spain 232

Sweden 237

Switzerland 241

Taiwan 244

Turkey 247

UK 251

Ukraine 257

Uruguay 262

US 265

Venezuela 278

Vietnam 282

Index 285

World Transfer Pricing 2017 1

World Transfer Pricing 2017

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W elcome to World Transfer Pricing, 2017.This is the fourth year TP Week has pub-

lished its directory to the leading transfer pric-ing advisory firms around the world. The scrutiny on multinationals’ transfer pric-

ing (TP) operations has intensified year on yearsince this directory’s first edition, and 2016 sawseismic changes introduced in TP regulationsand documentation globally in response to theOECD Base Erosion and Profit Shifting (BEPS)Project. Being able to find an adviser with theknowledge to navigate this changing market canbe fundamental to a company’s TP policy. However, finding the right adviser to help

manage the uncertainty is not as simple as goingto the most-well known firm or individual. Eachcompany has its own unique structure andrequirements and finding an adviser who under-stands the business practicalities of a particularindustry, or has first-hand experience of theauthorities in a specific jurisdiction, is vital toaddress individual company needs.

World Transfer Pricing is the directory in-house tax and transfer pricing directors turn toin order to find the firms and advisers which cangive them support, tailored to their needs. Each edition rates the TP expertise offered in

more than 50 jurisdictions globally, giving taxexecutives the most comprehensive informationabout the market for TP advice.The publication is unique among directories

because it classifies professional services, lawfirms and other TP advice providers, includingeconomists, together, rather than looking atthem separately, because they undoubtedlycompete for work.

Not just size, qualityThis guide goes beyond just the size of the prac-tices. While breadth and depth are importantofferings, flexibility and innovation are also vital.

Obviously, not all jurisdictions are the same.The breadth of knowledge and expertiserequired to be a Tier 1 firm in a large jurisdic-tion with a mature transfer pricing regimeexceeds that which is required to be a Tier 1firm in smaller jurisdictions with less developedtransfer pricing regulations.It is usually clear-cut in most jurisdictions

covered in this publication where firms shouldbe placed relative to the tier criteria and eachother. The criteria (listed next to this introduc-tion) that cover size, breadth and depth of prac-tice, and specialisms, are important, but are notthe crucial factors. Quality of work and clientfeedback are the key considerations for ranking.The few marginal decisions required about

which firms should go in which tiers are madeaccording to the impact and innovation thatlawyers and advisers bring to client engagements.Much goes into that criterion – knowledge,

experience of advisers, attentiveness, diligence– to work out a seemingly intractable issuewhere the advice can be in conflict.It is in this context that TP Week presents

World Transfer Pricing 2017, our comprehen-sive guide to the world’s leading transfer pricingfirms. We hope it will help tax executives obtainthe best advice for their situation.

MethodologyTP Week researchers interviewed corporate taxand transfer pricing directors and their advisersby phone, e-mail and in-person to compile thetiers of leading firms and write the commen-taries for 51 jurisdictions in World Tax 2017.Each firm that was listed in last year’s edition

was given the opportunity to make a submis-sion. Other firms referred to during theresearch as having international tax capabilitiesin the jurisdiction concerned were also sentresearch questionnaires, which were also hosted


Introduction

online for the first time. Returning a question-naire or a participating in a research interviewdid not guarantee any firm a position in any ofthe tiers.Interviews with tax executives were an

important part of the research process. Peoplewere interviewed on an anonymous basis toencourage candour. We asked them questionsabout, for example, the quality of advicereceived, opinions about teams and individualadvisers and what their advisers did well orbadly.The objective of interviewing both practition-

ers and tax executives was to get an opinion oftransfer pricing advisers from their peers andtheir clients. This year, we placed a greateremphasis than ever before on interviewingfirms’ clients.Tax directors have their own view of the mar-

ket, based on the advisers they use, while prac-titioners often have a broader view of practicebecause they advise many more clients than thenumber of external advisers a tax director uses.

At the same time, there was a possibility ofbias and ulterior motive in what anyone con-tributed to the research and we tried to min-imise this as much as possible through verifyingeach piece of information supplied, particularlyopinions about other firms, which can some-times be based on hearsay rather than evidence.No recommendation from any adviser for

their own firm or their colleagues in that firmwas taken into account. Firms could not pay tobe included in the tiers or to have any individu-als mentioned but were offered – independent-ly and after the tiers were finalised – the oppor-tunity to list their professional details for a fee.Individuals, particularly those in leadership

positions, are mentioned in the text, but thisshould not be taken as definitive endorsementof their quality as these mentions are not basedon any scientific survey.Tiers of leading firms from 51 countries or

territories have been included.

Unique rankingsThis year, once again, leading individuals arehighlighted in the text about their firm in themarket commentaries on each country and ter-ritory, rather than being listed separately by spe-cialism.At the top end of the rankings are the firms

that have the greatest depth of resources, expe-rience, and range of specialisms. They are con-sidered the best teams overall for transfer pric-ing advice in the country concerned. Firms arelisted in alphabetical order within each tier.The important point to note about the rank-

ings is that all the firms listed have highly rep-utable tax individuals in their advisory teams.We hope you find World Transfer Pricing

2017 to be a valuable tool in helping you iden-tify the appropriate advisers in the jurisdictionscovered.

Joelle JefferisDeputy editor, TP Week


Tier criteria

Tier 1Firms have a leading reputation in theirjurisdiction. They have a varied portfolio of work.They offer a range of transfer pricing services.They boast a variety of different clients.

Tier 2Firms have a leading reputation in theirjurisdiction. They have a varied portfolio of work.They offer a range of transfer pricing services.

Tier 3Firms have a leading reputation in theirjurisdiction. They have a varied portfolio of work.

Tier 4Firms have a leading reputation in theirjurisdiction. They offer transfer pricing services.

http://www.worldtransferpricing.4

BEPS and Changes to OECD Transfer PricingGuidelinesAs a part of the BEPS project, Chapter I,Section D of the OECD’s Transfer PricingGuidelines will be deleted in its entirety andreplaced with a lengthy new discussion devel-oped in the context of the BEPS work. The new guidance is intended to insure that:

• Actual business transactions undertaken byassociated enterprises are identified, and trans-fer pricing is not based on contractual arrange-ments that do not reflect economic reality;

• Contractual allocations of risk are respectedonly when they are supported by actual deci-sion-making;

• Capital without functionality will generateno more than a risk-free return, assuring thatno premium returns will be allocated to cashboxes without relevant substance; and

• Tax administrations may disregard transac-tions when the exceptional circumstances ofcommercial irrationality apply. In combination, the changes are intended to

help align transfer pricing outcomes with thevalue creating activities performed by membersof a multinational group.According to the OECD, a “comparability

analysis” is at the heart of the application of thearm’s-length principle. Application of thearm’s-length principle is based on a comparisonof the conditions in a controlled transactionwith the conditions that would have existed hadthe parties been independent and undertaken acomparable transaction under comparable cir-cumstances. There are two key aspects in suchan analysis:1. Identify the commercial or financial relationsbetween the associated enterprises and the

conditions and economically relevant circum-stances attaching to those relations in orderthat the controlled transaction is accuratelydelineated; and

2. Compare the conditions and the economical-ly relevant circumstances of the controlledtransaction as accurately delineated with theconditions and the economically relevant cir-cumstances of the comparable transactionsbetween independent enterprises.In situations where a transaction has been

formalised by the associated enterprisesthrough written contractual agreements, thoseagreements, according to the OECD, provide astarting point for delineating the transactionbetween them. It also shows how the responsi-bilities, risks, and anticipated outcomes arisingfrom their interaction were intended to bedivided at the time of entering into the con-tract. However, the OECD states that the par-ties’ written contracts alone are unlikely to pro-vide all the information necessary to perform atransfer pricing analysis, or to provide informa-tion regarding the relevant contractual terms insufficient detail. Consideration must be given tothe functions performed, the assets used andrisks assumed, together with the characteristicsof property transferred or services provided, theeconomic circumstances of the parties and ofthe market in which the parties operate, andthe business strategies pursued by the parties.The OECD continues by stating that com-

pensation usually will reflect the functions thateach enterprise performs (taking into accountassets used and risks assumed). However, theactual contributions, capabilities, and other fea-tures of the parties can also influence theoptions realistically available to them.


There have been a number of significant transfer pricing developments in the US andinternationally over the past year. David Forst of Fenwick & West highlights a few.

Global transfer pricing introduction

Other items that the OECD puts specialfocus on include assembled workforce andgroup synergies, although, as with other pro-posed changes, the OECD does not explicitlystate how these changes are consistent with thearm’s-length standard. As for assembled work-force, the OECD states that the existence of auniquely qualified or experienced employeegroup may affect the arm’s-length price forservices provided by the employee group or theefficiency with which the services are providedor goods produced by the enterprise. As forgroup synergies, the OECD states that groupsynergies are often favourable to the group as awhole and therefore may heighten the aggregateprofits earned by group members, depending onwhether expected cost savings are in factrealised, and on competitive conditions. Chapter VI of the Transfer Pricing

Guidelines on intangibles was also replacedwith a new descriptive analysis. The OECDstates that legal rights and contractual arrange-ments form the starting point for any transferpricing analysis of transactions involving intangi-bles. The terms of a transaction may be found inwritten contracts, public records such as patentor trademark registrations, or in correspon-dence and/or other communications among theparties. When no written terms exist, or wherethe facts of the case, including the conduct ofthe parties, differ from the written terms of anyagreement between them or supplement thesewritten terms, the actual transaction may bededuced from the facts established, includingthe conduct of the parties.The OECD reiterates here that it is especial-

ly important to ensure that the group membersasserting entitlement to returns from assumingrisk actually bear responsibility for the actionsthat need to be taken and the cost that may beincurred if the relevant risk materialises. Theguidelines also state that it is quite commonthat actual profitability is different from antici-pated profitability and provide commentary on

the issue. For example, with so-called hard tovalue intangibles, the OECD states that actualoutcomes can provide a pointer to tax adminis-trations about the arm’s-length nature of theanticipated pricing arrangement agreed upon bythe associated enterprises, and the existence ofuncertainties at the time of the transaction. Ifthere are differences between the anticipatedprojections and the actual results that are notdue to unforeseeable developments or events,the differences may give an indication that thepricing arrangement agreed upon by the associ-ated enterprises at the time the transaction wasentered into may not have adequately takeninto account the relevant developments orevents that might have been expected to affectthe value of the intangible and the pricingarrangements adopted.

MedtronicIn Medtronic, Inc. v. Commissioner, T.C. Memo.2016-112, the US Tax Court rejected a $1.4 bil-lion transfer pricing tax deficiency asserted bythe IRS. The key issue resolved in favour of thetaxpayer was the allocation under section 482 ofprofits pursuant to an intercompany licence ofintangibles between Medtronic and its PuertoRican subsidiary, which the IRS contended wassubstantially undercompensated. Ultimately, the Tax Court found that the

Puerto Rican subsidiary contributed significant-ly to Medtronic’s profits and, as such, upheldMedtronic’s transfer pricing method, the com-parable uncontrolled transaction transfer pric-ing method (CUT), but with a number of signif-icant adjustments. In so doing, it rejected thecomparable profits transfer pricing method(CPM) proposed by the IRS, concluding thatthe approach taken by the IRS was “arbitrary,capricious, or unreasonable.” Medtronic’s Puerto Rican subsidiary

(MPROC), was responsible for manufacturingand selling medical devices. Medtronic andMPROC entered into four intercompany

Global



agreements. One of these agreements, an inter-company licence, permitted MPROC to utilisethe intangible property required to manufac-ture the devices. The IRS argued that more income should

have been allocated to Medtronic under theintercompany licence of intangibles because, inits opinion, the activities performed byMPROC to manufacture the devices failed tojustify the level of compensation it received.The IRS also argued that the functions providedby MPROC under each of the intercompanyagreements should have been aggregated underthe applicable transfer pricing regulations.Under this aggregation approach, the IRSsought to treat MPROC as a mere contractmanufacturer, downplaying MPROC’s contri-butions to the medical devices at issue and therisks it incurred. In response, Medtronic argued that MPROC

served a role far greater than a mere contractmanufacturer. Medtronic also argued againstaggregating the functions provided by MPROCunder the four intercompany agreements. As a threshold matter, the Tax Court

addressed the IRS’s application of the CPM,concluding that the IRS’s approach was “arbi-trary, capricious, or unreasonable” and, as such,constituted an abuse of discretion. In support ofits holding, the Tax Court heavily criticised theeconomic analysis of the IRS’s expert, includingthe expert’s failure to give appropriate weightto the role of quality as the essential driver ofsuccess in the manufacture and sale of thedevices at issue. The Tax Court also dismissed the IRS’s cen-

tral argument that Medtronic performed all ofthe economically significant functions, whileMPROC was “replaceable” and performed only“finished manufacturing” according to processesapproved by Medtronic. The Tax Court pointedout that MPROC owned capital (i.e. right tolicensed intangibles), purchased its own materi-als, and bore real market risks. In addition,

Medtronic did not guarantee that it would pur-chase any of the devices manufactured byMPROC, and MPROC was not guaranteed afixed return on its investments. The Tax Court further attacked the compara-

bles selected by the IRS’s expert. Many of thecompanies identified as comparables were dis-counted by the Tax Court because these compa-nies performed functions that MPROC did notperform, and only one comparable sold a similartype of medical device. The Tax Court alsonoted that differences in the products manufac-tured by the companies selected as comparablesby the IRS and MPROC’s profile suggested adifferent level of risk. The Tax Court also found it “disturbing” that

the IRS’s expert used the same comparables toanalyse Medtronic’s sale of components toMPROC, where Medtronic was the testedparty, noting that a components manufacturerhas a role different from that of a final productmanufacturer, such as MPROC.Contrary to the comparables used by the

IRS, the Tax Court held that the comparablesselected by Medtronic were sufficiently similarto the controlled transaction to form the basisof a CUT analysis, even though they were notidentical to the transactions at issue. Ultimately,the Tax Court adopted Medtronic’s CUT trans-fer pricing method, but made a number of sig-nificant upward adjustments to the applicableroyalty rate to take into account additional fea-tures such as MPROC’s know-how, profitpotential, and the scope of its products.

GuidantGuidant LLC v. Commissioner involves a largenumber of purchases, sales, licenses and provi-sions of services among six related US entitiesand a large number of foreign manufacturingand distribution affiliates. The IRS made a single adjustment to the tax-

able income of the US parent and did not deter-mine that any of the adjustments were the sep-

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arate taxable income of any of the US sub-sidiaries. The IRS also did not determine thespecific amount of the adjustment that relatedto tangibles, intangibles or services. The taxpayer moved for partial summary

judgment on the grounds that the IRS mustdetermine the separate taxable income of eachUS affiliate and make specific adjustmentsinvolving provision of intangibles, the purchaseand sale of tangible property, and the provisionof services. The court ruled in favour of the IRS, stating

that while making entity-specific adjustmentwould theoretically yield the most reliableresults, the taxpayer here did not provide theIRS with reliable information for entity-specificadjustments. In such a case, the court held thatthe IRS has the authority under the law to makea single adjustment, both in respect of relatedtaxpayers and in respect of different types oftransactions. The case, which was a summary judgement

motion, did not address whether the taxpayer’spricing was arm’s length.

Temporary RegulationsNew temporary transfer pricing regulations pro-vide for the coordination of § 482 with othercode and regulatory provisions, such a § 367(d).According to the preamble of the regulations,transfers of property subject to § 367 that occurbetween controlled taxpayers require a consis-tent and coordinated application of both sec-tions to the controlled transfer of property.Treasury and the IRS state the consistent

analysis and valuation of transactions subject tomultiple code and regulatory provisions isrequired under the best method rule describedin Treas. Reg. § 1.482-1(c). A best methodanalysis under § 482 begins with a considerationof the facts and circumstances related to thefunctions performed, the resources employed,and the risks assumed in the actual transactionor transactions among the controlled taxpayers,

as well as in any uncontrolled transactions usedas comparables. The preamble states that based on taxpayer

positions that the IRS has encountered in exam-inations and controversy, Treasury and the IRSare concerned that certain results reported bytaxpayers reflect an asserted form or characterof the parties’ arrangement that involves anincomplete assessment of relevant functions,resources, and risks and an inappropriately nar-row analysis of the scope of the transfer pricingrules. In particular, Treasury and the IRS areconcerned about situations in which controlledgroups evaluate economically integrated trans-actions involving economically integrated con-tributions, synergies, and interrelated value on aseparate basis in a manner that results in a mis-application of the best method rule and fails toreflect an arm’s-length result. New Temp. Treas. Reg. § 1.482-

1T(f)(2)(i)(A) provides that arm’s-length com-pensation must be consistent with, and mustaccount for all of, the value provided betweenparties in a controlled transaction, withoutregard to the form or character of the transac-tion. For this purpose, it is necessary to considerthe entire arrangement between the parties, asdetermined by the contractual terms, whetherwritten or imputed in accordance with the eco-nomic substance of the arrangement, in light ofthe actual conduct of the parties. The preamble says this requirement is con-

sistent with the principles underlying thearm’s-length standard, which hold that arm’s-length compensation in controlled transac-tions is equal to the compensation that wouldhave occurred if a similar transaction hadoccurred between similarly situated uncon-trolled taxpayers. Temporary Treasury Reg. § 1.482-

1T(f)(2)(i)(B) adds a new clause to the regula-tions’ aggregation rule to provide that this aggre-gation principle also applies for purposes of ananalysis under multiple provisions of the Code

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or regulations. A new sentence also elaborateson the aggregation principle, by noting that con-sideration of the combined effect of two ormore transactions may be appropriate to deter-mine whether the overall compensation is con-sistent with the value provided, including anysynergies among items and services provided.The temporary regulation does not retain thestatement in Treasury Reg. § 1.482-1(f)(2)(i)(A) that transactions generally will beaggregated only when they involve “relatedproducts or services.” Temporary Treasury Reg. § 1.482-

1T(f)(2)(i)(C) provides that, for one or morecontrolled transactions governed by one ormore provisions of the code and regulations, acoordinated best method analysis and evalua-tion of the transactions may be necessary toensure that the overall value provided (includ-ing any synergies) is properly taken intoaccount. A coordinated best method analysis ofthe transactions includes a consistent consider-ation of the facts and circumstances of the func-

tions performed, resources employed, and risksassumed, and a consistent measure of the arm’s-length results, for purposes of all relevant codeand regulatory provisions. For example, situations in which a coordinat-

ed best method analysis and evaluation may benecessary include: • Two or more interrelated transactions wheneither all of the transactions are governed byone regulation under § 482 or all are gov-erned by one subsection of § 367;

• Two or more interrelated transactions gov-erned by two or more regulations under § 482;

• A transfer of property subject to § 367(a)and an interrelated transfer of property sub-ject to § 367(d);

• Two or more interrelated transactions when§ 367(d) applies to one transaction and thegeneral recognition rules of the Code apply toanother interrelated transaction; and

• Other circumstances in which controlledtransactions require analysis under multiplecode and regulatory provisions.

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LEADING FIRMS

1 Bruchou, Fernández Madero & Lombardi, Taxand Argentina Deloitte Pistrelli, Henry Martin y Asociados (EY) PwC Rosso Alba, Francia & Asociados

2 BaseFirma Estudio O’Farrell Goldemberg & Asociados Grupo GNB KPMG Litvak & Asociados Luna Requena & Fernández Borzese Abogados (WTS Argentina) Teijeiro & Ballone

The past year has been a tough one for Argentinaeconomically. With high inflation rates acting as ahidden tax, many companies are struggling andforeign investors see Argentina as a risky countryto invest in because of the economic instability.While practitioners are optimistic that positivechanges will soon happen and that better times lieahead, the new government has a lot to clear upbefore Argentina’s economy is on stable ground.The tax authorities are reportedly being more

relaxed on audits in general, however certainsectors of the economy are being put under themicroscope, facing an increasing amount ofaggressive audits. The commodities sector inparticular has been targeted this year, according toDeloitte. However, the sector has seen positivechanges too, with the new government removing

export taxes on minerals, including on gold andsilver. The OECD’s BEPS programme, which is a major

talking point in many other jurisdictions, is not sucha pressing concern in Argentina. The country is anobserver of the programme, but nothing has yetbeen formally assessed in terms of legislation. WhileArgentina wants to become a member of the OECD,and is following certain processes such as Action 13on country-by-country reporting (CbCR), the country isalready following the principle of substance overform, which is very similar to the measures in theBEPS programme. “There is no need to implement many of the BEPS

measures here because Argentina is following theprinciple of substance over form which already cov-ers many of the issues addressed by BEPS,” saidMartin Barreiro, head of tax at Baker & McKenzie.“Argentine courts have been applying as interpreta-tion tools all the measures adopted by the OECDwhich were relevant for the cases handled by themin Argentina,” he added.

Tier 1 With 23 practitioners, Bruchou, Fernández Madero& Lombardi, Taxand Argentina is a full-service firmcapable of delivering various kinds of transfer pricingadvice. Led by Matías Olivero Vila, Bruchou’s lawyersprovide TP planning, litigation and compliance serv-ices to their clients. The team handles cases forprominent clients such as HSBC, Citibank andGarrigues, and many of its clients require daily taxadvice from the firm. The firm is a member of Taxand,which has member firms in more than 40 countries,allowing the firm to provide integrated tax advice


ArgentinaTax authorities Administración Federal de Ingresos Públicos (AFIP)Hipólito Yrigoyen 370, C1086ADD, Buenos Aires, 1086Tel: +54 0810-999-2347Website: www.afip.gob.ar

http://www.afip.gob.ar


worldwide. Team leader Olivero Vila joined the firmin 1993 and has earned numerous distinctions forhis work. Other members of the team include LibanKusa and Daniela Rey. Kusa specialises in tax andcustoms matters, while Rey is experienced in taxplanning and transactional tax matters. Deloitte’s Argentine branch is made up of two part-

ners and 26 other practitioners. Horacio Dinice over-sees the TP practice. Dinice is highlighted for hisexceptional skills in TP disputes by a competing firm. Clients of Deloitte mainly come from the food, fast-

moving consumer goods (FMCG) and agriculture,manufacturing, healthcare and energy and utilitiesindustries, although the firm advises clients from allsectors. The team is experienced in the restructuringand reengineering of regulatory, financial and busi-ness aspects of transactions, design and control oftransfer prices, advice on the resolution of controver-sies with tax authorities, and intangibles valuationamong other areas of transfer pricing. Silvana Blanco and Jorge Prats Vuotto assisted a

leading cosmetic manufacturer in developing asupply chain optimisation. Through this work, thefirm proposed a new TP policy for different transac-tions within the company and proposed a newintangible TP policy in a context of affiliates in dif-ferent countries.Pistrelli, Henry Martin y Asociados (EY) consists of

49 professionals fully dedicated to TP advisory anddocumentation. The TP practice has three partners,including head of TP Gustavo Scravaglieri. The firm isfull service, and provides advice to various sectorsincluding healthcare, technology, media andtelecommunications (TMT), food, fast-moving con-sumer goods and agriculture, computers, software,online and digital and energy and utilities. Clientsdescribed the firm as “one of the best in Argentina”.A competing firm recognised partner MiltonGonzález Malla for his skills in documentation proj-ect management.PwC’s TP department in Argentina is led by partner

Juan Carlos Ferreiro. The firm has a multidisciplinaryteam of transfer pricing professionals which helpsclients with understanding and assessing the tax

impact of their business operations. Other firms inthe market recognised Ferreiro’s skills in documenta-tion project management, while partner Eduardo GilRoca, who has been with the firm for 23 years, wasacknowledged for being experienced within TP dis-putes. Cristian Rosso Alba oversees the transfer pricing, cus-

toms valuation and tax controversy practice of RossoAlba, Francia & Asociados. The TP team consists oftwo partners and seven other fee earners. MariaFernanda Minetto and Noelia Mauro are two new TPprofessionals who joined the firm in the last year.The firm advises half of the 20 largest exporting

companies in Argentina, including Ford and NobleGrains. The firm also regularly works with other lawfirms, and acted as co-counsel on a case for BungeArgentina with two other big law firms. The matterwas a TP assessment, and the firm was hired to pro-vide specific advice regarding the transfer pricingcomplexities of the case. The firm’s clients come, in the main, from the food,

FMCG and agriculture, manufacturing, energy andutilities, healthcare, and TMT industries. A client described the firm as “one of the best”,

while a practitioner at another firm called Rosso Alba“a shining star within tax”.

Tier 2A member of an international network, BaseFirma iscapable of providing advice to companies far beyondthe borders of Argentina. The firm, which consists ofthree partners and three other professionals, hasbeen practicing since 2002 and works with manyEuropean and American companies. The firm’s main services include helping compa-

nies save substantial amounts of taxes through taxplanning and representing clients in audits. It alsoprovides re-structuring and risk assessment. Ricardo Rosero, who oversees the practice, recent-

ly helped a client design a strategy for documentingcontract manufacturing and distribution activities inArgentina, Uruguay, Chile, Peru, Colombia andVenezuela. A challenging aspect of the deal was thatthe companies in Argentina and Venezuela were

Argentina


reporting recurrent losses, and Rosero helped theclient create and support adjustments to substanti-ate those losses.The firm advises clients from the TMT, transport,

computers, software, online and digital, energy andutilities, healthcare, manufacturing, hospitality, andfood, FMCG and agriculture industries.Four partners and three other fee earners make up

the TP practice of Estudio O’Farrell. The team isexperienced in providing advice to industries such asfood, FMCG and agriculture, energy and utilities, com-puters, software, online and digital, manufacturing,and TMT. The practice has a work unit specialised in com-

plex tax lawsuits, with particular experience in dis-putes subsequently appealed to the NationalSupreme Court of Justice. The team also assists withpreparation of documents and the interpretation ofArgentine TP rules and OECD guidelines, amongother things. The team has experience dealing withdifferent areas of the judicial branch, from theNational Tax Court to the Supreme Court of Justice. A

client said that Estudio O’Farrell were “among thebest”. Another client said: “I believe that EstudioO’Farrell’s tax department is the best in this matter[tax advice] in Argentina.”The practice is overseen by Miguel Tesón, who has

broad experience in tax litigation as well as in com-plex litigation. Cecilia Goldemberg, managing partner, leads the

TP practice of Goldemberg & Asociados. The firmoffers documentation, planning, interpretation sup-port and litigation services, and its clients are gener-ally involved in the business of trade, industrial, man-ufacturing, service, energy and entertainment. It alsoadvises non-profit and business chambers. Grupo GNB’s transfer pricing department of two

partners and five other tax professionals is led byJuan Elias Pérez Bay. Several of the firm’s profession-als are professors at prestigious universities inArgentina, and they offer various services within TPdisputes and TP compliance.The firm’s work includes assisting a client on an

analysis of the transfer pricing impact on the opera-

Argentina


Tax rates at a glance (As of April 2016)

Corporate income tax rate 35% (a) Capital gains tax rate 15/35% (b) Branch tax rate 35% (a)

Withholding tax Dividends 10/41.5% (c) Interest 15.05/35% (d) Royalties from patents, 21/28% /

know-how, etc. 31.5% (d)

Net operating losses (years) Carryback 0 Carryforward 5

a) A tax on minimum presumed income ispayable to the extent it exceeds regularcorporate income tax for the year.

b) The 15% rate applies to capital gains derivedby foreign residents from sales of shares,

quotas, and other participations in entities,titles, bonds and other securities. Similartreatment is granted to Argentine individuals.Argentine corporate residents are subject to theregular 35% corporate rate.

c) The 10% dividend withholding tax is calculatedon after-tax dividend distributions. However, ifthe amount of a dividend distribution or a profitremittance exceeds the after-tax accumulatedtaxable income of the taxpayer, a separate finalwithholding tax of 35% may be imposed onthe excess, regardless of the application of thegeneral 10% withholding tax, thereby resultingin an effective rate of 41.5%.

d) These are final withholding taxes imposed onnon-residents only.

Source: EY 2016 Worldwide Corporate Tax Guide


tions of a joint venture, and changing a client’s busi-ness model. KPMG’s Argentine branch is led by Marcelo

Castillo. Castillo is experienced in advising multina-tional companies on issues concerning complianceand tax planning for cross-border transactions forsectors that include food and beverage, technologyand pharmaceutical. Nicolas Litvak oversees the growing TP firm Litvak

& Asociados. The firm has three partners and fourother professionals; two work in TP disputes and fivein TP compliance. The firm provides advice to mostsectors, and recently, the firm advised a companywithin the oil and gas industry on the rental ofequipment pricing redefinition. The matter involved arestructuring of TP policy regarding equipment rental.The case was managed by Litvak and AntonietaTorres. Torres is the supervisor of transfer pricingwithin the firm and has more than five years of expe-rience in the area. Litvak is seasoned within corpo-rate tax, tax law, cross-border transactions, interna-tional tax, and tax controversy, compliance and audit. The firm also advised a company on a deal that

involved determining export prices to its main client.The advice given included analysing the cost struc-ture and commercialisation chain.

A client describes their experience as “excellent”,saying: “Nicolas Litvak has a lot of experience in thistype of advisory.”The transfer pricing practice at Luna Requena &

Fernández Borzese Abogados (WTS Argentina) offersits services to clients in the manufacturing, technology,media and telecommunications, healthcare, food, FMCGand agriculture, financial services and computers, soft-ware, online and digital industries. The firm offers arange of TP services such as development of TP policiesand negotiation with tax authorities regarding TP audits.The firm is developing TP policies based on the

OECD’s recommendations for a group of manufactur-ers, distributors and suppliers in Hong Kong andSouth America. Three partners and two other professionals make

up the TP practice at Teijeiro & Ballone, led byGuillermo Teijeiro. The firm recently advised a clienton the validation and justification of the amounts ofroyalties agreed upon by the parties as part of theongoing advice related to the inter-company licenceagreements. The case was led by Mariano Ballone,senior tax partner in the firm. Clients of the firmmainly come from the TMT, manufacturing, food,FMCG and agriculture, energy and utilities, and com-puters, digital, software and online industries.

Argentina


Luna Requena Fernández BorzeseAv. Pte. Roque Sáenz Peña 637 Floor 3°(C1035AAB) Ciudad Autónoma deBuenos AiresArgentinawww.lf-abogados.com

Key contact:Fernanda [email protected] +54 115 236 9990

Argentina


http://www.lf-abogados.com



LEADING FIRMS

1 Baker & McKenzie Deloitte EY KPMG PwC

2 Grant Thornton Greenwoods & Herbert Smith Freehills TP Equilibrium

3 Ashurst Clayton Utz DLA Piper

Australia’s 2016-2017 federal budget (released inMay 2016) saw the government amend its transferpricing rules to incorporate the OECD’s BEPS recom-mendations. The changes came into effect July 12016. This new guidance from the OECD, which includes

changes to the handling of intangibles, will strength-en the Australian Tax Office’s (ATO’s) ability to chal-lenge transfer pricing arrangements said DixonHearder, head of transfer pricing at Baker &McKenzie.He also pointed out a growing trend for tax and

transfer pricing audits which increasingly draw onnew law developments like the multinational anti-avoidance law (MAAL) (introduced in January 2016)and the diverted profits tax (DPT) (proposed in the2016-2017 budget). “If companies have MAAL and

DPT issues and the positions are not resolved, it willbe more difficult to get an advance pricing agree-ment (APA). On the other hand the ATO may encour-age APAs to those [companies which have] resolvedtheir positions with MAAL and DPT laws,” addedHearder. Tony Frost, managing director at Greenwoods &

Herbert Smith Freehills, described the proposedAustralian DPT as an “unfortunate development”.Frost said the proposal, modelled on the UK’s DPT,which was introduced last year, goes beyond whatthe OECD set out in the 15 BEPS action points.He also noted “Uncoordinated unilateral meas-

ures like diverted profits taxes will create consider-able uncertainty and may lead to increased dis-putes between countries and companies as tohow to divide up tax revenue from multinationalcompanies.” On top of these new laws, the ATO has been given

more resources. In the Budget, the governmentannounced the establishment of a new TaxAvoidance Taskforce within the ATO. This taskforce ofmore than 1,000 officials will enhance audit activitiestargeting multinationals, large public and privategroups and high net wealth individuals. The ATO hasalso expanded its whistleblower integrity and protec-tion provision to encourage and protect individualswho disclose information to the ATO on tax avoid-ance behaviour and other tax matters. This measurewill take effect from July 1 2018.“Clients are now more careful to not overlook state

taxes which includes land tax, payroll tax and stampduty as the revenue authority is keen to aggressively


AustraliaTax authorities Australian Taxation OfficeGround Floor, Ethos House, 28-36 Ainslie Ave, Civic Square ACT 2600Tel: +61 2 6216 1111Fax: +61 1300 097 953Email: [email protected]: www.ato.gov.au


http://www.ato.gov.au

improve its revenue bases,” said Jock McCormack,head of transfer pricing at DLA Piper. Not only has Australia become a “first-mover”

nation on TP issues, but several of Australia’s initia-tives exceed the recommendations of the OECD, par-ticularly in respect of the country-by-country report-ing (CbCR) requirements, said Leslie Prescott-Haar ofTP Equilibrium. As a result “the complexity and extentof transfer pricing risks for significant global entitieshas increased considerably, as has their complianceburden,” she added.

Tier 1Dixon Hearder leads Baker & McKenzie’s transferpricing team in Australia, which comprises two part-ners and seven other professionals. Its transfer pric-ing practice includes economists, accountants, valu-ation specialists, direct and indirect tax professionalsas well as legal specialists in intellectual property,corporate law, contracts, employment and disputeresolution. Jun Au, Jasmine Gharib, and AlexandraStead joined the team as associates in the last yearand Thomas Brennan has joined this year as senioreconomist. Hearder is respected for his ability to provide inte-

grated transfer pricing, customs and indirect taxadvice for cross border transactions, restructures, andintegrations. He has actively engaged with the ATOon the MAAL and used his TP experience to assistclients in several MAAL cases. The firm has worked a lot in the past year on tax

audits in transfer pricing, to help multinationalsunderstand the new unilateral laws including MAAL. One client said: “I have had very positive experi-

ences working with Dixon’s team in Sydney. Ourcompany depends on Dixon’s broad depth of tech-nical expertise spanning not only transfer pricingmatters (strategic planning, compliance, auditdefence/controversy), but also indirect tax matters,including stamp duty and GST. We also workedclosely with Dixon on a variety of M&A integrationprojects involving Australian operations.”Deloitte’s transfer pricing practice is headed by

Fiona Craig. The team consists of nine partners and

55 tax professionals, including Brad Edward whowas recently hired from the ATO. The practice offers transfer pricing advisory and

documentation service, APA, audit defence, mutualagreement procedures (MAP), and business modeloptimisation. The firm has heavily engaged with innovative

technology solutions this year. This has involvedstreamlining the collecting and processing of dataand information needed to make up-to-date busi-ness decisions. This function is becoming moreimportant as transfer pricing challenges are becom-ing more difficult in an increasingly transparent,global environment. The partners and directors in the practice are active

in advising on the adoption of OECD’s BEPS recom-mendations into the Australian rules.EY’s transfer pricing team offers a full suite of trans-

fer pricing services to various industries including pri-vate clients. The team helps clients to design, oper-ate, document, evaluate and defend transfer pricingpolicies and assists clients by helping them to buildpractical and pragmatic strategies to reduce anypotential transfer pricing risks as well as improve itsefficiencies. KPMG Australia’s TP practice, which comprises six

partners and 53 other professionals, is led by FrankPutrino. Over the past year the firm’s transfer pricingpractice has grown, with 15 new hires across allstaff levels. The top five industries that the firm advises in are

digital and online services, technology, oil and gas,transport and logistics and pharmaceuticals. As transfer pricing continues to be a key focus area

for the government, the firm continues to invest in itsTP service offering. Through participation in the legisla-tive and rulings advisory processes and considerableexperience gained through long-term relationshipswith a broad range of companies, the transfer pricingteam provides expertise on all areas of compliance,future planning and risk management to businesseswith international related party dealings (IRPDs). In the past 12 months, the TP team was busy

assisting clients to address challenges arising from

Australia



the new country-by-country reporting (CbCR) regime,helping out with APAs and various other transfer pric-ing works. PwC’s TP practice is managed by Pete Calleja,

who is also a member of the firm’s global leader-

ship team for transfer pricing services. Calleja has worked in 30 countries overseeing

the implementation of the most suitable transferpricing methods across a wide variety of businessarrangements.

Australia


Tax rates at a glance (As of January 1 2016)

Corporate income tax rate 30% (a)Capital gains tax rate 30% (a)Branch tax rate 30%

Withholding tax Dividends Franked n.a. Unfranked 30% (b) Conduit foreign income n.a. (c) Interest General 10% (d) Interest paid by Australian branch

of foreign bank to parent 5% (e) Interest (debentures, state and federal

bonds and offshore banking units) n.a. (f) Royalties from patents, know-how, etc. 30% (f) Construction and related activities 5% (h) Fund payments from managed

investment trusts 15% (i) Branch remittance tax n.a.

Net operating losses (years) Carryback 0 Carryforward Indefinite

a) The rate is 28.5% for eligible small businessentities with turnover of less than AUD2 million.For corporations, capital gains are taxed at therelevant corporate income tax rate.

b) This is a final tax that is imposed on paymentsto non-residents only. A reduced rate (in recenttreaties, reduced rates typically are 0%, 5% or15%, depending on the level of ownership)applies to residents in treaty countries.

c) An exemption from dividend withholding taxapplies to the part of the unfranked dividends

that is declared in the distribution statement tobe conduit foreign income.

d) In general, this is a final withholding tax that isimposed on payments to non-residents only.However, withholding tax is imposed in certaincircumstances on interest paid to residentscarrying on business overseas through apermanent establishment (branch). ModernAustralian tax treaties exempt government andunrelated financial institutions from withholdingtax.

e) Interest paid by an Australian branch of a foreignbank to its parent is subject to a rate of 5% onthe notional interest rate based on the LondonInterbank Offered Rate (LIBOR).

f) Unilateral exemptions from interest withholdingtax are provided for certain publicly offereddebentures, for state and federal governmentbonds and for offshore borrowing by offshorebanking units.

g) In general, this is a final withholding tax that isimposed on gross royalties paid to non-residents.A reduced rate (5% in recent treaties) applies toresidents of treaty countries.

h) The filing of an Australian tax return to obtain arefund may be required if this withholding resultsin an overpayment of tax. A variation of the rateto mitigate the adverse cash flow impact isavailable to certain taxpayers that have previouslyfiled tax returns in Australia.

i) Effective from July 1 2012, managed investmenttrusts that hold only newly constructed energy-efficient commercial buildings may be eligible fora 10% withholding tax rate.


The TP team offers clients various focused serv-ices such as alternative dispute resolution, TP doc-umentation, financial transactions, and APA andMAP. The firm provides tactical analysis on BEPS particu-

larly related to Australia, as well as insights to tax-payers on changes to the global tax systems.

Tier 2Grant Thornton’s transfer pricing team is led byJason Casas, the sole partner of the firm, supportedby nine other tax professionals. The team works col-laboratively with the rest of the firm to deliver solu-tions in all areas including commercial solutions. The firm offers clients various services including

preparing transfer pricing documentation, assistingcompanies’ communication with the ATO, transferpricing planning and supply chain optimisation. Themain industries the firm advises on include mediaand technology, financial services, energy and utili-ties, healthcare, transport, and manufacturing. The TP team works closely with other offices in

Asia Pacific region including Malaysia, Singapore, andIndonesia to support mid-sized businesses grow inthese key markets. The team members regularly trav-el to and from Malaysia, Singapore and the UnitedArab Emirates, providing comprehensive services toclients. Notably this year, Casas and Murat Cihanger

helped a client to manage its transfer pricing andthin capitalisation risks, specifically with the prepara-tion of an arm’s-length debt test. The deal was val-ued at $55,000 and was completed in August 2015. Greenwoods & Herbert Smith Freehills combine

their service offerings to provide integrated advisoryservices across all areas of commercial law, includingtax investigations and disputes and stamp duty.Greenwoods is a specialist tax advisory firm whileHerbert Smith Freehills (HSF) is a commercial law firm. Tony Frost is the managing director of Greenwoods

and Hugh Paynter is a partner leading the commer-cial litigation and dispute resolution team of HSF. Greenwoods and HSF together offer comprehensive

advice and services in a wide spectrum of taxation

with particular focus on income and capital gains tax,tax avoidance, international tax, GST, stamp duty,employment tax issues, charitable and not-for-profitorganisations, and tax investigations and disputes. Greenwoods and HSF’s industry specialisations

include real estate, financial services and banking,energy and resources including mining projects andinfrastructure.Its practice has good relationships with the ATO,

state and territory revenue offices and state and fed-eral treasuries, helping clients to achieve their com-mercial objectives with positive endorsement bythose authorities.TP Equilibrium, part of the Duff & Phelps Global

Transfer Pricing Alliance, covers both the Australianand New Zealand transfer pricing markets. Led byLeslie Prescott-Haar, the practice includes three othertax professionals. Sophie Day joined the firm as ananalyst in July 2015. The firm has long term specialist experience in

transfer pricing, covering various industries in bothAustralian and New Zealand markets. It has particu-lar expertise in disputes and litigation matters as wellas providing APA advice. The main industries the team advises on are finan-

cial services, food and fast-moving consumer goods(FMCG), healthcare, manufacturing, and technology,media and telecommunications (TMT).In May 2016, Prescott-Haar and Stefan Sunde car-

ried out a detailed research and analysis of the BerryRatio, including close consideration of comparabilityissues and potential adjustments for an Australiantaxpayer.

Tier 3Ashurst Australia’s tax practice is led by PeterMcCullough, who has more than 25 years of experi-ence in advising clients on extensive national andinternational income tax matters. He is specialised inmatters related to M&A, privatisations, infrastructuretransactions, structured finance and capital marketmatters, private equity and fund structuring, interna-tional tax planning, group restructures and generalcorporate taxation issues.

Australia



The firm’s tax services include transactions, taxplanning, indirect tax, transfer pricing, structuredfinancial products, corporate income tax, revenueauthority investigations and dispute resolution, duediligence exercises, prudential reviews and interna-tional tax law. The key clients of the practice come from banking,

construction, oil and gas, insurance, technology, andinvestment funds. Clayton Utz’s transfer pricing team, led by Andrew

Sommer, boasts three partners and five other profes-sionals. Niv Tadmore oversees the Melbourne taxand transfer pricing team, and is a member of theAustralian Treasury’s BEPS advisory group. Sommer and Tadmore are experienced advisers in

all aspects of transfer pricing, including advising onaudits, negotiation of APAs, dealing with the ATO, andreducing the risk of transfer pricing disputes by advis-ing on documentation.The transfer pricing team assists clients across a

variety of industries including oil and gas, manufac-turing, pharmaceuticals and financial services, andwas also involved in a number of transfer pricing dis-

putes for key participants in the energy and resourcesand pharmaceuticals industries in the past year. Jock McCormack leads DLA Piper’s transfer pricing

team in Australia. Its tax practice is supported by twopartners, another consultant at partner level and twoother professionals. Melissa Lim joined the firm inSeptember 2015. The five biggest industries for the firm’s transfer

pricing practice are technology and online and digitalservice, education, energy and utilities, financial serv-ices and FMCG. Over the past year the team has advised multina-

tional clients particularly across education, mediaand manufacturing sectors on complex and sensitivetransfer pricing matters leveraging its firm’s globalnetwork of lawyers and economists.The firm worked on various transfer pricing deals

over the past year, advising on the practical applica-tion of the new Australian MAAL. The team alsohelped both Australian clients operating globally andmultinationals operating in Australia with their taxplanning to ensure regulatory compliance and placeefficient tax structures.

Australia


LEADING FIRMS

1 Deloitte EY KPMG PwC

2 BPV Hügel Rechtsanwälte LeitnerLeitner

3 Freshfields Bruckhaus Deringer

It has been a busy year for transfer pricing profes-sionals in Austria as the demand for services hasdrastically increased and clients are seeking moreadvice than in the past.

As a result of a tax reform which came into effecton January 1 2016, the first income tax bracket wasreduced to 25% and anti-fraud provisions were intro-duced. However one of the biggest influences onAustria’s tax environment has been the OECD’s BEPSproject, which remains a significant challenge formany taxpayers due to its complexity and the uncer-tainty it has brought.

This has resulted in clients trying to adapt to thenew system and looking at their structures leading toan increase in the demand for transfer pricing serv-ices and advice.

“Clients are aware of the changes, and thankfullythey take it seriously and ask for advice on how toadapt to the new situation,” said Michael Sedleczek,head of tax and transfer pricing at Freshfields.

As a result of the changing tax environment, theAustrian tax authorities have adopted a more aggres-sive approach, particularly with regards to transfer

pricing. The market is coping with much moredemanding tax investigations by the authorities, fol-lowed by disputes. The authorities are said to bepreparing themselves by hiring extra staff and manytaxpayers face regular tax audits and problems withthe authorities.

Although a lot of the initiative remains policy, somemeasures have been implemented. On January 272016, Austria – and 30 other countries – signed a taxco-operation agreement to allow automatic sharingof country-by-country information as part of the BEPSinitiative.

On May 9 2016, the Austrian Ministry of Financepublished draft legislation to implement the OECD’sthree-tiered approach to TP documentation consist-ing of country-by-country reporting (CbCR), master fileand local file. According to the draft law, the require-ment will be effective for fiscal years starting fromJanuary 1 2016.

While other jurisdictions have been quick to imple-ment the automatic exchange of information provi-sion post-BEPS, Austria, similarly to neighbouringSwitzerland, has historically maintained a highdegree of banking secrecy. This is set to change asa further act was adopted in July 2015 which willresult in a loosening of the banking secrecy and givetax authorities more access to banking data.

“We had quite a strict bank secrecy in Austria forquite a long time and recently it has been prettymuch abolished, so it’s no longer as strict as it hasbeen,” said Karin Spindler-Simader, tax manager atTJP.

A central register of bank accounts and securitydepots will be set up and banks will have to reportall capital outflows exceeding €50,000 ($56,000)


AustriaTax authorities Federal Ministry of FinanceJohannesgasse 5, 1010 ViennaTel: +43 50 233 561Website: english.bmf.gv.at


and capital inflows of €50,000 from Switzerland andLiechtenstein to and from bank accounts and secu-rity depots of individuals to the Austrian Ministry ofFinance.

The legislative changes are expected to continue inthe coming year. Sedleczek said: “In Austria, theimplementation of the transfer pricing documenta-tion will come sooner or later.” He said other mainlegislative developments will relate to hybrid struc-tures and BEPS.

Tier 1Deloitte’s transfer pricing team in Vienna has contin-ued to grow over the past year and consists of 16professionals specialising in transfer pricing andinternational tax. The team is headed by AndreaLahodny who has more than 20 years of experienceand has been listed among the leading TP advisersby Euromoney since 2008. Lahodny specialises inadvance pricing agreements (APAs), tax auditdefence and arbitration procedures. Gabriele Holzinger, who has almost 20 years of

experience in international tax law and transfer pric-ing, works alongside Lahodny and specialises incross border financial transactions and intellectual

property transfer pricing projects. The team was high-ly recommended by clients for its “to-the-point”approach to transfer pricing issues.

One client said: “I am very happy working withGabriele Holzinger from Deloitte in Austria – she isreliable, practical and experienced.”

Since 2015, the senior manager Karin Andorfer hasbecome responsible for TP projects in the Linz andSalzburg offices and Deloitte’s presence in Austrianow stretches outside of Vienna.

The team maintains a strong relationship with theAustrian Ministry of Finance and tax administrationand Lahodny often speaks at tax authority trainingevents. The accounting firm regularly hosts transferpricing seminars.

The EY transfer pricing team of 19 professionalsis headed by Andreas Stefaner. It offers tailor-made TP strategies to support a company’s posi-tion and business model, based on the team’sknowledge of international tax laws, rulings andregulations. The team provides clients with a fullrange of services including documentation, restruc-turing and policy advice. The firm is an internation-al favourite benefitting from its unique global per-spective and network.

Austria



Corporate income tax rate 25% (a) Capital gains tax rate 25%

Withholding tax Dividends 25/27.5% (b) Interest (from bank

deposits and securities only) 0/25% Royalties from patents,

know-how, etc. 20% (c)

Net operating losses (years) Carryback 0 Carryforward Unlimited (d)

a) This rate applies to distributed andundistributed profits.

b) In general, this withholding tax applies todividends paid to residents and non-residents.An Austrian corporation is generally required towithhold tax at a rate of 27.5%. However, if thedistributing company has evidence of thecorporate status of the investor, it may withholdtax at a rate of 25%. Certain dividends paid toAustrian and European Union (EU) companiesare exempt from tax. In addition, a reduction inor relief from dividend withholding tax may bepossible under double tax treaties.

c) This withholding tax applies to non-residents. d) The offset of loss carryforwards against taxable

income is limited to 75% of taxable income inmost cases.


The transfer pricing team at KPMG offers a full suiteof services including documentation, negotiatingAPAs, litigation, planning and supply chain optimisa-tion. The team works closely with the firm’s econo-mists from the financial advisory division for morecomprehensive economic aspects of transfer pricing.Senior manager Werner Rosar specialises in transferpricing and oversees the practice alongside a num-ber of tax partners with outstanding transfer pricingexpertise including Sabine Beregger, FlorianRosenberger and Barbara Polster.

The Austrian PwC transfer pricing team comprisesa mix of economists, accountants and tax profes-sionals and benefits from PwC’s global financial serv-ices transfer pricing network (FSTP). The team is ledby the head of tax Herbert Greinecker, who spe-cialises in international tax law and restructuring andhas more than 25 years’ experience as a tax auditorand adviser.

The Austrian based accounting firm offers coreservices including dispute resolution, complianceand documentation, planning and APAs.

Tier 2BPV Hügel Rechtsanwälte’s transfer pricing team isheaded by Hanns Hügel and Gerald Schachner. Theteam of five partners and four tax professionalsadvises domestic and foreign clients on a range ofTP issues in relation to cross-border transactions andfinancing. The team also offers transfer pricing serv-ices in the form of documentation and restructuringadvice.

Hügel specialises in M&A transactions, corporate lawand arbitration and is a long-standing lecturer at theUniversity of Vienna. Schachner is a trained tax adviserand attorney with expertise in international tax law. Clemens Nowotny is the head of LeitnerLeitner’s

TP team and specialises in a range of tax servicesincluding transfer pricing, group taxation and themonitoring of inbound investment. The firm offers afull range of transfer pricing services including riskidentification, implementation of new transfer pricingmodels, conceptual design and documentation. Akey partner on the team is Manfred Wänke whoworks closely with Nowotny and specialises inAustrian and international tax law, reorganisation,due diligence, M&A and expatriates.

Tier 3The transfer pricing team at Freshfields BruckhausDeringer is headed by Michael Sedlaczek, who isalso the head of tax and works closely with ClausStaringer, a principal consultant who has been withthe firm for more than 18 years. The two work along-side six other full-time professionals and offer a widerange of tax services.

Staringer is the go-to person for transfer pricingservices and specialises in documentation and litiga-tion. Sedlaczek specialises in financial institutions,family businesses and private clients and the teamwork in specific industries including gaming andautomotive. The tax department focuses on corpo-rate tax, M&A, group reorganisations and financialinstitutions.

Austria



LEADING FIRMS

1 Deloitte EY KPMG PwC SORAINEN

2 Gencs Valters Law Firm

3 Cobalt Tark Grunte Sutkiene

In the Baltic States of Estonia, Latvia and Lithuania itis not yet clear to what extent the OECD’s BEPS pro-ject’s proposals will be adopted, meaning that theimpact BEPS will have on the market and the taxpay-ers in the region is difficult to assess.

While firms are trying to prepare for expectedimplementation, the advisory industry for transferpricing in the Baltics is in an adjustment period.Advisers think there is a reluctance from certain sec-tors of the tax advice industry to invest in transferpricing advice and services, or for advisers to branchout on their own, as the direction of the marketremains uncertain.

The watch word at the moment is uncertainty, sothe need to obtain preliminary rulings wherever pos-sible is quite pressing, according to Andra Rubene,tax partner at Tark Grunte Sutkiene. “The tax author-ities often do provide rulings, but these are often

quite general rulings with a lot of disclaimers, so theyare not always useful. But, we do advise clients toattempt to obtain them wherever that is possible,”Rubene said.

Another important factor is that the market fortransfer pricing in the Baltic States is in its relativeinfancy. While Lithuania was the earliest adopter in2001, Estonia only established its rules in 2006and Latvia had no formal requirement to preparetransfer pricing documentation until 2012. Thismeans that, while they do exist, there is only asmall number of firms specialising in transfer pric-ing in the Baltics.

Advisers are expecting that over the next year, theamount of audits taking place and the sophisticationof the tax revenue authorities across all three stateswill increase. Advisers report that all of the BalticStates have been investing heavily in their revenueservices in order to maximise tax yield.

“The tax authorities are looking for situationswhere there has been some possible abuse, or pos-sible evasion. They are even looking to suggest, tothe relevant authorities, changes to the law to helpthem prevent this as well,” said Mait Riikjärv, taxdirector at Deloitte Estonia.

“Clients have to understand that the world ischanging, and it remains to be seen how this isgoing to affect us all,” said Riikjärv “It seems sure thatthe compliance burden is set to rise with these dif-ferent [BEPS-inspired] measures and restrictions –exactly how is yet to be seen.”


Baltic StatesTax authorities EstoniaEstonian Tax and Customs BoardLõõtsa 8a, 15176 TallinnTel: +372 880 0810Fax: +372 676 2709Email: [email protected]: www.emta.ee

LatviaMinistry of Finance1 Smilsu st., Riga LV-1919Tel: +371 6709 5405Fax: +371 6709 5503Email: [email protected]: www.fm.gov.lv

LithuaniaMinistry of FinanceState Tax InspectorateVasario 16-th str. 14, 01514 VilniusTel: +370 5 268 7800Fax: +370 5 212 5604Email: [email protected] Website: www.vmi.lt


http://www.emta.ee


http://www.fm.gov.lv


http://www.vmi.lt

Tier 1Deloitte’s transfer pricing department in Estonia,headed by Mait Riikjärv, has been relatively stable in2016, with only one new hire in the year. KrisliKlaarman, joined the firm from the Estonian Tax andCustoms Board as a tax consultant.

This year saw Ivo Vanasaun, a senior tax managerat the firm, develop a novel solution which allowedrelated parties to enter into an agreement withoutfollowing the arm’s-length principle which was fullyapproved by the Estonian tax authority.

Deloitte’s practice in Lithuania is headed by KristineJarve, who heads a team of five TP specialists. Onemember focuses on disputes and four cover compli-ance. This year has seen them complete an advancepricing agreement (APA) which included finding com-parable transactions in a situation where it was notobvious that these existed, as well as establishing anarm’s-length basis for transactions.

Deloitte in Latvia offers a fully integrated tax andtransfer pricing service. The head of the departmentis Igor Rodin, and the TP work the firm does includesadvisory and documentation requirements, negotia-tion of APAs and dispute resolution.EY has a practice that covers all of the Baltic States.

Through its country specific offices it provides a servicespecific to Latvia, Lithuania and Estonia as well asbeing able to offer an overall approach to the BalticStates. Some of the TP services that EY provides in theBaltics include TP controversy risk assessments, con-troversy risk management and defence. As well ashelping clients develop their TP policies so that theyare compliant and defensible, the firm’s global reachmeans that it can coordinate these policies with dif-ferent arms of the same group across the world.KPMG in the Baltics can provide clients with the

facilities to assess their own TP arrangements toensure that they are in line with the arm’s-lengthprinciple. Steve Austwick is responsible for oversee-ing the tax service for the Baltics as a group of coun-tries. He has 15 years of experience working in taxin the Baltics. The head of the TP department atKPMG in Lithuania is Birutė Petrauskaitė; JoelZernask heads up the department in Estonia and

Gunta Kauliņa, who has experience in defendingclients during tax disputes in court, is head of the TPdepartment in Latvia.

The firm provides its clients with the full range ofTP services and can, like the rest of the Big 4 in theBaltics, offer a truly international service.PwC has offices in Estonia, Latvia and Lithuania.

The firm offers a full tax and TP service and was wellspoken of by other firms in the Baltics. The head oftax in Lithuania is Nerijus Nedzinskas, who specialis-es in matters relating to transfer pricing in the areasof finance, real estate, and telecommunications andpharmaceuticals. In Latvia the firm is headed bymanaging partner Zlata Elksnina-Zasirinsks. She hasbeen with the firm since 1994 and has extensiveinternational experience taking part in various taxengagements, including risk assessments and taxstructuring for companies involved in M&A transac-tions. In Estonia, a key contact is Hannes Lentsius. Allthree of the offices in the Baltics act on behalf ofclients in negotiations with the relevant tax authori-ties and advise on TP documentation, TP complianceand dispute resolution. PwC’s clients include some ofthe largest multinationals operating in the Baltics.SORAINEN in the Baltics is headed by Jānis

Taukačs. In the TP practice, the firm employs fourpartners and nine other professionals. Eight of thesecover TP disputes and nine cover TP compliance.

This year Taukačs, along with senior asssociateAija Lasmane and associates Aina Oksenuka andKaspars Strazds, worked to prepare TP documenta-tion for various intra-group transactions for a largemultinational waste management group. Thisinvolved substantiating the inter-company pricing ongroup operations from the perspective of the providerand receiver of the service.

Some of the most important sectors for SORAINENare financial services, technology, media andtelecommunications (TMT), energy and utilities, fast-moving consumer goods (FMCG) and manufacturing.Internationally, SORAINEN is a member of the WTSAlliance, allowing them to partner with other mem-bers of this network on global TP and tax issues.SORAINEN remains the only law firm in the Baltics

Baltic States



Baltic States


Estonia: Tax rates at a glance (As of January 1 2016)

The tax law in Estonia has been frequentlyamended, and further changes are likely to beintroduced. Because of these frequent changes,readers should obtain updated information beforeengaging in transactions.

Corporate tax rate 20% (a)Capital gains tax rate 0/20% (b)Branch tax rate 20% (a)

Withholding tax (d) Dividends 0% (c) Interest 0/20% (d) Royalties 0/10/20% (e) Rental payments 20% (f) Services 0/10/20% (g) Salaries and wages 20%

a) Resident companies and permanentestablishments of non-resident companies arenot subject to tax on their income. They aresubject only to tax at a rate of 20% on thegross amount of distributed profits and certainpayments made. The tax rate is applied to thegross taxable amount divided by a specifiedpercentage.

b) Resident companies and permanentestablishments of non-resident companies arenot subject to tax on their capital gainsreceived. They are subject only to tax at a rateof 20% on the gross amount of distributedprofits. Non-resident companies without apermanent establishment in Estonia are subjectto tax at a rate of 20% on their capital gainsderived from Estonian sources.

c) Withholding tax is not imposed on dividends.Dividends are subject to 20% corporate incometax at the level of the resident distributingcompanies only.

d) Interest payments are generally exempt fromwithholding tax. Withholding tax at a rate of20% is imposed on interest paid to resident

individuals (including payments made bycontractual investment funds on the account ofthe funds), except for interest received fromEuropean Economic Area (EEA) credit institutionsfrom deposits. Interest paid to non-residents asa result of ownership of contractual investmentfunds is subject to a 20% withholding tax ifmore than 50% of the assets owned (directly orindirectly) by the fund during a two-year periodpreceding the date of the interest payment isreal estate located in Estonia and if the interestrecipient has at least 10% ownership in thecontractual investment fund at the moment ofreceiving the interest. Withholding tax is notimposed on interest paid from the profits ofcontractual investment funds if the profits havealready been taxed.

e) Withholding tax at a rate of 10% is imposed onpayments to non-resident individuals andcompanies. Royalties paid to companiesresident in other EU countries or Switzerlandare not subject to withholding tax if theprovisions of the EU Interest-Royalty Directiveare satisfied. A 20% withholding tax is imposedon payments to resident individuals.

f) Withholding tax at a rate of 20% is imposed onpayments to resident individuals and non-residents.

g) The 20% rate applies to payments tononresidents from low-tax jurisdictions (a low-tax jurisdiction is a jurisdiction that does notimpose a tax on profits or distributions or ajurisdiction in which such tax would be lessthan ⅓ of the Estonian tax payable by residentindividuals on a similar amount of businessincome). The 10% rate applies to payments toother nonresidents for services rendered inEstonia. A 0% rate may apply under double taxtreaties.


with the ability to offer a full TP service includingbenchmarking searches for TP documentation and atax compliance service.

Tier 2Gencs Valters Law Firm offers a TP service in allthree Baltic States. The calibre of the firm’s clients,some of which are major multinationals involved inthe food and drinks industry, positions it as a leadingfirm in the Baltic States. Founded in 2000 in Latvia,the firm expanded and opened offices in Estoniaand Lithuania in 2008.

Tier 3This year Borenius, which was ranked in last year’sversion of World TP, has merged with Cobalt, taking

on that firm’s name. In Estonia, Cobalt’s tax practiceis led by partners Egon Talur and MarinaTolmatshova, who work in conjunction with threeassociates. In Latvia, the team consists of partnersGirts Lejins and Indrikas Liepa. Another notablemember of the team is Sandija Novicka, a certifiedtax expert and senior counsel with the firm. InLithuania, Rokas Daugėla is the head of tax in ateam of five.Tark Grunte Sutkiene is another firm that has seen

a merger in the past year, with Estonian law firmVarul’s team joining it in April 2016. The Latvian armof the firm was involved on behalf of a client in a TPdispute whereby it had to perform an analysis of theactual services received by the proposed recipientand establish a basis for the transaction.

Baltic States



Baltic States


Latvia: Tax rates at a glance (As of January 1 2016)

Because of the rapidly changing tax law in Latvia,readers should obtain updated information beforeengaging in transactions.

Corporate income tax rate 15%Branch tax rate 15%

Withholding tax (a) Dividends 0/15/30% (b) Interest 0/5/15% (c) Royalties 0/15% (d) Management and consulting fees 0/10/15% (e) Payments for the use of property

located in Latvia 5% Gains on transfers of real estate or

shares of real estate companieslocated in Latvia 2% (f)

Net operating losses (years) Carryback 0 Carryforward Unlimited (g)

a) These taxes apply to payments by Latvianresidents or permanent establishments to non-residents.

b) No withholding tax is imposed on dividendspaid by Latvian entities, except for dividendspaid to a resident of a state or territory that hasbeen recognised as a low-tax or no-tax state orterritory in accordance with Cabinet Regulations.The 30% rate applies to payments of interim(extraordinary) dividends (the Commercial Lawcontains specific rules regarding these dividends),and the 15% rate applies to the payments of allother dividends made to a resident of a state orterritory that has been recognised as a low-taxor no-tax state or territory in accordance withCabinet Regulations. The holder of a securitiesaccount that settles payments with a state orterritory that has been recognised as a low-taxor no-tax state or territory in accordance withCabinet Regulations must withhold the tax on

dividends that have been disbursed by stockcompanies with publicly traded shares.

c) No withholding tax is imposed on interestpayments made by Latvian entities except forinterest paid to a resident of a state or territorythat has been recognised as a low-tax or no-taxstate or territory in accordance with CabinetRegulations. The 5% rate applies to the interestpaid by Latvian-registered banks, and the 15%rate applies to all other interest payments madeto a resident of a low-tax or no-tax state orterritory in accordance with Cabinet Regulations.

d) No withholding tax is imposed on royalties,except for royalties paid by Latvian entities to aresident of a state or territory that has beenrecognised as a low-tax or no-tax state orterritory in accordance with Cabinet Regulations.A 15% tax rate applies to payments made to aresident of a low-tax or no-tax state or territoryin accordance with Cabinet Regulations.

e) The 10% rate applies to management andconsulting fees. The 0% rate applies tomanagement and consulting fees paid toresidents of countries that have entered intodouble tax treaties with Latvia (the residencecertificate must be submitted). The 15% rateapplies to payments of management andconsulting fees made to a resident of a state orterritory that has been recognised as a low-taxor no-tax state or territory in accordance withCabinet Regulations.

f) This is a final withholding tax imposed on gainsderived by non-resident companies without apermanent establishment in Latvia from sales ofLatvian real estate. This tax also applies to salesof shares if certain conditions are met.

g) Losses incurred in or after 2008 may be carriedforward for an unlimited number of years.


Baltic States


Lithuania: Tax rates at a glance (As of January 1 2016)

Corporate profit tax rate 15% (a)Capital gains tax rate 15% (b)Branch tax rate 15% (a)

Withholding tax (c) Dividends 0/15% (d) Interest 0/10% (e)(f) Royalties and know-how 0/10% (e)(g) Sale, rent or other transfer of

real estate located in Lithuania 15% (e) Compensation for violations of

copyrights or related rights 0/10% (e)(g)

Net operating losses (years) Carryback 0 Carryforward 5/Unlimited (h)

a) This is the standard rate of profit tax. Reducedrates apply to small, agricultural, social ornonprofit companies and to companiesregistered and operating in free-economiczones that satisfy certain conditions.

b) In general, capital gains are included intaxable profit and are subject to tax at theregular profit tax rate. A capital gain derivedfrom the sale of shares of a companyregistered in a European Economic Area (EEA)country or in a tax treaty country is exemptfrom tax if either of the following conditionsis satisfied:

• The shares have been held for at least twoyears and the holding represents more than25% of shares of the company throughoutthat period.

• The shares were transferred in areorganisation (as stipulated in the Law onProfit Tax), the shares have been held for atleast three years, and the holdingrepresents more than 25% of the shares ofthe company throughout that period.

This rule does not apply if the shares are soldto the issuer of the shares.

c) The withholding tax rates may be reduced byapplicable tax treaties.

d) The dividend withholding tax is a final tax. Underthe participation exemption rule, the rate is 0% ifthe recipient is a company (not located in a taxhaven) that holds at least 10% of the shares ofthe payer of the dividends for a period of atleast 12 months.

e) These withholding taxes apply to payments tononresident companies.

f) Interest paid to an entity registered in an EEAcountry or in a tax treaty country is exempt fromtax. In other cases, a 10% withholding tax isapplied.

g) Royalties, payments for know-how andcompensation for violations of copyrights orrelated rights are subject to a 0% withholdingtax if the criteria stipulated in the CouncilDirective 2003/49/EC of June 3 2003 on acommon system of taxation applicable tointerest and royalty payments made betweenassociated companies of different memberstates are met. In other cases, the 10%withholding tax rate applies.

h) Losses from disposals of securities and derivativefinancial instruments may be carried forward fiveyears to offset gains derived from disposals ofsuch items. Losses from the disposal of sharesof companies registered in an EEA country or inanother tax treaty country cannot be carriedforward if the shares have been held for at leasttwo years and if the holding represents at least25% of shares of the company throughout thatperiod. However, these losses can be offsetagainst capital gains derived from disposals ofsecurities and derivative financial instruments inthe current year. Other losses may be carriedforward for an unlimited period, unless the entityceases to carry on the activity that resulted inthe loss.



LEADING FIRMS


2 Baker & McKenzie Liedekerke Loyens & Loeff Mayer Brown Stibbe

Following years of intense changes to the tax system,there is an increased amount of uncertainty in theBelgian tax market. The tax authorities have tight-ened their screws and although the year has beenrelatively stable with little domestic changes, theauthorities have taken a liking to thorough auditingand looking at company structures in an aggressivemanner. Practitioners reported the special tax investi-gation team, usually in charge of tax fraud cases,have been auditing large companies with complexstructures, even though they are unrelated to fraud. “The approach and attitude of the tax authorities

has changed and is substantially different than 10years ago,” said Natalie Reypens head of transferpricing at Loyens & Loeff.The authorities gather detailed information on tax-

payers’ transfer pricing policies through audit ques-tionnaires and are expected to target approximately150 companies in Belgium this year, according to aKPMG report. The special transfer pricing audit depart-

ment’s approach has become an annual occurrencewith similar audit processes launched over the pastthree years. In 2014, 270 audits were launched thisway and just under 200 questionnaires were sent outin 2015. One major cause of this is the OECD’s BEPS action

plan which inspired an expansion of the transferpricing unit within the tax authorities and increasedscrutiny on companies’ transfer pricing policies. Many areas of BEPS are yet to be implemented

into legislation, however a draft law introducing


BelgiumTax authorities Service Public Fédéral FinancesBoulevard Roi Albert II 33, 1030 Schaerbeek, BelgiumTel: +32 0257 257 57Email: [email protected]: finance.belgium.be/fr

Tax rates at a glance (As of June 2016)

Corporate income tax 33.99% (a)Capital gains 0/0.412/25.75/33.99%Branch tax 33.99%

Withholding tax Standard rate of 27%, however several exemptions and reductions exist – see below Dividends 0/1,6995/5/10/15/17/20/27% Interest 0/15/27% Royalties 0/15/27% Branch remittance tax n.a. Net operating losses (years) Carryback 0 Carryforwards Unlimited

a) Surcharge of 3% on income tax makeseffective corporate tax rate 33.99%.

Source: AB Taxand, Taxand Belgium


country-by-country reporting (CbCR) and formal trans-fer pricing documentation requirements was adoptedinto legislation on July 1 2016. “Belgium was indeed one of the few countries that

did not yet have formal transfer pricing documenta-tion rules, although transfer pricing documentationwas recommended in practice and many multina-tionals already have such documentation in place fortheir Belgian subsidiaries. This development fits with-in the increased focus of the Belgian tax authoritieson transfer pricing audits,” said Alain Huyghe, partnerat Baker & McKenzie.Similarly, taxpayers’ awareness of transfer pricing

has grown, despite the country being slower than itsneighbours with implementing BEPS recommenda-tions. Stibbe’s head of transfer pricing, Xavier Gillot,said: “The recent TP developments brought by theadopted BEPS action points did not impact theBelgian transfer pricing market yet, it is too early, butwill certainly result in transfer pricing becoming a keyissue to be addressed by any Belgian taxpayer con-ducting activities with associated enterprises, whileten years ago, only a very limited number of taxpay-ers were preoccupied with transfer pricing.”The EU’s Anti-Tax Avoidance Directive will become

effective from January 1 2019, as the ECOFIN Councilreached an agreement on the directive on June 212016. It was thought Belgium would object due tocertain concerns that the directive would hinder theEU’s competitiveness and hit the small and openeconomies such as Belgium, but ultimately it agreedto it. “This shows that all those initiatives are becoming

reality in the near future,” said Huyghe.In January this year, the EU Commission ruled the

Belgian excess profit rulings constituted state aid.Huyghe said: “While Belgium has reasonable argu-ments to defend that its excess profit rulings do notconstitute state aid that has to be recovered from thebeneficiaries of such rulings and there is therefore areasonable chance that those arguments are accept-ed by the EU courts, a lot of damage has been donein the meantime since the action of the EUCommission is not good for Belgium’s image as an

interesting and stable jurisdiction for foreigninvestors.”

Tier 1Deloitte’s Belgian TP team consists of 29 tax profes-sionals including three partners, three directors, foursenior managers and five managers. It is headed bythree partners: Patrick Cauwenbergh, AndréSchaffers, and Jeroen Lemmens. The team specialises in business model optimisa-

tion (BMO), consulting and transfer pricing. The keyindustries Deloitte works within include manufactur-ing, technology, life sciences and healthcare. It playsa strong international role, working closely with othermembers of the Deloitte transfer pricing network. Deloitte Belgium has recognised the increased

importance of TP documentation and the technologyneeded and has developed an innovative new soft-ware solution along with three other Deloitte mem-ber firms. The software, TP Digital DoX, was launchedthis year and improves efficiency in preparing TPdocumentation. The TP team has recently expanded,hiring three junior consultants. Herwig Joosten oversees the transfer pricing and

tax team at EY. The team offers expertise in allaspects of transfer pricing, including advisory work,documentation and design. In the last few years, thepractice has seen an increase in auditing works as aresult of the international changes to transfer pricingoutlined by the OECD’s BEPS initiatives. The firm hasa strong focus on supply chain management.Joosten, who has been managing partner for morethan 15 years, specialises in transfer pricing andinternational taxation. Dirk Van Stappen heads KPMG’s TP team in

Belgium. They offer a full range of services includingtransfer pricing and intellectual property (IP) planning,double taxation relief procedures and TP audits. Theteam specialises in the chemical, life sciences, phar-maceutical and financial services industries. The firm has assisted clients on various TP issues,

ranging from audit defence, negotiating rulings,advance pricing agreements (APAs), and preparingglobal and European TP documentation.

Belgium



Van Stappen has more than 28 years ofexperience in corporate tax and transfer pricing andis a visiting professor at the University of Antwerp,teaching tax management. He specialises invarious international tax matters including relieffrom double taxation procedures, transfer pricing,planning and unilateral, bilateral and multilateral TPrulings. The global accounting firm PwC’s Belgian TP team

design tax-optimised business models, obtain taxrulings and APAs, and assist with IP planning. Itoffers a full range of services and specialises inhelping clients align their TP policy with the busi-ness model and market goals.

Tier 2Tax partner Géry Bombeke is the head of Baker &McKenzie’s TP practice and he is specificallyfocused on transfer pricing, M&A, reorganisations,financial tax and supply chain tax planning. The dedicated professionals advise and assist

clients on all transfer pricing matters includingimplementation, documentation and APA negotia-tion. It also represents clients in disputes, drawingon the experience of the litigation department.There is a strong focus on the pharmaceuticals andIT sector, both significant industries in Belgium, andthe firm has extensive experience with intragroupfinance companies and TP assistance in the frame-work of Belgian tax incentives. As part of the network of Baker & McKenzie, of

around 800 tax professionals in more than 40countries, the team is able to provide clients with afull range of TP services in all regions.Jean-Michel Degée, new head of tax, leads the TP

team at Liedekerke. As part of the firm’s tax team,the dedicated professionals offer strong expertise inmatters involving transfer pricing. The team offers a wide range of services and

advice on TP principles and implementation, aswell as assisting clients on audit and litigationcases. Following the international developmentsfrom the OECD, the firm has seen an increase in TPwork and the firm has developed a strong focus on

litigation to combat the aggressive approach of thetax authorities. Daniel Garabedian was the head of tax until April

2016 and remains part of the team and a memberof the Permanent Scientific Committee of theInternational Fiscal Association (IFA).Natalie Reypens oversees the TP practice at

Loyens & Loeff in Belgium. The team of one part-ner and three associates works closely with thefirm’s European TP team of 25 specialists. The team offers a full range of transfer pricing serv-

ices, including planning, documentation and negoti-ations with tax authorities. They believe TP is inter-twined with most tax issues and work closely withthe tax and legal teams to integrate their expertise. Reypens has been with the firm for more than 10

years and is an experienced litigator. She focuseson transfer pricing, corporate and international law,including domestic and cross-border corporaterestructuring, M&A, and holdings and financingstructures.Astrid Pieron leads the full tax service and TP

practice at Mayer Brown. The team of four profes-sionals, including two partners, offers documenta-tion services, advice on structures and litigation. Pieron specialises in the transactional aspects of

transfer pricing, tax optimisation of M&A, structuringof investment funds and general assistance to pri-vate equity deals.In 2008, Mayer Brown created a European trans-

fer pricing centre based in Brussels with the expert-ise of its members ranging from base transfer pric-ing knowledge to VAT and customs. The team ben-efits from the Mayer Brown network with more than120 tax professionals worldwide. Xavier Gillot heads the TP team at Stibbe which

offers a range of transfer pricing services includingplanning, strategy advice and documentation. Thefirm’s key practice areas include chemicals, technol-ogy, media and telecommunications. Gillot joined the firm in 2001 and specialises in cor-

porate tax, international tax planning and incentives.He is also active in both fiscal and judicial proceed-ings and negotiations with the Belgian tax authorities.

Belgium


Woluwe AtriumNeerveldstraat 101-103B-1200 BrusselsBelgiumT: +32 2 743 43 43F: +32 2 743 43 10

Contact: Natalie [email protected]

Belgium




LEADING FIRMS

1 Deloitte EY Terco KPMG Lacaz Martins, Pereira Neto, Gurevich & Schoueri Advogados Lilla, Huck, Otranto, Camargo Advogados Trench, Rossi e Watanabe Advogados (associated with Baker & McKenzie)

2 BRATAX – Brazuna, Ruschmann e Soriano Sociedade de Advogados Machado Associados Machado Meyer Sendacz e Opice Advogados Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados PwC Rolim, Viotti & Leite Campos Advogados

3 Barbosa, Müssnich & Aragão Bichara Advogados Castro, Barros, Sobral, Gomes Advogados Demarest Advogados Felsberg Advogados Lefosse Advogados Marchant TP Pinheiro Neto Siqueira Castro Advogados

Brazilian authorities have been busy dealing with apolitical and economic crisis, meaning there havenot been any significant direct changes to the trans-fer pricing market. However, the devaluation of theBrazilian real has affected taxpayers in more areasthan one. Imports have become costly, and compa-nies that use the resale price minus profit method for

their inbound transactions have seen higher taxableadjustments.Brazil’s transfer pricing rules have been subject to

a lot of criticism for being out of line with the OECDguidelines on transfer pricing, but the country is mov-ing closer than ever before to the organisation’sstandards. “I think that in the last five years, Brazilianauthorities have understood that being active withthe OECD is very important to them,” said Ana Utumi,head of tax at Tozzini Freire. Luis Rogério Farinelli, head of transfer pricing at

Machado Associados, said that the tax authoritiestend to pay attention to the lowering of import pricesin order to avoid the reduction of customs duties col-lection, but on the other side, in terms of corporatetax, the tax authorities pay attention to the artificialincrease of import prices aimed at avoiding thetransfer of more money abroad and reducing incometax in Brazil. “The taxpayer can choose the best method avail-

able in the transfer pricing legislation in order tocomply with the rules and not cause any adverseimpact in the global transactions. This is quite differ-ent compared to the OECD models,” said Farinelli.But being out of line with the OECD guidelines does

not necessarily mean an underdeveloped transfer pric-ing system. “My opinion is that we have a number oflegislations, including in transfer pricing, that are evenstricter than what BEPS recommends,” Utumi said.Whether Brazil will take the plunge and swap its

own rules for the OECD guidelines, or even adoptsome policies to draw closer to the internationalstandard, is something many practitioners are


BrazilTax authorities Secretaria da Receita Federal do BrasilMinistério da FazendaEsplanada dos Ministérios, Bloco PCEP 70048-900, Brasilia, DFTel: +55 61 3412 2500Website: www.receita.fazenda.gov.br

http://www.receita.fazenda.gov.br

uncertain about. “Brazil is already participating inOECD meetings as a collaborator (key partner),” saidRicardo da Silveira, partner at Machado Associados.“We don’t know exactly if and when the country willbecome an OECD member, but I think it would bringvery significant benefits for the country in terms ofinternational commerce,” he said.

Tier 1 Carlos Ayub is the lead TP partner at the Brazilianbranch of Deloitte, which offers a full range of spe-cialised TP services, focusing on advisory and com-pliance. The firm has grown over the past year, bothin terms of professionals and revenue, and now hasthree partners and 58 other professionals. The firmadvises companies from sectors such as pharmaceu-tical, chemical, agribusiness, technology, media andtelecommunications (TMT), automakers and auto

parts. Lead TP partner Ayub has more than 23 yearsof experience including in accounting audit, corpo-rate tax and transfer pricing services.The team recently worked on a case where a

Fortune 100 online retailer engaged in complextransactions with foreign related parties. Deloittedeveloped creative approaches to adapt the BrazilianTP rules to the transactions entered by the company.Competing firms speak well of Marcelo Natale, the

cross-border leader of the firm, saying he has spe-cialist skills in TP disputes and documentation proj-ect management.The firm is able to provide a truly international serv-

ice, due in part to being part of the Deloitte networkof member firms. “I had a very positive experience. Wewill keep our contract with Deloitte,” said one client. The Brazilian arm of EY, EY Terco, is managed byKatherine Pinzon-Romero, who is one of two part-

Brazil



Corporate income tax rate 15% (a)Capital gains tax 15/25% (b)Branch tax 15% (c)

Withholding tax Dividends n.a. Interest 15/25% (d) Royalties 15% Branch remittance tax n.a.

Net operating losses (years) Carryback 0 Carryforward Unlimited (e)

a) In addition to the statutory corporate incometax rate of 15%, a surtax of 10% on income ofmore than BRL240,000 ($106,000) a year isimposed on legal entities and a 9% socialcontribution tax (CSLL) is levied on adjusted netincome. For financial institutions, the CSLL rateis 15%.

b) If the capital gains are derived by a tax havenresident, the rate is increased to 25%.

As of 2017 capital gains derived by non-residents on the disposal of assets in Brazil willbe subject to income tax at progressive ratesas provided in the table below.

Tranches Rates Capital gain up to R$ 5Million 15.0% Capital gain from R$ 5MM to R$ 10MM 17.5% Capital gain from R$ 10MM to R$ 30MM 20.0% Capital gain higher than R$ MM 22.5%

Non-residents investing in the financial andcapital markets may benefit from distinguishedtax treatment.

c) Branches are taxed at the same rates asdomestic companies.

d) The rate is 25% if the recipient is domiciled ina tax haven.

e) The amount of the carryforward is limited to30% of taxable income in each carryforwardyear.

Source: Tax advisers from BMA – BMA, Müssnich, Aragão


ners in the TP team. The firm has 60 professionalswho are trained to provide TP advice in accordancewith Brazilian rules and OECD guidelines. Pinzon-Romero has 14 years of experience as a TP adviserand is experienced in the development and man-agement of transfer pricing audits. She has workedextensively in the management of TP audits forclients in the oil, mining, consumer products andpharmaceutical industries. The TP practice’s otherpartner is Marcio Oliveira, who is a professor in taxplanning and transfer pricing and is experienced ininternational tax planning, supply chain restructuring,tax compliance and corporate reorganisations.Another member of the team is director JanainaCosta, who has experience in alternative methodsand audit defence. Ten of the firm’s professionals are working on a

case concerning country-by-country reporting (CbCR),master file and local file for a Brazilian multinational. The firm’s clients mainly work in healthcare, energy

and utilities, financial services and food, fast-movingconsumer goods (FMCG) and agriculture. KPMG’s Brazilian TP practice has three partners

and 19 other professionals. Of the total staff, 19work with TP compliance. Marienne Coutinholeads the practice, which was established in 2009and is described as “one of the best in Brazil” bya client. The firm recently assisted a cable TV com-pany with preparing calculations in compliancewith local legislation, considering the intangiblenature of the transactions. Tax partner Julio Cepedaand audit director Edson Costa assisted on thecase. Most of the firm’s clients work in healthcare,manufacturing and TMT, but the firm also servesnumerous other sectors. Practice leader Coutinho brings with her more than

21 years of experience, and is also in charge of inter-national tax and deal advisory for the firm. Coutinhois based in São Paulo and is also a member of theglobal international steering committee of KPMG,where she helps to develop, monitor and implementthe firm’s global strategy for international tax.The professionals at Lacaz Martins, Pereira Neto,

Gurevich & Schoueri Advogados assist their clients

with all kinds of TP advice. Luís Eduardo Schoueri,whose experience covers tax law, including tax liti-gation, transfer pricing, M&A and double tax conven-tions, leads the practice. Schoueri is also a professor in tax law at the

University of São Paulo and has published literature ontransfer pricing. He was recognised as an expert on TPdisputes by other firms, and both Schoueri and the firmwere well spoken of by its peers. Daniel Vitor Bellan, apartner in the firm, was recommended for his specialistskills in TP disputes, according to a competing firm.Lilla, Huck, Otranto, Camargo Advogados’ profes-

sionals are a team of three. João Paulo de SeixasMaia Krepel and Isabel Garcia Calich da Fonsecalead the practice jointly. The practice is equally strong in all types of advi-

sory work: tax planning, transactional matters andcontentious issues. The firm often works on sophis-ticated tax structures and complex litigation andtransactional matters, and has assisted leadingmultinational companies. Krepel has 16 years of experience and focuses on

tax consulting and transactional matters, with anemphasis on corporate, estate and tax planning andforeign investments. Calich da Fonseca’s practicefocuses on corporate as well as domestic and inter-national tax planning. She has 15 years of experience. The team has developed specific expertise in

advising companies from multiple industries, includ-ing computers, software, online and digital, TMT,food, FMCG and agriculture and financial services.Trench, Rossi e Watanabe, a Baker & McKenzie

member firm, has a strong transfer pricing practicewith five partners and nine other fee earners.Leading the team are Simone Dias Musa, who alsoheads the tax practice, and Clarissa Machado.Clients of the firm work in sectors such as manufac-turing, computers, software, online and digital, ener-gy and utilities, and financial services.Musa joined the firm in 1997. Her practice areas are

corporate income tax, international taxation, transferpricing, foreign investments structuring and M&A. Machado has been a partner in the firm since

2007 and helps clients develop and implement tax-

Brazil


efficient structures for financial transactions, acquisi-tions and sales of business operations, real estateoperations and related transactions. Having a coop-eration agreement with Baker & McKenzie, theBrazilian transfer pricing team has direct contact witheconomists and experts on global TP rules. Clientsspeak well of the firm, saying they “provide fastreplies” and “good quality of work”. Principal PauloSehn is recognised by a competing firm for his skillsin TP disputes.

Tier 2BRATAX – Brazuna, Ruschmann e SorianoSociedade de Advogados is a boutique firm set upin 2013 as a result of the merger between the formerDias Carneiro Advogados’ and Soriano e WoilerAdvogados’ tax departments. The firm is overseen by co-heads José LuisBrazuna, Cristiano Ruschmann and Ciro CesarSoriano de Oliveira. The firm is medium-sized, withthree partners and six other fee earners. The firm hasworked on TP matters related to the chemical sector,with judicial and administrative disputes on theapplication of illegal TP methods and election of theapplicable methods to the case. Clients of the firmwork in sectors such as healthcare, computers, digi-tal, software and online, TMT, food, FMCG and agri-culture, and manufacturing.“I find this a top Brazilian firm in terms of quality,”

a client said. Another client described their experi-ence with BRATAX as “great”. The TP experts at Machado Associados are led byLuís Farinelli. The firm comprises six partners andfour other professionals, with Louise Siqueira as anew addition to the team. Machado Associados ismultidisciplinary and advises clients of all sizes andin various industries, including companies in cosmet-ics, chemicals, pharmaceuticals, automobiles and oiland gas among others. The team is capable ofassisting companies in TP matters for all purposes,such as calculation and planning, as well as defend-ing clients in tax litigations at all levels. Siqueira hasseven years of experience in the audit, consulting,and financial areas. Farinelli has been with the firm

for 23 years and, in addition to his transfer pricingknowledge, specialises in income tax and similartaxes, M&A, foreign investments and corporate reor-ganisations.A client said: “The lawyers are very well prepared

and competent, and they are always ready to givesupport. I work very often with this firm and believeit is the best.”Machado Meyer Sendacz e Opice Advogados has

a team of 12 professionals, six of whom are partners.Raquel Novais leads the transfer pricing practice, hav-ing been with the firm for 29 years and has expertisein tax law, tax structuring in M&A and in both inboundand outbound investments. Its professionals havebroad experience in TP issues and assist companiesin TP matters in a wide range of industries such aselectronics, IT, pharmaceutical and automotive. Clients described the firm’s work as “excellent”,

with one client saying: “The services provided haveachieved the highest technical standards, and theteam demonstrated great commitment to the com-pany’s needs and deadlines.”Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga

Advogados is a full-service firm with one partner andfive associates. The firm’s professionals are capableof serving industries such as financial services,healthcare, energy and utilities, food, FMCG, manu-facturing, and TMT. In 2014, the firm successfullyadvised Superior Energy Services on a notice ofinfraction which disregarded the independent com-pared prices method employed by the company andclaiming for a corporate income tax and social con-tribution on net profits deficiency. Partner Luis Felipe Centeno Ferraz has been with

the firm for six years and was recognised by a com-peting firm for his skills in TP disputes. PwC’s Brazilian team helps multinational compa-

nies with a range of intercompany transactions suchas planning, documentation studies, audit defenceand disputes. Fernanda Amaral is the transfer pricingdirector for Brazil and has been with the firm since1996. Rolim, Viotti & Leite Campos Advogados is capable

of advising on various domestic and cross-border

Brazil



issues. João Dácio Rolim leads the practice. Rolim is aprolific writer and speaker on tax and transfer pricing.

Tier 3With seven partners and 33 other professionals,Barbosa, Müssnich & Aragão is capable of deliver-ing transfer pricing advice to big multinationals andother companies. Paulo Bento leads the practice andis experienced in transfer pricing. The firm specialises in advising companies that

work in healthcare, education, financial services, andcomputers, software, online and digital, and offersservices such as intercompany debt transactions andpolicy and strategy. In the past year, the firm assisteda Brazilian company with advice on TP policy andstrategy in relation to intercompany purchases fromrelated parties abroad. The company wanted to reor-ganise its business model and the firm advised onthe applicability of TP rules on the new transactions.The transfer pricing department at Bichara

Advogados is led by Luiz Gustavo Bichara. SandroMachado dos Reis and Francisco Carlos RosasGiardina are also partners. The firm offers a range of TP services to its clients.

They work in the education, energy and utilities,computers, software, online and digital, financialservices, food, fast-moving consumer goods, hospi-tality, healthcare, manufacturing, technology, mediaand telecommunications and transport industries.In March 2016, the firm assisted a client in a dis-

cussion about the correct application of transfer pric-ing methods in pulp exportations. “Bichara Advogados is a very dynamic advisory

support and very effective to its clients,” said onecompany which employed the firm recently.Co-heads André Gomes de Oliveira and FranciscoMoreira lead the TP practice at Castro, Barros,Sobral, Gomes Advogados. The firm has five otherTP professionals, with Daniel Cordeiro as the newestaddition to the team in November 2015. Its clientscan be found in sectors such as computers, software,online and digital, energy and utilities, financial serv-ices, food, FMCG and agriculture, manufacturing, TMT,and hospitality.

The firm has a cooperation agreement withBaseFirma, and the two firms have been workingtogether in designing transfer pricing solutions toaccommodate the OECD methodology and theBrazilian fixed-margin methods.A client described Oliveira as having “vast experi-

ence within the higher courts of the judicial level”.The client added: “He always brings fresh perspec-tives. Good judgement and communication skills arealso noted.”Demarest Advogados’ transfer pricing team com-

prises three partners and 12 other tax professionals.The firm advises clients in the healthcare, manufac-turing, food, agriculture, FMCG, financial services,computers, digital, software and online and TMT sec-tors. The firm provides assistance in analysis of TPissues, as well as providing defence/assistance in lit-igation cases.Demarest is advising a client in the administrative

discussion related to an audit. The tax authorities areclaiming that the company paid its related parties ahigher price for imported items than the prices cal-culated in accordance with Brazilian transfer pricinglegislation.Oswaldo Leite de Moraes Filho leads the transfer

pricing department. Carlos Eduardo Orsolon waspromoted to partner in January 2016.Felsberg Advogados is a full-service law firm offer-

ing advice on planning, consulting and transfer pricing.It also offers support through all stages of litigation.Head of the practice Thiago Rufalco Medaglia joinedthe firm in 2006 and has extensive expertise in advis-ing companies in the airline industry. The team alsospecialises in inbound and outbound investments.Gustavo Haddad runs Lefosse Advogados’ transfer

pricing practice, which consists of four partners and28 other professionals. The firm works in domesticand international tax matters and has transfer pricingand cross-border transaction expertise.The firm advised a Fortune 500 company on a

high-profile assessment regarding transfer pricingrules. The matter related to the interpretation of TPrules involved in the importation of raw material andresale products from related parties applied in the

Brazil


production of final products in Brazil. The outcome ofthe case could have an impact on several othercompanies in a similar situation. Haddad’s work includes planning in corporate

restructuring and acquisitions, litigation, tax consul-tancy and planning and taxation of internationaloperations and transactions.“The firm was very helpful and reliable,” one client

said.Having opened in 2015, Marchant TP is a new firm

in the Brazilian transfer pricing market. The firm, ledby Diego Marchant, is a boutique specialised intransfer pricing and offers services within litigationand consultancy. Marchant worked for Machado,Meyer, Sendacz e Opice Advogados before openingup Marchant TP, and the firm comprises three part-ners, including Marchant, as well as eight other pro-fessionals. The firm serves companies in industriessuch as aviation, commodities, services, chemicals,telecom, electronics and pharmaceuticals.Pinheiro Neto’s TP team helps its clients with liti-

gation and consultancy, among other things. Theteam consists of head of department Sérgio FarinaFilho, partners Luciana Rosanova Galhardo, RicardoBecker, Flávio Veitzman and Jorge Lopes, and addi-tional professionals Felipe Cerrutti Balsimelli,Gustavo Andrejozuk and Victor Gregolin.

Rosanova Galhardo was cited by a competing firmas being competent within documentation projectmanagement. The firm recently assisted two multi-national companies with legal opinion and imple-mentation of structures for the use of the independ-ent prices method on a worldwide basis. In additionto serving clients from manufacturing, Pinheiro Neto’steam also advises sectors such as healthcare, FMCGand agriculture, TMT, and computers, digital, softwareand online.Two partners and 10 other professionals work in

Siqueira Castro Advogados’ TP department. Thehead of both the tax and the TP department isMaucir Fregonesi Júnior.The firm is working on a case for a Brazilian com-

pany, advising it on new transfer pricing rules. Thefirm advised on the tax aspects of some of thecompany’s operations, including the company’scompliance on import and export operations andtax credits granted under the special regime forreintegration of tax costs for export companies. Itsclients mainly operate in food, FMCG, agriculture,TMT and healthcare.A client said: “The firm has committed lawyers

who are great strategists in various tax matters.They provide excellent service and present innova-tive solutions.”

Brazil



OfficeAv. Rio Branco, 110 – 14th floor20040-001 – Rio de Janeiro – RJBrazilPhone: (+55 21) 2132-1855Fax: (+55 21) 2132-1856

ContactAndré Gomes de [email protected]

www.cbsg.com.br

Deloitte Touche TohmatsuCarlos Eduardo AyubTax Partner – Transfer PricingTel: +55 11 5186 [email protected]

Av. Brigadeiro Faria Lima, 3144, 11thFloorSão Paulo, 01451-000BrazilT: +55 11 3150 [email protected]

Established in 1972, Machado Meyer isone of the most respected law firms inBrazil, with more than 700 employees.

With a business oriented approach, we areknown for seeking innovative solutionsfor our clientes.

We combine competences in several legalfields into a broad and complementaryview, offering legal advice to domesticand foreign clients, operating in manyindustry sectors.

It has been more than 40 years of practicebased on solid ethical principles, the tech-nical capacity of our team of profession-als, and a close contact with our clients.

Our tax practice has extensive experiencein assisting Brazilian and foreign clients.Our daily activities involve transactionalwork (domestic and cross-border transac-tions such as M&As, IPOs, foreign invest-ment, private equity and corporaterestructurings), structuring of financialtransactions and stand alone tax consul-tancy and legal opinions.

The team has a strong reputation in bothdirect and indirect taxes, customs regula-tions, transfer pricing, tax litigation, andfinancial matters.

ContactRaquel [email protected]

Brazil



http://www.cbsg.com.br


http://www.deloitte.com.br


http://www.machadomeyer.com


LEADING FIRMS


2 Baker Tilly Klitou Delchev & Partners Grant Thornton

3 CMS Reich-Rohrwig Hainz Tax & Financial Solutions

Bulgaria issued no transfer pricing rulings in thepast year. The tax authorities are cautious when itcomes to dealing with taxpayers on issues oftransfer pricing.“There is a trend, and it’s shown in the legislation

even, toward the tax authority prioritising revenue, socollecting taxes, fighting tax evasion, rather than tak-ing steps toward co-operating with businesses,” saidVesselina Petkova, partner at Delchev & Partners. A tendency toward litigation in previous years had

been noted to be a feature of the tax market inBulgaria. On this issue, there seems to be change forthe better from the taxpayers’ point of view.“After the financial crisis (of 2008 and 2009), there

were a lot of tax assessments, and a lot of appeals.But during the last year, possibly the last two years,that trend has reversed. I can see that our work ismore balanced between consultancy and litigation,much more so than was the case even a couple ofyears ago,” said Petkova.

In Bulgaria there are no legally binding TP documen-tation requirements, however the tax authorities dohave guidance on the subject which can be amendedindependently of the legislator. There have been fewmoves by the authorities to implement any BEPS-inspired legislation, except for the implementation ofmeasures for the exchange of financial information.Banks and other financial institutions in Bulgaria arealready obliged, as of February 19 2016, to gather andexchange information from businesses and individu-als with the authorities of other participating states.Further action on BEPS may come in the future,

however advisers said that it is more likely that it willbe implemented through EU directives, rather thanon the initiative of the Bulgarian authorities.On May 25 2016, the EU Council adopted amend-

ments to the EU Administrative Co-operationDirective, which are intended to extend the type ofinformation that has to be exchanged to includemandatory country-by-country reporting (CbCR). Thismeans BEPS Action 13 has a practical expression inthe 27 member states of the European Union, and inBulgaria by extension.

Tier 1 Deloitte’s transfer pricing practice in Bulgaria is head-ed by Pieter Wessel, who heads a team of six otherprofessionals. Two who work on TP disputes andfour work on TP compliance. 2016 saw the firm hireGeorgi Stoykov, previously of PwC, who joined thefirm as a senior tax consultant.Also in 2016, the firm was involved in the delivery

of TP training for high-profile employees of anational revenue authority, winning a contract to


BulgariaTax authorities Ministry of Finance102, G.S. Rakovski str. Sofia, 1040Tel: +359 2 9859 2027Email: [email protected]: www.minfin.bg

National Revenue AgencyBul. 52 Dondukov, Sofia, BulgariaWeb: www.nap.bg

www.nra.bg


http://www.minfin.bg

http://www.nap.bg

http://www.nra.bg


deliver 160 hours of training in a tender process thatalso involved other Big 4 firms.EY in Bulgaria offers a full transfer pricing service.

The firm supports clients in the design and imple-mentation of TP policies. The firm is also well placedto defend clients’ arrangements should theybe chal-lenged by the tax authorities. A key contact inBulgaria is certified tax adviser Piotr Wielinski, who isa partner and the firm’s tax leader.KPMG in Bulgaria is led by tax and legal partner

Kalin Hadjidimov. His team specialises in providingadvice to clients on matters of tax structuring anddue diligence, as well as providing analysis andadvice on the impact of new tax developments tocompanies operating in the energy, oil and gas, realestate, telecommunications and banking and financesectors. The firm has offices across Europe and therest of the world, allowing it to serve multinationalswith a consistency of service in multiple jurisdictions.PwC in Bulgaria is well spoken of by peers and

clients. The firm’s focus is on TP compliance, but itoffers a full TP service. PwC has been assisting itsclients in adjusting their TP policies to evolving prior-ities in the post-BEPS world.

Tier 2Baker Tilly Klitou has a “one-stop shop” approach totax, which means that it offers all of the tax and TPservices that a company may feasibly need, and canoffer them in-house. Access to an international net-work of Baker Tilly-affiliated firms means that a con-sistency of service is guaranteed when the worktakes an international aspect.

The tax and TP practice at the law firm Delchev &Partners is led by Veselina Petkova. The firm has twopartners and four other professionals working in tax,which is considered by the firm to be one of theirkey practice areas.This year, the firm’s clients have included multina-

tionals, their Bulgarian subsidiaries and other localcompanies, working in the civil engineering indus-tries, petrochemicals and energy, among other areas.The firm offers advice on transactional issues as wellas litigation.Grant Thornton has been operating in Bulgaria

since 1995. The firm’s managing partner in the juris-diction is Mariy Apostolov, who has held the posi-tion since 2001. The firm offers audit support, docu-mentation checking, structure planning and adviceon setting up the most efficient transactions. Throughits international network of member firms, GrantThornton can offer an international service.

Tier 3CMS Reich-Rohrwig Hainz in Bulgaria offers a TPservice alongside their general tax work, as well asadvising clients on a range of issues in corporatelaw. A key contact in the jurisdiction is GentschoPavlov, who heads the team of four other profes-sionals.Tax & Financial Solutions is an independent

Bulgarian firm that offers tax and TP advice. The firmis jointly led by Plamen Grozdanov, DimitrinkaSpiridonova and Andreana Premyanova, who adviseclients including large multinationals, Bulgarian com-panies and private individuals.

Bulgaria


Bulgaria


Tax rates at a glance (As of August 2016)

Corporate income tax rate 10%Capital gains tax rate 10%Branch tax rate 10%

Withholding tax Dividends 0% to 5% (a) Interest 5% to 10% (b) Royalties 5% to 10% (b)

Branch remittance tax n.a.

Net operating losses (years) Carryback 0 Carryforwards 5

a) Dividends paid to companies and other entitiesthat are residents of EEA country are exemptfrom withholding tax.

b) The rate on interest/royalties paid to an EUrelated party is 5% in certain cases. As fromJanuary 1 2015, Bulgaria must fully implementthe EU interest and royalties directive andexempt interest and royalties paid to anassociated company of another member stateor to a PE of an associated company situatedin another member state.

Source: Professionals from Eurofast Global, Sofia Office/Bulgaria


LEADING FIRMS

1 Baker & McKenzie Blake, Cassels & Graydon Deloitte EY KPMG Osler, Hoskin & Harcourt PwC

2 Gowling WLG McCarthy Tétrault

3 Collins Barrow Grant Thornton McMillan Stikeman Elliott

The past year has been a busy one for Canada’s taxlawyers, who have been dealing with the conse-quences of the declining value of the Canadian dollar.Negative developments in the oil and gas sector havealso had an impact on the tax and transfer pricingmarkets, and M&A and restructuring activity have seenan increase as some smaller companies have run outof money. “Low commodity and oil prices have contributed to

an uptick in cross-border M&A transactions,” said JonNorthup, partner at Goodmans. “I think there are a lotof companies that are struggling. An M&A transactionbecomes a way for them to get out of trouble,” headded.

But professionals are positive that things quicklycould turn for the better. “After more than 35 yearsworking with businesses in the oil and gas sector, Ihave seen the economic roller coaster ride in termsof deal flow on a number of occasions. While the cir-cumstances seem more complex each time, weremain cautiously optimistic about recovery in thesector,” said Lindsay Holmes, national leader ofBorden Ladner Gervais’ tax group.Transparency requirements are also on the increase

in Canada, fuelled by the OECD’s BEPS project. Thecountry intends to implement Action 14 on disputeresolution mechanisms, Action 5 on countering harm-ful tax practices, Action 6 on preventing treaty abuseand Action 13 on country-by-country reporting (CbCR).Applying the TP provisions found in the BEPS Actions8-10 is also being discussed, and Canada hasendorsed the OECD’s new standard for automaticexchange of information. Automatic exchange ofinformation means that foreign financial entitieswould provide information on Canadian residents’financial accounts held in their jurisdictions to theCanadian tax authorities, and the other way around.

“The world is moving away from secrecy – banksecrecy, offshore account secrecy, tax planning secre-cy – and towards transparency,” said JeffreyTrossman, head of tax at Blake, Cassels & Graydon.“The days of aggressive tax plans that create deduc-tions in one country and corresponding income thatdisappears will soon be coming to an end. Wheneverything’s transparent, it affects the way youengage in international tax planning,” he said.


CanadaTax authorities International Tax Services OfficeCanada Revenue AgencyOffice address: 2204 Walkley Road, Ottawa ON, K1A 1A8Mailing address: P.O. Box 9769, Station T, Ottawa, ON K1G 3Y4Tel: +1 613 952 3741; +1 613 941 8495; +1 613 940 8497; +1 613 940 8499Fax: +1 613 941 2505; +1 613 952 3845; +1 613 941 6905Website: www.cra-arc.gc.ca

http://www.cra-arc.gc.ca

Increased transparency has also caused theCanadian Revenue Authority (CRA) to spend a lot ofmoney auditing companies. David Kemp, head oftransfer pricing at Collins Barrow, said that the CRA isfar more involved in cracking down on non-comply-ing taxpayers, especially those with unreportedincome, than it was previously, and will also be tar-geting those who utilise tax havens or have beenlinked to the Panama Papers. “The CRA has beenmuch involved in auditing both small and large cor-porations, and they have been very aggressive,”Kemp said.

Tier 1Baker & McKenzie’s Canadian transfer pricingdepartment is led by Jacques Bernier, who is alsothe chair of the Toronto office’s tax practice group,and Salim Rahim, who is chair of the North Americantransfer pricing practice group. The team consists ofmore than 240 professionals and has substantialexperience in all transfer pricing matters, includingdocumentation, APAs, competent authority matters,dispute resolution, TP policy, reviewing acquisitions,supply chain restructuring and intellectual propertytransfers. The firm assists clients in virtually every sector,

including the automotive, pharmaceuticals, electron-ics, banking and finance, software, chemicals, con-sumer durables and luxury products industries.“We have had a very positive experience. They

have a very knowledgeable team with a wealth ofexperience in the field,” said one client.Another client said: “We have a personal relation-

ship with him [Bernier]. From time to time we havesome challenges with tax authorities and that’swhere Jacques comes in.”Blake, Cassels & Graydon’s transfer pricing prac-

tice is made up of seven partners. Janice McCart andScott Wilkie co-head the department, which servescompanies in all industries. The firm is full-service, offering multinationals

advice on numerous TP aspects including strategyplanning, cost-sharing agreements and advance pric-ing agreements (APAs). Wilkie’s practice is primarily

focused on international taxation, including interna-tional corporate tax planning, transfer pricing and taxtreaty advice, while McCart specialises in transferpricing and is involved in all aspects of transfer pric-ing disputes. A client said: “The experience with them was excel-

lent. The project was handled efficiently and timely.”The Canadian branch of Deloitte is headed by

Markus Navikenas, who is based in Calgary. Deloitteoffers a broad range of services to its clients, andcomprises 15 partners and 53 other professionals. Navikenas, an economist, is also Deloitte’s global

head of oil and gas transfer pricing, and has signifi-cant experience in areas such as supply chain opti-misation and TP controversy resolution. In December 2015, the firm assisted a client on an

analysis of the most reasonable measure of arm’s-length prices associated with IT infrastructure andsoftware licenses developed by the company for thebenefit of its US subsidiary. Because the client had aunique business model, it required specialisedknowledge from the team. Deloitte offers its services to companies in numer-

ous industries including manufacturing, healthcare,financial services and computers, software, onlineand digital. The firm also has a strong position in theautomotive sector.Nine partners and 50 other TP professionals work

in EY’s Canadian transfer pricing department. Theyare spread out in offices in Calgary, Montreal, Ottawa,Toronto and Vancouver. The firm assists with TP strat-egy and policy development, controversy and riskassessment, as well as other transfer pricing-relatedmatters. Tom Tsiopoulos leads the TP practice. Practitioners at KPMG provide all kinds of transfer

pricing services, such as APAs, TP planning and dis-pute resolution. David Francescucci is the nationalleader of transfer pricing and value chain manage-ment. He has more than 15 years of TP experience,serving clients in industries such as financial services,mining, telecommunications, transportation andengineering and construction. At Osler, Hoskin & Harcourt, Monica Biringer and

Firoz Ahmed co-head the practice. The team of 16

Canada



partners and 11 other professionals represented amining company in a transfer pricing appeal wherethe company had been reassessed by the CRA for its2005 to 2015 taxation years.The firm’s top five main industries are energy, min-

ing and metals, financial services, consumer productmanufacturing and pharmaceuticals. A client saidthey had a “very positive experience” with co-headAhmed, describing him as “fantastic” and “extremelyresponsive”.The firm advises on the development of TP

methodologies, preparation of documentation, dis-closure and compliance requirements, exposure andrisk assessment, and tax controversy and litigation.Partner Al Meghji is respected by his peers for hisskills in transfer pricing disputes.PwC’s TP practice offers services such as planning,

documentation, audit defence, competent authorityinteraction and APAs. A competing firm describedPwC as “competent and good at what they do”. One of the firm’s TP partners is Andrew McCrodan,

based in Toronto. McCrodan has extensive cross-bor-der experience, including income tax audit defences,contemporaneous documentation engagements,competent authority assistance and APAs. His skills inAPA negotiation and documentation project manage-ment were well respected by competing firms.

Tier 2Gowling WLG provides services like APAs and auditdefence to its clients. National leader of Gowling’stransfer pricing and competent authority team DaleHill previously worked 16 years as a CRA senior man-ager. His extensive experience includes APAs andcompetent authority requests.“Gowling provides solid legal services. Advice is

practical and creative, responses are timely. The teamis strong and has depth with expertise in the specificsubject matter of the representation,” a client said. The firm recently assisted a company with filing and

obtaining a downward TP adjustment, where thecompetent authority refused to look at the request.The firm filed a complaint against the CRA, and uponfinal review the CRA accepted a portion of the request.

Canada



Federal corporate income tax rate 15% (a) Federal capital gains tax rate 7.5% (a)(b) Branch tax rate 15% (a)

Withholding tax Dividends 25% (c) Interest 0/25% (d) Royalties from patents, know-how, etc. 25% (c) Branch remittance tax 25% (e)


a) These 2016 rates are applied to generalincome that is not eligible for themanufacturing and processing deduction or thesmall business deduction. Additional tax islevied by the provinces and territories ofCanada, and the combined federal andprovincial or territorial rates on general incomemay vary from approximately 25% to 31%.

b) 50% of capital gains is subject to tax. c) Final tax applicable only to non-residents. This

rate may be reduced by a tax treaty. d) In general, no withholding tax is imposed on

interest paid to payees who are dealing atarm’s length with the payer. However,withholding tax at a rate of 25% typicallyapplies to interest paid or credited to relatednon-residents (the rate may be reduced by atax treaty). Other specific exemptions or specificinclusions may apply to change the generalrules noted above.

e) This tax is imposed in addition to the regularcorporate income tax. The rate may bereduced by a tax treaty.


The firm’s clients mainly come from the healthcare,financial services, energy and utilities, and manufac-turing sectors. The transfer pricing professionals at McCarthy

Tétrault assist large multinationals with TP structur-ing, intercompany arrangements, TP disputes, APAs,and competent authority settlements, among otherareas. The team also has experience in in-court pro-ceedings and administrative appeals. “They are always available, proactive and bring cre-

ative solutions. They are a very knowledgeable anddedicated team, bringing added value to our compa-ny,” said a client.Patrick McCay leads the TP practice as well as the

tax practice. Other members of the team are part-ners Thomas Akin, Douglas Cannon, Chia-yi Chua,John Yuan, Nicolas Cloutier and associate BrianO’Neill. Akin, who has more than 30 years’ experi-ence, was recognised by a competing firm for hisskills in TP disputes. The most important sectors forthe company are financial services, food, fast-mov-ing consumer goods (FMCG) and agriculture, andenergy and utilities.

Tier 3David Kemp is in charge of Collins Barrow’s transferpricing matters. The firm, which is mid-market, effec-tively has one full-time TP manager and one full-timeTP assistant, and many other professionals split theirtime between Collins Barrow and other work. Thefirm provides cost-effective solutions to its clients,such as TP planning, documentation and disputeresolution services.A client said the TP practice was “very professional”

with a “wide knowledge base and guidance solu-tions”. Kemp was respected for his skills in APA nego-tiation by his peers.The firm recently assisted a client in the develop-

ment of appeals dispute resolution position and therelevant documentation. This required an in-depthreview to identify, value and assess the various pro-curement-related intangibles.Brad Rolph and his team of 16 professionals make

up the TP department at Grant Thornton. Five new

analysts have joined the firm over the past year. Thefirm offers TP planning and consulting; compliancework such as TP analysis and documentation; andcontroversy management, including appeals, compe-tent authority matters, and dispute support. The most important industries for the firm are com-

puters, digital, software and online, energy and utili-ties, financial services, food, FMCG and agriculture,technology, media and telecommunications (TMT),manufacturing, and transport. The firm has, over thepast year, worked on cases such as TP defence of acompany’s European intercompany loan pricing andtax and TP structuring of a large Canadian infrastruc-ture project. McMillan’s team of four partners and four other

professionals assists domestic and internationalclients with their transfer pricing arrangements. Theteam provides guidance through all phases of thetransfer pricing review and compliance process, aswell as assisting clients at all stages of the TP disputeresolution process. The firm also assists with APAnegotiations. Michael Friedman leads the depart-ment. His expertise includes structuring domestic andinternational commercial acquisitions, divestitures,reorganisations and business combinations.“Overwhelmingly positive experience. They are

extremely knowledgeable and have developedmany innovative tax strategies. In my view, McMillanis one of the best in the income tax and TP areas,”said one client.Many of the firm’s clients work in sectors such as

financial services, manufacturing and TMT, but thefirm also serves companies in a wide range of otherindustries. The firm has also produced a tool whichsimulates the inquiries that may be posed by theCRA when assessing whether a worker is serving asan employee or an independent contractor.Ron Durand heads the TP practice at Stikeman

Elliott. One other partner and one associate makeup the team. The firm specialises in advising sec-tors including financial services, food, FMCG andagriculture, manufacturing and transport. The TPprofessionals assist clients in all aspects of transferpricing, including the review and preparation of TP

Canada



documents, audits, submissions to competentauthority and litigation. Durand is based in the Toronto office and is for-

mer head of the tax group. He has experience inareas including divestitures, M&A, reorganisations,

corporate restructurings and financings. Jean-Guillaume Shooner is another key contact at thefirm. He has expertise in international trade, cus-toms, procurement, transfer pricing, dispute settle-ment and regulatory matters.

Canada


Gowling WLG is a new international lawfirm created by the combination ofGowlings, a leading Canadian firm, andWragge Lawrence Graham & Co (WLG),a top U.K.-based international firm.

With over 1,400 legal professionals pro-viding a range of dedicated legal supportin 18 cities across Canada, the U.K.,Europe, the Middle East and Asia, thefirm offers a diverse range of services tohelp domestic and international organiza-tions achieve their business goals. It has aparticular focus on a number of key globalsectors, including energy, financial servic-es, life sciences, natural resources, realestate and technology.

Unique among Canadian law firms,Gowling WLG’s Transfer Pricing andCompetent Authority Group works withorganizations to optimize their global taxposition and reduce their exposure tounfavourable audit assessments throughproper tax planning and implementationstrategies. It includes senior partners withover 50 years of combined experienceworking for the Canada Revenue Agency(CRA) — experience which enables theteam to provide efficient solutions toclients’ complex legal matters.

Based in Ottawa near the CRA’s head-quarters, the firm’s transfer pricing teamis the pre-eminent group of its kind inCanada, having achieved strong results forclients matters related to both the CRAand foreign tax authorities. Multinationalsseek out the firm’s specialized expertise

in the areas of advanced pricing agree-ments and audit defence.

In addition, Gowling WLG is the onlyCanadian law firm that has a PhD econo-mist with CRA experience dedicatedsolely to its transfer pricing practice. Thisallows the firm to conduct complex eco-nomic analysis that goes above andbeyond traditional comparability analysis,which is often needed to settle clientmatters in a favourable manner.

Gowling WLG’s Transfer Pricing andCompetent Authority Group is an inte-gral part of the firm’s tax practice, whichhas been ranked as a leading Canadianfirm in the areas of International TaxTransactions and International TaxPlanning Excellence by the InternationalTax Review. The team was recognized asTransfer Pricing Firm of the Year by ITRin 2011, 2013 and 2015.

Website: gowlingwlg.com

Contact:Dale Hill, Leader – Transfer Pricing &Competent Authority GroupTel: +1 613 786 0102Email: [email protected]

Canada




Osler, Hoskin & Harcourt LLPPO Box 501 First Canadian Place, Toronto, Ontario, Canada, M5X 1B8 Tel: +1 416 362 2111Fax: +1 416 862 6666Website: www.osler.com

ContactsMonica Biringer Email: [email protected] Tel: +1 416 862 6830 Al Meghji Email: [email protected] Tel: +1 416 862 5677Amanda HealeEmail: [email protected] Tel: +1 416 862 6780

Canada’s Leading Tax TeamRecognized as Canada’s Transfer PricingFirm of the Year in 2016 by InternationalTax Review and a ‘cornerstone of theCanadian tax market’ by ChambersGlobal, Osler is well known in Canadaand around the world for its transfer pric-ing expertise.We provide strategic guidance on thedevelopment of methodologies, docu-mentation, compliance and risk assess-ment with respect to transfer pricingpractices. We represent clients in contro-versies at the administrative level and inlitigation before the Canadian courts.Osler was counsel in the first transferpricing case to consider the scope andapplication of the current Canadian trans-fer pricing legislation, and also represent-ed the taxpayer in the first and only trans-

fer pricing case to be heard by theSupreme Court of Canada. We continueto act on the majority of significant trans-fer pricing disputes before the Tax Courtof Canada.Osler is recognized for the breadth anddepth of its expertise in tax law and isconsistently ranked as one of Canada’stop law firms. We serve our clientsthrough offices in Toronto, Montréal,Calgary, Ottawa, Vancouver and NewYork.

Canada


http://www.osler.com




LEADING FIRMS

1 Deloitte EY PwC

2 KPMG Salcedo & Cia

3 BaseFirma Grant Thornton

Although transfer pricing only was introduced intolocal legislation in 2012, the market in Chile has rap-idly matured with businesses and authorities havinga better understanding of the possible impacts ofrules on intra-group transactions. The market has alsobeen subject to some changes over the past year.One of these changes is the implementation of coun-try-by-country reporting (CbCR), with the first informationexchanges expected to begin in 2017. Chile is one of 83countries worldwide that have signed the multilateralcompetent authority agreement (MCAA) for the auto-matic exchange of CbCR. From June 2013, taxpayerswere also required to submit an annual notification tothe authorities regarding transactions with foreign-relat-ed parties and the relevant transfer pricing policy.With regards to the BEPS Actions 8-10, which relate toaligning transfer pricing outcomes with value creation, areform in 2014 introduced new rules to enhance theoversight of the tax authorities of cross-border transac-tions. Large companies are required to submit a sworndeclaration on their global tax footprint, Deloitte reports.For taxpayers, this increase in documentationrequirements means that they will have to prove that

transfer prices in transactions with related parties areconsistent with the arm’s-length principle.Chile signed up to become a member of the OECDin 2010 and is still the only South American membercountry. Practitioners say that more and morechanges are being implemented in order to complywith the OECD’s regulations. As more changes comeinto effect, the transfer pricing market is becoming abigger focus for both taxpayers and the authorities.“Transfer pricing is something that wasn’t viewed verymuch, but now it has become much more complicatedand it is an area with which we are engaging muchmore,” said Jaime Carey, managing partner and co-headof tax at Carey. “The market has become a lot moresophisticated and people are starting to realise that.”While the authorities discuss TP policies openlywith companies, the growth in sophistication hasbeen matched by a growth in aggression. Theauthorities carried out far more in-depth audits in2015 than in previous years.“They are very aggressive in their auditing in transferpricing,” said Juan Pablo Guerrero, partner at KPMG.

Tier 1 Deloitte’s transfer pricing practice consists of onepartner and 38 other TP professionals, and is one ofChile’s biggest TP teams. Pablo Albertini leads boththe tax and the TP practice. The firm provides services including advice on con-temporary documentation, audit defence, tax planningtransactions, business model optimisation and advancepricing agreements (APAs). The firm also has accessthrough Deloitte’s network to professionals fromVenezuela, Colombia, Argentina, Peru and Mexico, mak-ing it able to meet clients’ needs throughout the region.


ChileTax authorities Servicio de Impuestos Internos Alonso Ovalle 680, SantiagoTel: +56 22 395 1115Website: www.sii.cl

http://www.sii.cl


The firm recently assisted a company that was facinga fine by the Chilean tax authorities for its treatment ofthe import of raw materials and finished goods. Deloitteassessed the client’s approach to intercompany trans-actions and made changes that resulted in a 96%reduction of the original fine. Partner Alejandro Paredesand manager Vanesa Lanciotti assisted on the case. The firm uses Deloitte’s country-by-country (CbC)digital exchange tool, which was designed byDeloitte worldwide and enables companies to simu-late a CbC report. This tool helps businesses toassess priorities and consider proactive steps need-ed before the CbCR requirements come into effect.

EY in Chile offers a wide range of services to itsclients. Pablo Greiber heads the TP practice, which con-sists of himself and 20 other professionals. The firm pro-vides its services to clients from all sectors, but many ofits clients work in the manufacturing, financial services,pharmaceutical, automotive and mining sectors. The firm’s services include compliance, planningand controversy. The team members come from var-ious backgrounds, and share their transfer pricingknowledge by holding workshops.Roberto Carlos Rivas leads the transfer pricingpractice at PwC. The practice consists of 38 other TPprofessionals who work with TP disputes and com-pliance. The team has advised many large multina-tionals over the past year, often relating to the devel-opment of master file and CbC reports.This year, the firm assisted a company in the financialservices industry with multiple TP audits. The team, con-sisting of Rivas, Gonzalo Schmidt, Felipe Domínguez,María Carolina Camargo and Magdalena Valdivieso,successfully managed to close these TP audits withoutany tax assessment by the Chilean tax authorities.The firm’s biggest clients come from the miningindustry, but also from financial services and food,fast-moving consumer goods (FMCG) and agriculture.A large proportion of companies in Chile’s miningindustry are clients of PwC.

Tier 2Global firm KPMG helps multinationals to plan andstructure transactions with related parties, as well

as assisting with compliance and documentationand dispute resolution at the administrative andcourt levels. The firm consists of partner and head of tax Juan

Pablo Guerrero and 18 other TP professionals.Domingo Olivera is a new addition to the team andwas hired as a senior consultant in August 2015. KPMG advises major multinationals in multiplesectors, many from sectors such as energy and min-ing, utilities, and banking and financial institutions,as well as large retailers and major electronic goodsdistributors. Together, the team has analysed 8,000intercompany transactions.Recently, the firm assisted a food manufacturingand distribution company with defining its internalTP policy. The advice included design of TP policy forall national intercompany transactions.

Salcedo & Cia’s transfer pricing professionals helpwith transfer pricing reports and audits, as well asassisting clients in administrative and judicial litiga-tions, serving as permanent counsel for TP mattersand conducting risk analyses for companies.Claudio Salcedo is the owner and leader of thepractice.

BaseFirma is a specialist in transfer pricing, offeringservices like documentation, master-file reporting,audit defence, in-house training and implementationof TP models. The practice has three partners, amongthem practice leader Alonso Vilaboa, and three otherTP professionals. The firm is part of an internationalgroup with offices in cities including Amsterdam,Buenos Aires, Lima, Miami and Madrid.Major clients of the company work in financialservices, manufacturing, food, FMCG, agriculture, andenergy and utilities. Last year, the firm assisted asecurity company with TP methodology for estab-lishing arm’s-length interest rates for intercompanyloans. The company was in a complicated financialsituation, and was unable to obtain liquidity in thelocal financial market.

Grant Thornton’s team provides documentationpreparation, compliance support, business optimisa-tion and dispute avoidance services to local andinternational clients. Hector Castillo leads the team.

Chile


Chile



Corporate income tax rate 24%Capital gains tax rate 24/35% Branch tax rate 24%

Withholding tax Dividends 35% (a)(b) Interest 35% (a)(c) Royalties from patents, 0/15/trademarks, formulas and 20/similar items 30% (a)(d)

Technical services 15/20% (e) Other fees and compensation forservices rendered abroad 35% (a)

Branch remittance tax 35% (f)

Net operating losses (years) Carryback Unlimited (g) Carryforward Unlimited

a) The tax applies to payments to non-residents. b) The 35% tax is applied to the amount of thegrossed-up dividend. A credit equal to thecorporate tax paid is available.

c) A reduced rate of 4% applies to certain interestpayments including, but not limited to, interestpaid on loans granted by foreign banks,insurance companies, financial institutions, andinterest paid with respect to import operations.

d) No withholding tax is imposed on paymentsrelated to standard software if certainrequirements are met. A reduced withholdingtax rate of 15% applies to payments withrespect to the following:

• Invention patents • Models • Industrial drawings and designs • Layout sketches or layouts of integrated

circuits • New vegetable patents

• Use or exploitation of computer programs(software) The reduced tax rate does notapply to payments made to related entitiesor to companies resident in countriesincluded in a list prepared by the ChileanMinistry of Finance containing the territoriesconsidered to be tax havens. As a result, thewithholding tax rate for such payments is30%. Two companies are considered to berelated if one of the following conditions issatisfied:

• Either company owns 10% or more of theother company’s capital.

• Either company participates in 10% or moreof the other company’s revenues.

• A shareholder or owner owns 10% or moreof each company or participates in 10% ormore of its revenue. A reduced withholdingtax rate of 20% applies to payments fortelevision broadcasting and cinematographicmaterials.

e) A 15% rate applies to payments forengineering, technical assistance, professionaland other technical services rendered in Chileor abroad. However, if the parties are related orif the payments are being made to a companydomiciled in a country included in the tax-haven list, the withholding tax rate is 20%.

f) The 35% tax is applied to the grossed-upbranch remittance. A credit is available for thecorporate tax paid at the branch level.

g) The carryback of losses will no longer beavailable, effective from the 2017 accountingperiod. Applies to payments for televisionbroadcasting and cinematographic materials.



Roberto Carlos RivasPartnerTel: +56 2 [email protected]

Gabriel BernalSenior [email protected]

Carolina [email protected]

Maria Carolina [email protected]

Chile






LEADING FIRMS


2 Baker & McKenzie DLA Piper Grant Thornton Hendersen Taxand King & Wood Mallesons NERA Economic Consulting WTS China

China has been one of the first countries to imple-ment the OECD’s BEPS transfer pricing recommenda-tions into local legislation. In September 2015,China’s State Administration of Taxation (SAT)released the Implementation Measures of SpecialTax Adjustment (Draft for Public Consultation). Further,on June 29 2016, the SAT issued Bulletin 42 toimprove the reporting of related party transactionsand contemporaneous documentation.Bulletin 42 introduces a three-tier documentationframework, as set out in Action 13, while requiringtechnical analysis and consideration of positions thatare familiar to the Chinese market, according toEunice Kuo, head of transfer pricing at Deloitte. “This reflects how transfer pricing issues are mov-ing in China,” said Kuo. “The SAT tries its best toadopt the concept used internationally as much asthey can, so that China can be aligned with the other

countries. On the other hand, China wants to take itsunique business environment into considerationwhile adopting those international principles intoChina,” she added. One way China has incorporatedits own style into the BEPS legislation is the inclusionof location specific advantages into Bulletin 42. “China will be very aggressive and take a very firmview in its position that a lot more income belongsto China,” said Brendan Kelly of Baker & McKenzie.Tax authorities’ strength in conducting their researchand targeting audits will be boosted as well, saidKhoon Ming Ho, head of tax and transfer pricing atKPMG. This will be done by greater use of technologyin analysing data of comparable companies.On the taxpayers’ side, in the past, unlike foreignmultinationals operating in China, Chinese multina-tionals did not have a high interest in transfer pricingissues. However, starting from 2016, many Chinesemultinational have started looking at transfer pricingissues and the global trends, specifically with regardto outbound investments including acquisitions offoreign companies. “I think this issue was opened upby the aggressive outbound activities [of Chinesemultinationals] and some of their investees in othercountries have brought this issue up with theChinese headquarters and the Chinese headquartershave been focusing on this issue which echoes theOne Belt One Road strategy,” said Kuo.

Tier 1 Eunice Kuo is the national head of the transferpricing team at Deloitte in China which consists ofover 200 transfer pricing professionals acrossmainland China as well as Hong Kong. Other key


ChinaTax authorities State Administration of TaxationNo 5 Yangfangdian West RdHaidian District, Beijing 100038Tel: +86 10 6341 7114Website: www.chinatax.gov.cn

http://www.chinatax.gov.cn


transfer pricing partners at the firm are LiantangHe, deputy head of national transfer pricing andPatrick Cheung, regional head of transfer pricing inHong Kong.The team assists clients with strategic documenta-tion and the efficient resolution of disputes as part ofits various services comprising of: transfer pricingadvisory and documentation, advance pricing agree-ment (APA) negotiation, dispute resolution involvinglitigation and mutual agreement procedures (MAPs),business model optimisation and facilitation of trans-fer pricing risk management. In the past year, Deloitte has successfully workedwith an increasing number of Chinese multinationalcompanies assisting with both their local matters ofdoing business in China and cross-border issueswith their outbound expansions. Notably, inSeptember 2015, Kuo worked on a transfer pricingaudit defence against an investigation case coveringthe past 10 years. The matter was highly complexbut the firm successfully negotiated with the localtax authority which initiated the audit to substantiallyminimise the tax adjustment. EY’s transfer pricing practice is led by Travis Qiu,who has more than 16 years of experience in taxand commercial law advisory. He focuses on interna-tional tax planning, tax effective supply chain man-

agement and transfer pricing. He has a good rela-tionship with the Chinese tax authorities and hasassisted several multinationals in transfer pricingaudit defence, MAP, and bilateral APAs. Both the China and Hong Kong transfer pricingpractices of KPMG are led by Khoon Ming Ho, whoalso represents KPMG China in the international taxsteering group within the KPMG network. This steer-ing group focuses the overall strategy and directionsof the KPMG global tax practice network. The firm has three specialist areas for transfer pric-ing which are disputes, APA negotiations and docu-mentation project management. Three partners areassigned to each area. Two further partners overseethe financial services transfer pricing practice and theJapanese market. The five major industries that the firm concentrateson are education, consumer markets, hospitality,industrial markets and transport. Last year, the team helped a client under a secondtransfer pricing audit by the Chinese tax authoritiesas a follow up to an audit concluded earlier.Through extensive research on the industry, the mar-ket conditions and the client’s value chain, thetransfer pricing team successfully convinced theauthorities that the client’s declined profitability waslargely due to the market conditions rather than

China



Corporate income tax 25%Capital gains tax 25% (a)Branch tax rate 25%

Withholding tax (b) Dividends 10% Interest 10% Royalties from, for example,

patents and know-how 10% Branch remittance tax n.a.


a) Capital gains derived by foreign enterprisesfrom disposals of interests in foreign investmententerprises are subject to a final withholdingtax of 10% instead of income tax. This ratemay be reduced by applicable tax treaties.

b) The statutory rate is 20%, which is reduced to10% by the Enterprise Income Tax LawImplementation Regulations.


pricing manipulation, which helped to cut the taxadjustment by approximately 60%. PwC’s transfer pricing team consists of more than12 partners and directors and 170 other profession-als. Jeff Yuan leads the department both in Chinaand Hong Kong. The firm has continued to investresources to provide further transfer pricing servicesin the central and west regions in China to meet ris-ing demands for transfer pricing assistance from bothinternational and domestic multinationals. The firm provides the full scope of services including:strategic risk assessment, TP planning, TP documenta-tion, TP controversy, APAs, tax valuation, end-to-end TPexecution, value chain analysis and TP integration.Recently, the PwC transfer pricing specialists havebeen very active in supporting clients in developingcoordinated, centralised global documentation anddefence processes that take into account the require-ments of each jurisdiction. The firm has a dedicatedtranslation team to assist clients in translating their TPdocuments from Chinese into English or vice versa. The transfer pricing team is pursuing technologyinitiatives to bring enhanced value to clients, withincreased industry specific knowledge and TP-relatedexperiences through data analytics, to prepare andadapt to the changing global TP landscape.

Tier 2Glenn DeSouza, an economist from the US, andShanwu Yuan, former SAT TP official and representa-tive to the OECD and the UN, head Baker & McKenzieChina’s transfer pricing practice together. The practiceconsists of eight other tax professionals. The tax teamhas four partners and seven tax lawyers and advisers. The firm provides planning and documentationstudies for multinationals in retail, technology, con-sumer electronics, chemicals, semiconductors andfashion. It also works on projects including auditdefence, complex documentation, planning struc-tures and implementing bilateral APAs. The firm’s key clients include large companies in avariety of industries, such as chemicals, software, e-services, electronic manufacturing services, pharma-ceuticals and retail.

Baker & McKenzie finds a multi-disciplinaryapproach combined with innovative technical con-cepts essential in what has become a challengingenvironment for audits when compared to a fewyears ago. The team has developed an advanceddatabase for econometrics and benchmarking toenable clients compare and evaluate their pricingmethodology and minimise their business risks.The transfer pricing team has concluded a numberof audit cases in the last year, including a bilateralAPA between the US and China in relation to the useof the new profit split method by the tax authoritiesto determine the amount of royalty paid by the Chinasubsidiary to its US parent for the first time.DLA Piper’s China and Hong Kong transfer pricingpractice is led by Daniel Chan. The practice boastsfive partners and 16 tax professionals coveringboth jurisdictions, as well as a global transfer pric-ing team helping multinationals deal with transferpricing matters. Chan looks after both tax and transfer pricing inAsia. He is an expert in advising on the structuring ofthe China transactions and distribution operations ofmajor European, Japanese and US multinational cor-porations in diverse industries. The firm’s transfer pricing services include docu-mentation and advice on locally compliant TP poli-cies, valuation of intangibles and other assets, dis-pute solution including tax audit defence, APA nego-tiations and mediation, litigation, and businessrestructuring in line with the OECD’s BEPS framework. DLA Piper’s clients are widely spread across theindustries of distribution, IT, technology, equipmentmanufacturing and semiconductors. Rose Zhou heads the transfer pricing practice of

Grant Thornton in China, which has two partnersand 20 other professionals with long term experi-ence of transfer pricing.Major clients of the firm come from the health-care, automotive, online and digital, tourism, oiland gas and technology, media and telecommuni-cations industries.The transfer pricing specialists deliver a broadrange of services including risk assessment,

China



benchmarking, documentation, dispute resolution,APAs, TP planning, and specialised transfer pricingtraining for CFOs and tax managers explainingtransfer pricing rules and practical solutions. The transfer pricing practice of Hendersen Taxandis headed by Dennis Xu and the team focuses on TPcompliance. Another notable partner in the TP team is Kevin

Wang who is regarded as a key member of the firm’sglobal compensation equity and employment taxteam. Wang has 14 years of experience in domesticand international tax and is considered to be anexpert in all kinds of corporate tax. The transfer pricing team at King & Wood

Mallesons in China advises clients on an array oftransfer pricing matters, using a deep understanding ofboth local and international transfer pricing rules. Theteam also plans, implements and defends clients’supply chain structures by understanding clients’ com-mercial objectives, the allocation of value aspects andthe applicable indirect tax and tariff costs. Tony Dong is the leader of the tax and transfer pric-ing team and is specialised in Chinese tax and busi-ness advisory works. Dong frequently representsmultinational and Chinese companies in tax disputessuch as transfer pricing investigations, anti-avoid-ance investigations, tax audit defence, tax appealsand tax litigation cases. The firm focuses on the consumer and retail, finan-cial services, private equity, projects, energy andresources, real estate and construction, healthcareand media and technology sectors.

NERA Economic Consulting transfer pricing teamoffers independent advice on valuation studies, eco-nomic benchmarking, financial service transfer pric-ing, intercompany financing transactions, strategydesign, system implementation, TP documentationand APA, all supported by a team of well-regardedeconomists. The firm has offices in Shanghai and Beijing where

Harlow Higinbotham, senior vice president, is based.Higinbotham is an economist and chartered financialanalyst with more than 25 years of advisory andresearch experience in various sectors. His main areaof expertise is dealing with inter-company pricingcontroversies in multiple jurisdictions. Martin Ng as a sole partner leads the tax and trans-fer pricing practice at WTS China with support fromseven other tax advisers and economists. Three newspecialists joined the firm last year: Conrad Lin as aconsultant and Arvy Gu and Sissi Shen as associates. The firm’s transfer pricing practice offering compris-es the entire range of transfer pricing services, fromthe provision of transfer pricing policy solutions tothe preparation of OECD-compliant and local countrytransfer pricing documentation. Advice on inter-com-pany transactions involving intellectual property,business restructuring advice, benchmarking servic-es, tax audit defence, litigation and arbitration sup-port and APA negotiation are also offered.WTS supports clients from several industries andgeographical origins, with a focus on the transporta-tion, industrial, healthcare, technology and mediaindustries.

China


WTS China Co. Ltd.Unit 031,29F, Hang Seng Bank TowerNo.1000 Lujiazui Ring Road, PudongNew AreaShanghai 200120 PRCChinawww.wts.cn

Key contact:Martin NgManaging [email protected] +86 215 047 866 5202

China


http://www.wts.cn



LEADING FIRMS

1 Baker & McKenzie Brigard & Urrutia Abogados Deloitte PwC

2 BaseFirma EY Godoy & Hoyos Abogados KPMG Philippi Prietocarrizosa Ferrero DU & Uría

When practitioners in Colombia talk about the taxand transfer pricing markets over the past year,“increasing transparency” and “a changing environ-ment” are the key themes. While there were no normative changes to

Colombia’s TP rules in 2015, the government hasbeen working closely with the OECD on several ofthe BEPS Actions and wants to become a memberof the organisation. As Colombia is not yet anOECD member, none of the guidelines are binding,and there have not been any official statementsregarding the implementation of BEPS. However,the government has been eager to implementAction 13, on country-by-country reporting (CbCR),practitioners say.“We’re working hard to become a part of it [the

OECD],” said Ciro Meza, head of tax at Baker &McKenzie. “This is a special era, things are changing.We are definitely moving towards more and moretransparency,” he said.

Practitioners say that internal affairs have taken upmany resources, and the government has been slowin implementing BEPS as a consequence. But thismove towards the OECD, however slow, is having animpact on the tax and transfer pricing markets. “The environment has changed 360 degrees com-

pared with how it was five years ago,” said Meza.“Tax planning is something that has been taken veryseriously and very carefully, and the culture of taxcompliance is more and more important inColombia, and this is a result of what’s going on inthe world,” he added.The Colombian tax authorities have also been

increasing scrutiny regarding transfer pricing require-ments, and are auditing almost all taxpayers withdocumentation requirements. Practitioners expect tosee more detailed audits and assessments in thefuture, especially as the government now has mem-bers that deal directly with the OECD in order toensure compliance with the law.“Some years ago, the tax authorities did not have

enough expertise to analyse highly complex transac-tions,” said Carolina Rozo Gutiérrez, co-head of tax atPhilippi Prietocarrizosa Ferrero DU & Uría. “However,the tax authorities have recently improved theirteam, involving former private sector practitioners, sothey are now changing the way they conduct theseaudits, and are trying to sophisticate the auditingprocess. One of the examples is the transfer pricingdivision.”

Tier 1 Gustavo Sanchez Gonzalez heads the transfer pric-ing practice at Baker & McKenzie Colombia. The


ColombiaTax authorities Dirección de Impuestos y Aduanas NacionalesCarrera 8 No 6C – 38 Edificio San Agustín, BogotaTel: +57 1 607 9999; +57 1 546 2200Fax: +57 1 333 7841Website: www.dian.gov.co

http://www.dian.gov.co

firm’s Bogota office serves as the base for theAndean region (Venezuela, Ecuador, Peru andColombia), advising clients in consulting, documenta-tion and dispute projects. Advice is also available toclients in other countries, including Chile, Guatemala,Panama, Dominican Republic and El Salvador. The firm helps its clients with consulting, docu-

mentation, disputes and TP controversy. The teamwas responsible for successfully negotiating the firstadvance pricing agreement (APA) in Colombia and isalso in the process of securing the first APA inEcuador. The firm recently advised a company on a busi-

ness unit transference. The activities performedincluded the determination of the business unit mar-ket value, and the purchase price allocation of thisvalue. This also required the valuation of intangibleassets with no book value.“They provide great advice in taxation and plan-

ning,” one client said.Both the tax and the TP department at Brigard &Urrutia Abogados are led by José Andrés Romero.Two partners and six other professionals adviseclients on all areas of transfer pricing including advis-ing on legal and economic issues. The team consistsof lawyers, economists, accountants and other pro-fessionals, which allows for client solutions that lookat all possibilities. It also provides training for clients’in-house transfer pricing teams. The team mostly works with clients in the mining,

agriculture, oil and gas, entertainment and servicesindustries. “They are very good, efficient, solution-ori-entated and hands on. In particular, we work withAndrés Hernández, José Andrés Romero and NicolásBernal Abella,” said a client. In February 2016, the firm performed a TP analysis

for a company that was restructuring. The businessrestructuring was innovative because the firm’sanalysis and projections on the new business modelproved to the management that its restructuring planwas not efficient from a tax perspective. The firminstead proposed another business model that wasmore accurate for the type of business the groupwas running.

Deloitte Colombia advises on compliance, consult-ing, planning, value change management, valuationsand dispute resolution. Jose Erney Guarín runs thetransfer pricing department, which consists of him-self and 30 other TP professionals. Guarín has more than 18 years of experience,

which includes participating in and supervisingengagements in tax planning, tax diagnosis, due dili-gence, tax outsourcing, and the review and prepara-tion of tax returns.Clients of the firm predominantly come from indus-

tries such as energy and resources, consumer busi-ness, manufacturing, life sciences and healthcare,and technology, media and telecommunications(TMT).The team is helping a company with TP planning,

including a defence file. The TP practice teamed upwith tax colleagues in order to build a funding struc-ture for a Canada-based company. The firm assessedwhether the transaction was at fair market value inorder to comply with anti-abuse provisions, and alsobuilt a defence file for the client.PwC offers a range of transfer pricing services, such

as defence, special attorney, compliance, APA sup-port, consultancy, general consulting and TP plan-ning. Carlos Mario Lafaurie Escorce leads the prac-tice. He has carried out domestic and internationaltax planning projects, and is a member of both thetax consulting and tax compliance teams where hecounsels clients on various taxes such as incometaxes, sales taxes, industry and commerce taxes, andwithholding tax obligations.

Tier 2 Diana Mogollon is in charge of BaseFirma’s team ofthree partners and 10 other transfer pricing profes-sionals. The team helps clients with setting andimplementing TP policies, structuring their sharedservices centres, valuing companies, tangible andintangible assets, planning their transactions, devel-oping master files, TP models and manuals. The firm can also help with TP audit defences. The

team builds multiple scenarios and economic modelsof a client’s TP situation, and helps to present and

Colombia



Colombia



Corporate income tax rate 25% (a) Corporate income tax for equality rate 9% (b) Corporate income tax for equality surtax 6% (c) Capital gains tax rate 10% Branch tax rate 25%

Withholding tax (d) Dividends 0/20/40% (e) Interest 0/5/14/33% (f) Royalties Software 26.4% Other 33% Technical services, technical assistance

and consulting services 10% (g) Branch remittance tax 0/40%

Net operating losses (years) Carryback 0 Carryforward Unlimited

a) Reduced and gradually increasing income tax rates exist.

Also, a wealth tax applies to companies for 2015 through

2017.

b) This tax applies to local corporate taxpayers required to file

an income tax return, which include branch offices and

permanent establishments (PEs) of foreign entities.

c) The surtax applies to income tax for equality taxpayers on

their taxable income that exceeds COP800 million. The

surtax apples for 2015 through 2018. The rates of the

surtax are 5% for 2015, 6% for 2016, 8% for 2017 and 9%

for 2018. The surtax is subject to an advance payment

that is calculated applying the corresponding tax rate for

the relevant year to the taxable income of the prior year.

The surtax does not apply to companies that operate or

are located in offshore free trade zones.

d) Corporate income tax rates applicable to non-residents

that receive Colombian source income not attributable to a

branch or PE and that are required to file an income tax

return in Colombia are temporarily increased from 2015

through 2018 (2015: 39%; 2016: 40%; 2017: 42%; and

2018: 43%). The National Tax and Customs Administration

issued Official Opinions 11676 and 12343 of 2015, which

state that withholding tax rates set at 33% were not

modified because the increase of the corporate income

tax rates for foreign entities did not change the general

withholding tax rates. However, these opinions did not

address the withholding tax rate applicable to dividends.

Consequently, the increase of rates may affect the

applicable withholding tax rate on dividends.

e) Dividends paid to non-residents are not subject to tax if

the dividends are paid out of profits that were taxed at the

corporate level. If the profits were not taxed at the

corporate level, dividends paid to non-residents that are

not attributable to a branch or PE are subject to

withholding tax at the corporate income tax rate of 40%

for 2016. Dividends paid between domestic corporations

are not subject to tax if the company generating the

profits out of which the dividends are paid is taxed on

these profits in Colombia. Otherwise, the dividends are

included in the income tax return of the recipient of the

dividends. A 20% withholding tax is imposed on dividends

paid to residents if the taxpayer is required to file an

income tax return.

f) Interest paid or accrued by Colombian residents to foreign

entities on loans with a term equalling or exceeding one

year are subject to 14% withholding tax; otherwise, the

applicable rate is 33%. Interest paid on loans that have a

term equal or greater than eight years and that are related

to certain infrastructure projects are subject to a 5%

withholding tax. Interest paid by Colombian financial

institutions and interest paid by Colombian residents to

foreign entities with respect to international trade

operations are deemed to be foreign-source COLOMBIA

307 income and are accordingly exempt from withholding

tax. Certain qualified loans executed before 31 December

2010 do not generate Colombian-source income. As a

result, interest on such loans is exempt from withholding

tax.

g) This withholding tax applies to consulting services,

technical services and technical assistance services

rendered in Colombia or from abroad by non-residents that

are not domiciled in Colombia.


negotiate its case against the tax authorities, andserves as a bridge for communication between thecompany’s headquarters and the local tax authorities.The firm is working on a case with a company on

how to restructure its international operational finan-cial and economic structure by targeting key financialindicators provided by the firm. Clients of the firmmainly come from food, fast-moving consumergoods (FMCG) and agriculture, manufacturing andenergy and utilities, but the firm also serves compa-nies in various other sectors.Andrés Felipe Parra Ramírez leads the TP practice

at EY. The firm helps clients understand and managetheir tax compliance and reporting obligations. It alsohelps with assessing and improving tax structures,risk management and maintaining effective relation-ships with the tax authorities. Clients can also seekhelp with documentation, planning, cross-bordertransactions and controversy work. Clients of EY Colombia work in sectors such as

energy and utilities, hospitality, manufacturing,healthcare and financial services.The transfer pricing department at Godoy & HoyosAbogados has one partner and five other profes-sionals. The firm’s clients mainly work in the manu-facturing, food, FMCG and agriculture, financial serv-ices, energy and utilities and computers, digital, soft-ware and online industries, to name a few. Godoy &Hoyos offers services including planning, compliance,controversy and competent authority procedures.In 2016, a tobacco company hired the firm to rep-

resent it before the tax authority on a transfer pricingtax litigation procedure. The tax authority proposedto disallow cost and expenses with related parties

and questioned the validity of the transfer pricingeconomic analysis of the company. The firm man-aged to highlight substantive issues not consideredby the tax authority in its requirements and the studyof the case.“My experience with the firm is excellent. Both the

partners and the associates are knowledgeable anddiligent,” said one client.The transfer pricing practice at KPMG focuses on

planning and compliance for companies with opera-tions in Colombia and Latin America. Partner VicenteJavier Torres heads the practice.Martin Acero, Guillermo Infante, Dante Sanguinetti,

Mario Silva, Carolina Rozo and Walker Villanueva co-head the TP practice at Philippi PrietocarrizosaFerrero DU & Uría. Five other professionals are alsoemployed by the practice. The firm focuses on mat-ters like the drafting and filing of transfer pricingreturns and reports, performance of benchmarkings,advice on multinationals structuring, litigations, andintercompany agreements. The firm is advising an automotive company on

various transfer pricing matters, including running aTP analysis taking into account changes to the con-ditions of intercompany transactions. This dealinvolves substantial adjustments based on thechanging conditions of the transactions, adding sig-nificant complexity to the case. Many of the firm’s clients work in financial services,

TMT, manufacturing, and healthcare. “I had a really good experience, I received integral

support in the advice and interdisciplinary help. I’msatisfied with the services and recommend them toothers,” said one client.

Colombia



LEADING FIRMS


2 WTS Alfery

Unlike many jurisdictions, the tax authorities in theCzech Republic are not especially focused on transferpricing, instead VAT fraud captures most of their auditattention. Even so, changes to the transfer pricingmarket have been introduced in response to theOECD’s BEPS project. EU directives have altered the TP documentation

required in the jurisdiction. This includes the intro-duction of country-by-country reporting (CbCR) andthe automatic exchange of information between taxauthorities.The commencement of the automatic exchange of

information will take place in the Czech Republic inSeptember 2017. Full implementation of the BEPSproposals is something that will take time in thejurisdiction however. “We are aware of [the BEPS rec-ommendations], but it is not something that hasbeen implemented into Czech law, so the practice istotally different to the theory,” said Jana Alfery, partnerat WTS Alfery.So far as implementation of Actions 8-10 of the

BEPS report is concerned, there is no specifictimetable in place in the jurisdiction for these to be

transposed into law. In practice, the Czech authori-ties focus on the economic substance of transac-tions, meaning that all of the commonly acceptedmethods for TP calculations are accepted, so longas an actual economic basis for the transactions isdemonstrated.The use of advance pricing agreements (APAs) in

the jurisdiction is fairly uncommon, and the authori-ties seldom discuss structures with taxpayers beforethe submission of a tax return, although this is notto say that it is never done.“With respect to transfer pricing you can submit a

formal request to the Ministry of Finance to approveyour transfer pricing procedure, but it takes time, andI do not know of many companies who would wantto submit a request. What most companies do is justcomply, and then when they have an audit they pre-pare the documentation,” said Alfery.The Czech Republic never implemented the OECD’s

transfer pricing guidelines into its domestic law, sothe preparation of transfer pricing documentationremains voluntary. The tax authorities will occasion-ally request it as a part of an audit and it must thenbe submitted to them within 15 days. The position of taxpayers is one of relative insecurity

– the approach of the tax authorities toward taxpayershas been said by some advisers to be unnecessarilyaggressive, generating conflict and uncertainty.

Tier 1 Deloitte’s transfer pricing practice in the CzechRepublic is led by Marek Romancov, who overseesa team of one other partner and 16 professionals.


Czech RepublicTax authorities Ministry of FinanceLetenská 15 118 10 PrahaTel: +420 257 04 1111Fax: +420 257 04 2788Email: [email protected]: www.mfcr.cz


http://www.mfcr.cz

Four of these focus on TP disputes, and 18 work inTP compliance.The firm offers a full advisory and documentation

service which advises clients on the set-up andmaintenance of their TP policies, as well as the localdocumentation requirements and the selection ofthe most appropriate TP methods in the face of anincreasingly confident Czech revenue service.The past year has seen the firm design a method-

ology for the provision of central procurement activi-ties and set up a price for these activities for a multi-national retailer. The work related to the Czech com-pany and its four foreign subsidiaries. The year alsosaw them design and implement a TP policy for afast growing Czech-based software start-up, whichinvolved a full redesign of certain business processesnot initially caught in the question of transfer pricing,so as to ensure the company was operating a com-pliant and efficient model.EY takes a multi-disciplinary approach to transfer

pricing. The firm’s professionals help clients to build,manage, document, review and defend TP structures.They offer a service that includes structure design,documentation preparation and maintenance andcontroversy risk management.PwC in the Czech Republic is led by David

Borkovec, lead tax and legal partner. PwC offers a full

TP service alongside its tax functions. It has the abil-ity to work with their clients on a range of cross-bor-der tax and TP issues. In the arena of transfer pricing,the services it offers include the preparation of TPdocumentation, assistance in the preparation andnegotiation of APAs and assistance in preparing TPbenchmarking studies.KPMG offers a TP service that aims to aid compa-

nies in the design, maintenance and defence of theirTP strategies. It aims to ensure that their clients arenot only compliant, but that they are keeping pacewith the rate of change in the world of tax. Workingwith the companies, it designs tax structures that aresuitable for the post-BEPS world.

Tier 2WTS Alfery is led by managing partner Jana Alferyand has a team of five people, made up of one part-ner and four other professionals. One covers TP dis-putes and the other three cover TP compliance.Clients the firm has advised this year include

Bühler Motor, as well as a large multinational elec-tronics manufacturing conglomerate. This includedrepresenting Bühler Motor during a large TP auditwhich meant it was necessary for them to co-oper-ate with a partner firm within the WTS network inGermany.

Czech Republic



Czech Republic



Corporate tax rate 19% (a)Capital gains 0/19% (b)Branch tax 19%

Witholding tax Dividends 1/15/35% (c)(d)(e) Interest 1/15/35% (c)(e)(f)(g) Royalties 0/15/35% (c)(e)(g)(h)


a) Basic investment funds are subject to tax at a rate of 5%.

The preferential treatment will be available for

Liechtenstein residents as of the date of legal effectiveness

of the Czech Republic-Liechtenstein tax treaty. A 0% rate

applies to pension funds.

b) Capital gains derived by Czech or EU/EEA parent

companies on transfers of shares in their subsidiaries are

exempt from tax if certain conditions are satisfied. The

preferential treatment will be available for Liechtenstein

residents as of the date of legal effectiveness of the Czech

Republic-Liechtenstein tax treaty.

c) The rates may be reduced by applicable tax treaties.

d) Dividends are subject to a final withholding tax at a rate of

15%. Under the principles of the EU Parent-Subsidiary Directive

(No. 90/435/EEC), dividends paid by Czech companies to

parent companies (as defined in the directive) located in

EU/European Free Trade Association (EFTA) countries are

exempt from withholding tax if the parent company maintains

a holding of at least 10% of the distributing company for an

uninterrupted period of at least one year. The preferential

treatment will be available for Liechtenstein residents as of

the date of legal effectiveness of the Czech Republic-

Liechtenstein tax treaty. Dividend distributions between two

Czech companies are exempt from tax under similar

conditions. Effective from January 1 2014, the tax exemption

does not apply if any of the following circumstances exists:

• The parent company or the subsidiary is exempt from

corporate income tax or similar tax applicable in its

jurisdiction.

• The parent or subsidiary may opt for an exemption from

corporate income tax or similar tax applicable in its

jurisdiction.

• The parent or subsidiary is subject to zero corporate

income tax or similar tax applicable in its jurisdiction.

e) The 35% withholding tax generally applies to Czech-source

income arising to Czech tax non-residents from countries

outside the EU/EEA that have not entered into a double tax

treaty with the Czech Republic or a bilateral or multilateral

tax information exchange agreement that is binding on both

the Czech Republic and the respective foreign country. The

35% withholding tax rate also applies if the Czech income

payer is unable to prove the tax residency status of the

respective beneficial income owner. If applicable, the 35%

rate affects all types of income subject to withholding tax (for

example, dividends, interest, royalties or rental income). It

does not affect rental income from financial leases if the 5%

withholding tax rate applies

f) Interest payments are subject to withholding tax at a rate of

15%. Under the principles of the EU Directive 2003/49/EC,

interest paid by Czech companies to related companies (as

defined in the directive) located in EU/EFTA countries is

exempt from withholding tax if certain additional conditions

are met. The preferential treatment will be available for

Liechtenstein residents as of the date of legal effectiveness

of the Czech Republic-Liechtenstein tax treaty.

g) For each type of income, EU/EEA tax residents may choose

to include the income in their tax return and have it taxed at

the standard corporate income tax rate after deduction of

associated expenses (while claiming a credit for the

withholding tax paid against tax liability stated in the tax

return) or they may choose to treat the withholding tax as a

final tax on the income.

h) This withholding tax applies to nonresidents. Under the

principles of EU Directive 2003/49/EC, royalties paid by Czech

companies to companies located in EU/EFTA countries are

exempt from tax if certain additional conditions are met. The

preferential treatment will be available for Liechtenstein

residents as of the date of legal effectiveness of the Czech

Republic-Liechtenstein tax treaty.


WTS Alfery s.r.o.Václavské nám. 40110 00 Praha 1Czech Republicwww.alferypartner.com

Key contact:Jana [email protected] +420 221 111 777

Czech Republic


http://www.alferypartner.com



LEADING FIRMS

1 Deloitte EY KPMG Acor Tax PwC

2 Bech-Bruun, Taxand Denmark CORIT Advisory Plesner

3 Vistisen Tax Attorneys

Firm to watch Bjørnholm Law

Denmark’s tax market has been heavily influencedby international trends, such as the OECD’s BEPSproject and the European Commission’s Anti-TaxAvoidance Directive. The BEPS transfer pricing (TP)documentation requirements, including country-by-country reporting (CbCR), came into effect onJanuary 1 2016. This has been a challenge forcompanies and has kept practitioners busy.

“BEPS is on everyone’s mind,” said EY head oftax, Vicki From Jørgensen.

“We are a small country and tax laws change,normally, all the time. However, we haven’t seen alot of amendment this past year so I would say themain emphasis and focus has been on interna-tional tendencies; it’s been BEPS but it has alsovery much been EU related,” said Jakob Bundgaard,head of tax and transfer pricing at CORIT Advisory.

Although BEPS has been a main topic this year,the anti-avoidance rules are starting to steal thespotlight. Denmark already has various anti-avoid-ance rules in place, including anti-hybrid entitiesrules, anti-hybrid loans rules and sophisticatedinterest limitation rules. “We now have all the BEPSreports prepared by the OECD in the last year andof course that is changing a lot of things in tax law.But I think the thing with Denmark is that in thepast decade, Denmark has been the front runner inintroducing anti-avoidance rules in all differentareas,” said Ole Schmidt, managing partner atKPMG Acor Tax.

The tax authorities have been under a lot of pres-sure and scrutiny after the country’s biggest taxfraud. In August 2015, the authorities alerted policeafter foreign companies appeared to have drainedmore than €800 million ($893 million) from the sys-tem. This reflected negatively on multinationals’transfer pricing, an area which was already undersome scrutiny from the tax authorities who havebecome more aggressive and have launched moreaudits over the past couple of years.

“They [the authorities] are struggling and trying tofind the right approach and some initiatives havebeen launched, of course with the purpose of gettingback on track,” said Bundgaard. “That includes forinstance a code of conduct for the employees andI’m sure they wouldn’t develop a code of conduct, ifthe conduct was just plausible.”

This has resulted in an increase in the demand forTP services. “Transfer pricing is very much in demandand general compliance and corporations have been


DenmarkTax authorities Ministry of Taxation – SkatteministerietNicolai Eigtveds Gade 28, DK- 1402 Copenhagen KTel: +45 33 92 33 92Fax: +45 33 14 91 05Email: [email protected]: www.skm.dk


http://www.skm.dk

even more cautious about their tax planning,” saidNikolaj Bjørnholm, founder of Bjørnholm Law.

As taxpayers adjust to the changing tax environmentand the tax authorities’ attitudes, practitioners havebeen busy advising on all transfer pricing areas. “It hasbeen a year where people try to consolidate and tryto come to terms with what the new changes andnew tax environment will be,” said From Jørgensen.

Tier 1Deloitte’s transfer pricing team is one of the biggestin Denmark with 36 dedicated professionals, headedby Asger Mosegaard Kelstrup. The team offers a fullrange of TP services and provides clients with techni-cal solutions. The aim is to help companies managerisks by aligning practical TP solutions with their over-all global business operations and objectives, assistthem with strategic documentation to support their TPpractices, and resolve their disputes efficiently.

Kelstrup has more than 15 years of transfer pricing

experience including business model optimisation,audit defence and controversy, including advancepricing agreements (APAs). Jonathan Bernsen workswith a range of global and Danish multinationals andfocuses on tax operating models, tax and TP tech-nologies. Another significant partner is AnjaSvendgaard Dalgas who has worked with transferpricing, corporate and international tax for more than10 years. She has assisted clients with foreignexpansion plans, including M&A and local countrytax planning, integrating both transfer pricing andinternational tax opportunities. Kasper Toftemark is apartner at Deloitte and has 15 years of experience intransfer pricing including controversy work, cross-bor-der tax planning, audit defence, double tax resolu-tion and aligning IT systems with TP reporting.

The firm promotes education and compliance andhas hosted several seminars on various TP issues,including BEPS, financial transfer pricing, CbCR andcontroversy.

Denmark



Corporate income tax 22%Capital gains tax 22%Branch tax rate 22%

Withholding tax Dividends 27% Interest 22% (a) Royalties 22% (b)


a) The 22% rate applies to payments on or afterMarch 1 2015.

b) The 22% rate applies to payments on or afterMarch 1 2015. The rate is 0% for royalties paidfor copyrights of literary, artistic or scientificworks, including cinematographic films, and forthe use of, or the right to use, industrial,commercial or scientific equipment. In addition,

the rate may be reduced or eliminated if certainconditions are met under the European Union(EU) Interest-Royalty Directive or a double taxtreaty entered into by Denmark.

c) A Danish branch office or a tax-transparententity may be recharacterised as a Danish tax-resident company if the entity is controlled byowners resident in one or more foreigncountries, the Faroe Islands, or Greenland and ifeither of the following circumstances exists:

• The entity is treated as a separate legalentity for tax purposes in the country orcountries of the controlling owner(s).

• The country or countries of the controllingowner(s) are located outside the EU andhave not entered into a double tax treatywith Denmark under which withholding taxon dividends paid to companies is reducedor renounced.



Henrik Arhnung oversees the TP practice at EY. Theteam consists of four partners and 29 other dedicat-ed professionals with a wealth of experience acrossall TP services and industries. The firm is recognisedby clients for its wide range of in-depth TP services.

A significant partner is the newly appointed HenrikHansen who heads the transfer pricing team in theAarhus office. Justin Breau leads the APA team, work-ing closely with Marc Schlaeger, head of the integrat-ed operating model effectiveness team.

Another key member of the team is executivedirector Sune Hvelplund who is the head of the con-troversy team, providing audit defence and litigationsupport.

The team strives to provide clients with integratedsolutions to improve the way they go about theirbusiness. This year, the team has worked on a num-ber of APAs, operational TP and audits.

EY remains one of the largest accounting firms inDenmark following the 2014 merge with KPMG.

KPMG Acor Tax’s TP team provides the full suite ofservices and are praised by clients and peers. Theteam seeks to deliver innovative solutions to knowntransfer pricing challenges and has specified tailoredIT requirements for automated TP monitoring andtaking a pragmatic approach to dispute resolution,focusing on achieving solutions and results with thetax authorities.

KPMG Acor Tax is the fresh take on KPMG inDenmark after the former KPMG member and EYmerged on July 1 2014.Simon Krogsgaard Schaadt and Henrik Lund over-

see the team of professionals. Krogsgaard Schaadtspecialises in various transfer pricing matters includ-ing disputes, international tax planning, compliance,and tax intelligence IT solutions. Lund has been partof KPMG’s global TP services network since 2001 andcreated KPMG Denmark’s TP audit task force in 2007,focusing on assisting clients in dispute managementand resolution, controversy and strategic handling ofprocesses connected with international tax and TPaudits. Another significant member of the transferpricing team is Martin Nielsen who has more than17 years of experience on cross-border work with

multinational clients in various industries. He is alsopart of the KPMG Acor Tax leadership team.

The team has continued to grow this year, but con-tinues to consist of highly experienced professionalswith knowledge gained from working with Big 4firms. Jørgen Juul Andersen is the head of PwC’s Danish

TP group. He has a wealth of experience in transferpricing, including implementation, restructuring, plan-ning, optimisation, documentation, APAs and disputeresolution.

The firm offers an extensive array of TP services to itsinternational and multinational clients. Juul Andersen isa member of PwC’s global TP group of almost 2000specialists and has written about transfer pricing forvarious Danish and international publications.

PwC has 16 offices across Denmark and offers aninternational focus as part of the global network.

Tier 2Anders Oreby Hansen is the head of tax and transferpricing at Bech-Bruun, Taxand Denmark. The teamoffers a full range of TP services including disputehandling and strategic advice. The team is creating aniche within the market, to have a focus that takesinto account a mix of economics, finance and legalservices. It has seen an increase in the amount oftransfer pricing work it undertakes and assistedapproximately 25% of the total amount of TP casesmade by the tax authorities in 2015.

Transfer pricing has become a key focus area forthe firm. It delivers both legal advice, traditionalaccounting and supply chain analysis services. Afinancial analysis team has been added to the groupwhich is active in transfer pricing and tax assess-ment cases. Jakob Bundgaard is the head of transfer pricing

and tax at CORIT Advisory. The team of nine dedi-cated professionals assists clients on classic transferpricing matters including identification and pricing ofinter-company transactions, implementation ofstrategies, formulation of official multinational poli-cies, documentation, dispute resolution and APA fil-ing and negotiations.

Denmark


CORIT has joined with Copenhagen Economics forits transfer pricing offering to the European market.The firm offers long standing TP valuation expertise,applied worldwide, in various industries.

The firm is unique as it is fully independent and isnot part of a law or accounting firm. It relies on aca-demia and the team’s strong technical expertise, aswell as running a think-tank on international tax mat-ters, which publishes articles and books as well asoffers training courses.

Other significant members of the TP team includeAnne Katrine Føgh Michaels, Katja Dyppel Weber,Christian Plesner Rossing, Anders Nørgaard Laursen,and Louise Fjord Kjærsgaard.

The transfer pricing team at Plesner consists of 10tax professionals, including five partners. The team isheaded by Hans Severin Hansen and maintainsstrong expertise in litigation and controversy. The firmhas seen an increase in TP work and is continuingto assist a number of large companies.

The tax authorities have a persistent focus on thetransfer of intellectual property and Plesner is assist-ing various clients targeted by the authorities in land-mark cases, nationally and internationally. The prac-tice reported it has seen an increased demand forassistance in discussions with the authorities in allo-cation of profit cases, loss making entities and intra-group financing.

Another leading partner is Lasse EsbjergChristensen, who advises Danish and foreign busi-nesses and represents clients before the courts. Heis praised by clients for his transfer pricing and taxadvice, one saying: “Personally I praise Lasse Esbjerg

Christensen for his highly skilled, spot-on and swifttax advice. He is a very knowledgeable lawyer, hard-working and very technically skilled.”

In April 2016, partner Nikolaj Bjørnholm, a skilledand highly praised professional, and the firm part-ed ways.

Tier 3The highly praised niche tax litigation firm, VistisenTax Attorneys, is recommended by its peers andclients for transfer pricing controversies. EduardoVistisen is the founding partner and the sole TP prac-titioner. He is an acclaimed litigator with expertise inDanish and international tax litigation before theDanish courts and administrative tribunals, as well asthe European Court of Justice.

Firm to watchNikolaj Bjørnholm founded Bjørnholm Law in March2016 after more than 20 years of tax and transferpricing experience with various firms. He is the solepractitioner at the new firm focusing on tax contro-versy and international taxation. Bjørnholm alsooffers advice in a range of TP matters and audits. Hehas represented clients before the courts in a num-ber of audits including negotiations and settlement,oral procedure at the Danish tax tribunal and assis-tance in regard to court cases.

He is a recognised litigator and was highly spo-ken of by his peers and clients. One client said:“We have used Bjørnholm Law on several occa-sions and have benefitted from their professionali-ty and commitment.”

Denmark



Nikolaj BjørnholmPartner / Attorney-at-law

Tel: +45 30 93 71 93Email: [email protected]: www.bjornholmlaw.com

Strandvejen 60DK – 2900 Hellerup, CopenhagenDenmark

Denmark



http://www.bjornholmlaw.com

LEADING FIRMS


2 Alder & Sound Borenius, Taxand Finland

3 Roschier

Firm to watch Bird & Bird

Although transfer pricing has become one of thehottest topics in mainstream media and public dis-cussion in Finland, uncertainty remains around thesubject of the impact of the OECD’s BEPS project.There have been no regulatory changes as a resultof BEPS, however, in December 2015 the Ministry ofFinance published a draft bill outlining the project toimplement updated TP documentation requirementsincluding country-by-country reporting (CbCR). The billwould require companies to also file master andlocal files on financial years on or after January 2016,with effect from January 2017. Advisers suggest the proposal will be implemented

later this year but that before regulation changes, theauthorities’ attitudes are already aligning with BEPS.“The Finnish tax authorities have been activelyinvolved in the OECD’s BEPS project and therefore thedifferent approaches presented in the BEPS discussionsdrafts and reports, final or not, have already beenapplied retroactively in the daily monitoring, ongoing

audits and assessment processes,” said Petteri Rapo,senior associate and acting CEO at Alder & Sound. One major area that has felt the effect of the proj-

ect is audit and assessment processes. The numberof transfer pricing auditors has significantly increasedover the past years and there has been a crackdownon transfer pricing practices. Multinationals are par-ticularly feeling the pressure as the authorities chal-lenge their structures more. “The biggest thing in theFinnish tax market is that the Finnish tax administra-tion has been very aggressive in tax audits and inthe court cases that are pending,” said Janne Juusela,head of tax at Borenius, Taxand Finland. While Finnish taxpayers in general are feeling a

growing aggressive trend from the authorities, it isespecially evident in transfer pricing cases. Advisersreported there have been an increase in audits inrecent years as well as questionnaires relating to TPissues during the yearly tax assessment. “In somecases, the eagerness to act on the topic has not hadsupport from the facts of the case, resulting in signif-icant assessments and disputes without proper sub-stance or sufficient argumentation to back up theadjustment measures,” said Rapo.Apart from the increase in audits and aggressive

tax authorities, it has been a stable year in Finland.Juusela said: “The current government have beenvery passive on tax legislation so there hasn’t beenany major proposals.” Transfer pricing professionalsexpect BEPS actions to be implemented later thisyear or next year.

Tier 1Outi Ukkola leads the transfer pricing team atDeloitte and has more than 20 years of experience


FinlandTax authorities Finnish Tax AdministrationFinnish Tax Administration, OCR Service, Corporate, PL 200, 00052 VEROTel: 020 697 051 (from inside Finland); +358 20 697 051 (from outside Finland)Website: www.vero.fi

http://www.vero.fi


Finland



Corporate income tax 20%Capital gains tax 20%Branch tax rate 20%

Withholding tax Dividends 0/15/20% (b) Interest 0/20% (c) Royalties 20% (d)


a) The withholding taxes apply only to paymentsto non-residents. The rates may be reducedby tax treaties.

b) No withholding tax is imposed on dividendspaid to a parent company resident in anotherEuropean Union (EU) country if the recipientof the dividends satisfies the followingconditions:

• It holds directly at least 10% of the capitalof the payer.

• The recipient of the dividend is a companyqualifying under Article 2 of the EU Parent-Subsidiary Directive. Companies resident inEU or European Economic Area (EEA)member states are generally eligible forthe tax exemption for dividends under thesame conditions as comparable Finnishcompanies if the Finnish withholding taxescannot be credited in the company’s stateof residence and if sufficient exchange ofinformation may take place betweenFinland and the state of residence of therecipient. Dividends paid to a companyresident in an EU/ EEA member state aresubject to withholding tax at a rate of 15%if the shares constitute investment assetsof the recipient company and the recipientowns less than 10% of the Finnishcompany.

c) Interest paid to non-residents is generallyexempt from tax unless the loan may bedeemed comparable to an equity investment.In general, interest paid to resident individualsis subject to a final withholding tax of 30% ifit is paid on bonds, debentures and bankdeposits.

d) No withholding tax is imposed on royaltiespaid to non-residents if all of the followingconditions are satisfied:

• The beneficial owner of the royalties is acompany resident in another EU country ora permanent establishment located inanother EU country of a company residentin an EU country.

• The recipient is subject to income tax in itshome country.

• The company paying the royalties, or thecompany whose permanent establishmentis deemed to be the payer, is anassociated company of the companyreceiving the royalties, or of the companywhose permanent establishment isdeemed to be the recipient.

A company is an associated company ofanother company if any of the followingapply:

• The first company has a direct minimumholding of 25% in the capital of thesecond company.

• The second company has a directminimum holding of 25% in the capital ofthe first company.

• A third company has a direct minimumholding of 25% in both the capital of thefirst company and the capital of thesecond company. Royalties paid to residentindividuals are normally subject to salarywithholding.


in taxation, focussing on TP planning, documenta-tion and litigation. She is a published author and aregular speaker at various tax seminars both inter-nationally and in Finland. The team of dedicatedprofessionals helps companies manage risk byaligning practical solutions with their overarchingglobal business goals and operations, assists withstrategic documentation and in the resolution ofdisputes. A full range of services is offered, includ-ing examination defence, mutual agreement pro-cedures (MAP) and business optimisation services.The team has a strong focus on dispute avoidancewith the ability to offer advance pricing agree-ments (APAs) support. Kennet Pettersson is the head of transfer pricing

at EY. The team consists of 15 other professionals.Pettersson works closely with executive directorJouni Honka-aho, who has more than 10 years’experience on transfer pricing, documentation anddesigning TP models. The large accounting firm isbased in Helsinki and has a full suite of services onoffer.The team helps clients build, manage, document,

review and defend their transfer pricing policies andprocesses to align them with their business strategy.

KPMG’s transfer pricing team comprises a mix oftax advisers and finance experts with a strong focuson tax audits, international dispute resolution and TPdocumentation. Eric Sandelin is the head of thedepartment which has expertise in financial transac-tions shown through their benchmark analysis andvaluations. The team provides value chain manage-ment and operational transfer pricing. Key industriesfor the firm include welfare services, public adminis-tration, real estate and construction and consumerproducts. Tax partner Sari Takalo is the head of PwC’s trans-

fer pricing team. As well as transfer pricing, she alsospecialises in corporate taxation and M&A. Theaccounting firm has a large tax department consist-ing of more than 140 tax and legal professionals. Itoffers a wide array of transfer pricing services includ-ing documentation, design and policy advice withinvarious key industry sectors.

Tier 2Managing partner Hannu-Tapani Leppänen is thehead of the transfer pricing department at Alder &Sound. The team consists of three partners and 12dedicated professionals committed to providingmultinationals with an extensive range of tax servic-es. Transfer pricing is a key practice area for the firm.It offers a wide array of services with emphasis oncompliance, including documentation support. Theaim is to provide a comprehensive turnkey solution,utilising the cross-discipline approach and aligningthe optimal TP model with both the operationalmodel and strategic goals of corporations. This year, the firm won major new clients and

engaged various high-profile cases involving cross-bor-der transfer pricing issues. The team comes highly rec-ommended, one client said: “In the past we have usedother firms for transfer pricing in Finland, but Alder &Sound offers better service and especially Alder &Sound listens very well to what the client needs.”Newly appointed head of transfer pricing, Markku

Renko, oversees the practice at Borenius, TaxandFinland. He specialises in transfer pricing, includingplanning tax-effective operating structures, pricingintragroup transactions and documentation, as wellas all areas of tax. Renko works closely with thefirm’s head of tax Janne Juusela, who has a wealthof experience in litigation, M&A and transfer pricing.The impressive clientele consist of corporate entitiesincluding private equity funds, institutional investors,and banks, multinational and family-owned compa-nies, along with associations, authorities and privateindividuals. Some of the work the team assisted clients with

this year included transfer pricing disputes, the valu-ation of intragroup licensing of intangibles and cross-border reorganisations. The firm is highly praised byits clients. One said: “We would use and recommendthem again, they have some of the best individualsin the field.”

Tier 3The transfer pricing team at Roschier is small butfocused on complex transfer pricing planning and

Finland



disputes. The team, headed by Mika Ohtonen, whois supported by several senior associates, representmultinationals in TP disputes. The transfer pricingwork represents almost a third of the firm’s overalltax work but the team is not regularly involved in TPdocumentation work.

Firm to watchBird & Bird’s Finnish tax practice was established lastyear and is headed by Sami Tuominen. The tax team

consists of four professionals, with two of them alsoworking in transfer pricing. Anna Shusmkaya joined thefirm in the autumn of 2015 and has extensive experi-ence in all aspects of transfer pricing. Before joiningBird & Bird, she worked at the Finnish tax authoritydealing with TP matters and remains an active mem-ber of the International Fiscal Association (IFA). Apartfrom providing clients with advice in Finnish, English,Swedish and Russian, the team also offer value addedservices such as regular training and seminars.

Finland


In recent years, corporate tax has become akey topic in the public sphere and westerncountries have promoted a new tax paradigmaimed at taxing profits at their source.This assertion of the need for taxation at

source is the motivation behind the OECD ini-tiative on BEPS, finalised in October 2015, aswell as the European Anti-Tax AvoidanceDirective (ATAD) recently adopted by the EU.These discussions have naturally impacted

the French tax authority’s (FTA’s) recent posi-tioning towards transfer pricing. This has ledto i) higher tax transparency requirementsand ii) a stricter review of transfer pricingduring tax audits. However, independentlyfrom the FTA, this situation iii) raises thequestion of double taxation and of the neces-sity for a consensus to be reached betweencountries on the application of the new BEPS-inspired rules.

Transparency: the main topic for the FTA in2016The FTA has launched an extensive plan forincreased transparency, notably through theimplementation of county-by-country reporting(CbCR). France was one of the first countriesto transpose this new BEPS standard inDecember 2015 for fiscal years starting on or

after January 1 2016. In-line with OECD rec-ommendations, groups that report more than€750 million ($830 million) in revenues willhave 12 months after the fiscal year ends to filetheir CbC reports in France. Local filing will notbe required if the group confirms that it hascomplied with the obligation in a jurisdictionthat shares the information with France. As it isdrafted, the law is fully aligned with theOECD, although additional clarification isexpected in a decree to be published in thecoming weeks.So far, information from CbCR is only sup-

posed to be exchanged between tax authorities,nonetheless the French parliament is pushing tomake it public. In addition to the discussions onpublic CbCR at European level (Directive pro-posal issued on April 12), some members of theFrench parliament are pushing to make it publicin France with a threshold that would decreaseover a few years from €750 million ($850 mil-lion) to €200 million. Whether or not this pro-posal is voted in at this time, it is clear that inthe near future CbCR, or at least a part of it,will be made public, and groups should getready for this.In addition to CbCR, the FTA decided to

lower the threshold for the filing of the French TPform that is due within 6 months after the filing


An introductory chapter providing an overview of France’s transfer pricing policies in thepast year, by Grégoire de Vogüé and Julien Pellefigue of Taj, a member of DeloitteTouche Tohmatsu.

France

Tax authorities Ministry for the Economy and FinanceTélédoc 151139, rue de Bercy75572 Paris Cedex 12Tel: +33 1 40 04 04 04Website: www.economie.gouv.fr

http://www.economie.gouv.fr


of the tax return. The threshold will decreasefrom €400 million in assets or turnover for thelargest entity of the group to €50 million for fis-cal year 2016 (to be reported in 2017). This form,which does not trigger significant penalties, isused by the FTA to identify potential TP issues,and thus to program tax audits. Therefore, it is akey element for French companies managing theirbusiness tax filings with the FTA.

More stringent tax auditsFrance has a reputation for being quite aggres-sive towards transfer pricing, and the least wecan say is that it has not relented. In particular,we have seen companies audited several timeswithout any increase to their business taxassessment. These companies were deeply andheavily scrutinised, and situations that wereaccepted in the past were seriously challenged.Notably, the use of principal companies is beinghighly attacked, with an attempt from the FTAto analyse the full value chain, and to measurethe precise value added to the global value cre-ation process by the French entity. This requiresproviding more precise elements on the rest ofthe group. To obtain information the FTA hasextensively, and successfully, developed the useof administrative assistance.To some extent a purely one-sided approach

is no longer accepted, and more and more theFTA is requiring a complete overview of thegroup and its profitability. This could be usedeither to criticise the French functional profile,or to ask for a higher remuneration at arm’s-length. To some extent the FTA is slowlyswitching to methods aimed at allocating profitover the group.To do so, the FTA benefits from new tools.

Apart from the TP form and CbCR, France has

implemented an obligation to provide, on thefirst day of an audit, the company’s electronicaccounts in a standardised format (theElectronic Accounting Entries File). And TPaudits nearly always mean the use of IT audi-tors, focused on checking profitability by divi-sion or product line, providing more depth toFrench TP challenges.

New rules yet to emergeThese new FTA practices are likely to createsignificant incidences of double taxation, how-ever in practice eliminating double taxation isbecoming more and more complex for taxpay-ers. For example, in the US, the number of fileshas increased by more than 30% over the lasttwo years. Since countries are using newapproaches that are not commonly shared,reaching a consensus is more and more difficult.The increased pressure on transfer pricing

from western tax authorities should alsoinclude a higher effort to define clear andshared guidelines in order to reach the sought-after goal of taxing profits where they aremade. This means considering more and morethe global value chain rather than each indi-vidual piece separately, although this wouldimply reaching a consensus on the rules to beapplied. To some extent, profit splits havebeen a promising answer, however, despite thecurrent OECD focus on this topic, no consen-sus has yet to be obtained on how to make anefficient profit split. Creating this new set ofrules should nevertheless be high on the agen-das of the various tax authorities, includingFrance. Otherwise, the increased pressure ontransfer pricing could lead to an attrition ofinternational trade with potential negativeconsequences on growth.

France


LEADING FIRMS

1 Arsene Taxand, Taxand France Baker & McKenzie CMS Bureau Francis Lefebvre EY Fidal Taj, Société d’Avocats (Deloitte)

2 Freshfields Bruckhaus Deringer Landwell et Associes (PwC)

3 August & Debouzy DLA Piper LexCase Mayer Brown

The tax authorities in France have an aggressivereputation among taxpayers, both domesticallyand internationally. In previous editions of WorldTransfer Pricing it was noted that there has beenan increasing tendency in France for tax matters tobecome criminal issues, and a series of raids dur-ing the first six months of 2016 on large multina-tionals’ offices in the country have only com-pounded this impression.

When it comes to the issue of transfer pricing inFrance and what kind of structures to adopt or avoid,Guillaume Valois of DLA Piper in France said: “Whatwe tell our clients is to perform audits of their struc-ture and their business organisation and how theyoperate in Europe, and in France in particular, andmake a validity check on what is in place. And inlight of what we know about the priorities of theFrench authorities and what we know about theirnew approach on these issues, see how, based onthese audits, they can improve their structure or reor-ganise their structure in order to be prepared for anydiscussions with the French authorities.”

The authorities are willing in France to engage inpre-filing informal meetings to discuss the relativestrengths of a company’s transfer pricing arrange-ments, according to Caroline Silberztein, Baker &McKenzie’s co-head of transfer pricing.

“Whenever we call them [the tax authorities] tohave a preliminary, pre-filing meeting to discussinformally a particular case, we have always had apositive response,” she said.

Having their arrangements accepted in advance bythe authorities can be more difficult for multination-als however, with the authorities seemingly reluctantto accept advance pricing agreements (APAs).

“If you are a large multinational you can go to thetax authorities and present a structure and get theiropinion on whether it is legitimate, this is standard,this is almost daily practice. What you cannot do isgo to them and get their blessing for setting up anovertly aggressive, almost fictional tax structure thatwould have the effect of shifting profits out of France.This they will not do for you,” said Vincent Daniel-Mayeur, head of tax at Freshfields BruckhausDeringer.

France has been a fast mover when it comes toimplementing of all aspects of the BEPS proposals.This is especially seen in the action points on trans-fer pricing (Actions 8-10) due to its domestic transferpricing rules already referencing the OECD’s guide-lines. This means that the new recommendationswere applicable immediately after the OECD formallyadopted them.

“I think France is certainly one of the countries thathas tried to implement the BEPS recommendationsas fast as possible. So therefore, the environment isdifficult in France. Clearly, the tax pressure is notgoing down, and actually we have seen an increasein our activity with respect to tax audits and litigation,as a result of this fast implementation,” said HervéIsraël of DLA Piper.

The recent spike in audits and raids looks unlikelyto subside according to Israël. Other advisers havepointed out that, there seems to be something of aneffort on the behalf of the tax revenue service tomake examples out of certain large multinationalsthat they consider to be abusing the tax law.

Tier 1 At Arsene Taxand, Taxand France, the transferpricing practice is led by Antoine Glaize, who also

France



heads Taxand’s international TP operations. InFrance, he is supported by a team of five other pro-fessionals. The team generally works with multina-tional enterprises that are considered to havesome kind of permanent establishment of man-agement competencies in France, such as a headoffice or a decision centre. They advise on thedesign, implementation and defence of TP struc-tures.

The firm also engages, on its clients’ behalf, in APAnegotiations and have the capability to defend theirclients to the tax authorities during audits or shouldthe matter end up in court.

The TP practice of Baker & McKenzie in France isheaded by Caroline Silberztein, former head of theOECD’s transfer pricing unit from 2001 to 2011.

Silberztein oversees a team of six professionalswhich helps in assisting multinationals from a

range of industries with TP risk assessment andthe management, design and implementation ofTP policies, as well as tax audits, tax litigation,mutual agreement procedures (MAP) and APAs, onboth a local and a global basis. The economic partof the transfer pricing practice is led by LionelOchs.

This year has seen Océane Le Naoures join theteam as an analyst.CMS Bureau Francis Lefebvre has a large num-

ber of senior professionals working in the area oftransfer pricing. The team includes François Hellio,who has more than 25 years of professional expe-rience in matters of international taxation, particu-larly transfer pricing. Julien Saiac, another teammember, specialises in offering advice and han-dling litigation in areas of international taxationand transfer pricing.

France



Corporate income tax 33⅓%(a)Capital gains tax 0/15/33⅓% (a)Branch tax rate 33⅓%

Withholding tax Dividends 30/75% (b)(c)(e) Interest 0/75%(b)(e)(f) Royalties 33⅓/75% (b)(e)(f)

Net operating losses (years) Carryback 1 (h) Carryforward Unlimited (i)

a) For resident companies, surtaxes are imposedon the corporate income tax and capital gainstax.

b) These are the withholding tax rates underFrench domestic law. Tax treaties may reduceor eliminate the withholding taxes.

c) Under the European Union (EU) Parent-Subsidiary Directive, dividends distributed by aFrench subsidiary to an EU parent company areexempt from withholding tax, if, among other

conditions, the recipient holds or commits tohold at least 10% of the subsidiary’s shares forat least two years.

d) The withholding tax rate is 75% for distributedprofits paid into uncooperative states.

e) No withholding tax is imposed on interest androyalties paid between associated companiesof different EU member states if certainconditions are met.

f) The withholding tax rate is 75% for interest onqualifying borrowings and royalties paid intouncooperative states.

g) Branch remittance tax may be reduced oreliminated by double tax treaties. It is notimposed on French branches of companies thatare resident in EU member states and aresubject to tax in their home countries.

h) Losses carried back may not exceed €1 million.i) The amount of losses used in a given year

may not exceed €1 million plus 50% of thetaxable profit exceeding this limit for such year.


EY’s TP practice in France is headed by JansMartens, who has spent this year engaged in severalimportant pieces of work for the firm involving largeFrench and international multinationals. These haveincluded helping find a solution to several interrelat-ed transfer pricing matters for a French multinational,arising from the OECD’s BEPS project. These includedcountry-by-country reporting (CbCR) requirementsand the risk of TP controversy both domestically andinternationally, as well as dispersed intangiblesaround the group.

EY has domestic and international clients active inthe areas of retail, life sciences and chemicals, realestate, private equity and energy as well as clientswho are government bodies. Most of the work thatEY has been undertaking has been to prepare itsclients for the implementation of the BEPS inspiredregulations, both in France and internationally.Fidal’s TP practice is generally well trusted by

French multinationals and has been highly praisedby its peers. It assists its clients in the planning andimplementation of TP policies, as well as support-ing them during tax audits. The firm also hasexpertise in negotiating APAs with the French rev-enue authorities. Taj, Société d’Avocats is Deloitte’s local office in in

France. It has a total of six partners and 25 other pro-fessionals working in the area of transfer pricing. Thisyear has seen the firm acquire one new partner, EricLesprit, who joined the firm from the French taxadministration. Lesprit’s role revolves around securingrisks related to international taxation in general, andtransfer pricing in particular, an area he has morethan 15 year of experience in.

This year saw Grégoire de Vogüé, another TPpartner, engaged in the structuring of a large multi-national’s intellectual property policy following anoperational restructuring. The aim was to betterreflect the new realities of the way that the client’sbusiness operated from different managerial hubsfollowing two decades of growth whereby the busi-ness was mostly oriented from France. The workwas undertaken to better reflect the change in thecompany’s realities.

Taj, Deloitte was well spoken of by its peers andclients in France and is in the position to offer ahigh quality of service to clients who operate acrossborders through the international network ofDeloitte offices.

Tier 2Freshfields Bruckhaus Deringer’s TP practice in Franceis overseen by Vincent Daniel-Mayeur. This year hasseen the firm advise an American multinationalinvolved in a dispute with the French tax authoritieson the legitimacy of their transfer pricing structure.

The challenge to the legitimacy uses BEPS-inspiredlanguage, and is one of the first of its kind in France.It is likely that it will end up constituting a test case,and it illustrates the firm’s ability to deal in high-pro-file, high-stakes tax disputes, and their ability to acton principles-based tax issues.Landwell et Associes is the French member firm of

the international PwC group. It has offices in 10French cities and has numerous professionals work-ing in transfer pricing. As a PwC member firm theycan offer their clients tax and transfer pricing adviceand implementation services in conjunction withPwC firms internationally.

Tier 3August & Debouzy assists its clients with validatingor implementing their transfer pricing policies, andalso offers support to their clients in the event of aTP audit. The firm was established in 1995 andadvises French and international clients, with onethird of its clients being non-French entities. A keycontact at the firm is Clara Ferrari, a senior associatewho covers transfer pricing through her work as aspecialist in tax.DLA Piper’s TP practice is headed by tax partner

Hervé Israël. The team consists of one partner andtwo other professionals, all of whom cover TPcompliance, and one of whom specialises in TPdisputes. This year saw the firm advise on theimplementation of a new transfer pricing regimefor a large French education provider prior to itssale. The firm also offered advice to a US software

France



developer about the TP policy that it had enactedin France. DLA Piper in France were well spoken ofby both their peers and clients.

LexCase was founded in 2009. A key contact forthe firm is Philippe Drouillot, a partner with experi-ence in analysis and optimisation, and advisingFrench companies, as well as foreign companies

setting up in France, on the most efficient tax andtransfer pricing structures to put in place.

Mayer Brown is internationally well regarded inthe transfer pricing arena, and France is no excep-tion. Partner Benjamin Homo, and his team advisesclients from a range of industries on domestic andinternational tax planning and transfer pricing.

France


Taj, Law firm, member of DeloitteTouche Tohmatsu Limited181 avenue Charles de Gaulle92524 Neuilly-Sur-Seine CedexTel: +33 1 40 88 22 50Website: www.taj.fr

Contacts:

Grégoire de VogüéPartner Transfer PricingTel: +33 1 40 88 22 20Email: [email protected]

Eric LespritPartner Transfer PricingTel: +33 1 40 88 86 75Email: [email protected]

Aymeric Nouaille-DegorcePartner Transfer PricingTel: +33 1 55 61 48 74Email: [email protected]

Julien PellefiguePartner Transfer PricingTel: +33 1 55 61 79 72Email: [email protected]

Jean-Luc TrucchiPartner Transfer PricingTel: +33 1 40 88 83 81Email: [email protected]

Profile

Taj is one of the leading French law firms,specialized in international tax and legalstrategies. With 466 practitioners, includ-ing 57 partners, Taj primary areas ofexpertise include international taxationand transfer pricing, mergers and acquisi-tions, indirect taxation, tax audit and liti-gation, international mobility taxation,labor law, business law and insolvency law.Taj is a member of Deloitte ToucheTohmatsu Limited, enabling its clients tobenefit from the expertise of 38 000Deloitte tax experts in 150 countries.

The rising volume and variety of inter-company transactions, the current evolu-tion of transfer pricing regulations and theincreased enforcement activities world-wide have made transfer pricing a majorarea of concern for global businesses.Within that framework, the goal of Tajprofessionals working alongside theDeloitte transfer pricing network is tohelp companies manage risks by aligningpractical transfer pricing solutions withtheir overall global business operationsand objectives, assist with strategic docu-mentation to support their transfer pric-ing practices, and resolve disputes effi-ciently.

The specificity of Taj approach is based onthe understanding that transfer pricing is,by nature, a transdisciplinary topic, at theintersection of Tax law, economics andbusiness strategy. Dealing efficiently withtransfer pricing matters, whether in con-sulting or litigation, therefore requires aproficiency in these three domains. Basedon this notion, Taj team has been built bycombining together attorneys at law,Ph.D economists and former strategy

France


http://www.taj.fr







consultants, which proved to be a verysuccessful approach and Taj won a well-earned reputation for quality and deliver-ing results.

France


LEADING FIRMS

1 Deloitte EY Flick Gocke Schaumburg PwC

2 Baker & McKenzie KPMG NERA Economic Consulting

3 Dentons Freshfields Bruckhaus Deringer Luther LW Tax Lemaitre Wittkowski Oppenhoff & Partners Warth & Klein Grant Thornton WTS

It is no surprise that the transfer pricing advisorymarket in Germany continues to grow with TPremaining one of the main topics for both taxpay-ers and advisers. The German economy had astrong and stable year, and even the legislativeenvironment saw few changes, a state that is notguaranteed in Germany. As the German federalelection will take place in 2017, there was little

change to the tax and transfer pricing legislationalthough it remains a discussion among politiciansand taxpayers alike.

While the legislative market has been quiet, thetax authorities have tightened their screws, follow-ing the international trend of increasing aggressive-ness. Advisers reported the authorities havefocused heavily on transfer pricing audits in thepast year, resulting in increased amounts of com-pliance work and reviewing structures. “The keydevelopment is the level of experience of the taxauthorities and, from what we can see, the taxauthorities are more educated and have moreexperience,” said Deloitte’s head of transfer pricingJobst Willmanns. As a result of this, taxpayers havealso become more aware and critical, which haskept advisers busy.

The OECD’s BEPS project is yet to have a legisla-tive impact in Germany. Although various actionpoints are partly covered in the current income taxlaw, advisers said they expect to see new regula-tions in terms of transfer pricing soon.

“Transfer pricing is absolute highest on every-body’s agenda. Again in terms of compliance, butalso in terms of setting up new structures, review-ing structures in the light of BEPS. Basically anincreasing amount of our business tax advice is


GermanyTax authorities Bundesministerium der Finanzen – Federal Ministry of FinanceWilhelmstraße 97, 10117 BerlinPostanschrift: 11016 BerlinTel: +49 3 018 682 0Fax: +49 3 018 682 32 60Website: www.bundesfinanzministerium.de

Bundeszentralamt für Steuern – Federal Central Tax OfficeAn der Kueppe 1, 53225 BonnTel: +49 228 406 1240Fax: +49 228 406 3200Website: www.bzst.de

http://www.bundesfinanzministerium.de

http://www.bzst.de


now around transfer pricing,” said ChristophRoeper, Deloitte’s head of tax.

Based on a first draft published in June 2016, theFederal Ministry of Finance issued a draft law onJuly 13 2016 that would implement the multilateralcompetent authority agreement on exchange ofcountry-by-country (CbC) reports, which Germanysigned on to along with 30 other countries onJanuary 27 2016. The draft also included the imple-mentation of the EU automatic informationexchange directive, which was adopted inDecember 2015, along with several other meas-ures to avoid base erosion and profit shifting.

“The CbCR is more or less fixed to be implement-ed on a global basis. Clients are a bit confused butalso have a clear view on that they now have todo something to manage their tax position and riskproactively. It’s not quite clear if it will be imple-mented in 2016 or 2017, but it is clear that it willbe implemented and therefore clients are lookingfor solutions to fit to the new BEPS documentationrequirements,” said Maik Thomas Heggmair headof transfer pricing at WTS Germany.

Although no date is set for the implementation,on February 26 2016, the German Federal Councilannounced its intentions to introduce severalBEPS-related measures in 2016.

Before anything has been implemented however,taxpayers are already taking the recommendationsinto their own hands and have started preparingfor what is to come. “As a consequence of theBEPS project multinationals as well as privateclients look more and more for safe, compliantstructures and are less focussed on tax optimisa-tion, especially with aggressive tax planning,” saidXaver Ditz, head of transfer pricing at Flick GockeSchaumburg.

Although there is still some uncertainty of whenthese changes will be implemented, the future oftransfer pricing is heavily dependent on the activi-ties of the government. Advisers reported the com-ing year will be an interesting one with new rulescoming into force as a reaction to OECD discus-sions, including transfer pricing documentation.

Tier 1Deloitte’s transfer pricing team in Germany is led byJobst Wilmanns, who works alongside 14 other part-ners and directors and over 90 transfer pricing spe-cialists. The team comprises a mix of economistsand lawyers with expertise in valuation, legal, imple-mentation, financial services and business modeloptimisation (BMO). Not only does the firm offer doc-umentation and audit work, but extends to valuationservices for intangibles and relocations of functions,BMO, M&A, advisory and IT-based solutions andcompliance.

The diverse clientele includes many of the mostprominent German multinationals, medium-sizedbusinesses and mid-market clients. This year, theteam expanded with the new addition of two seniormanagers, Daniel Bickenback from EY andStephanie Wahlig from PwC. The team assisted aGerman multinational to implement a new cen-tralised and tax efficient business model in Europe.

The team works in a wide spectrum of industries,ranging from automotive, consumer business, chem-ical and pharmaceutical as well as financial services.Deloitte Germany has eight offices across the coun-try, enabling the team to build close relationshipswith clients and provide flexibility so projects can betaken on at short notice. In addition to this, the teamhas developed and implemented technologicaltransfer pricing solutions, such as automated docu-mentation tools to assist with increasing documen-tation requirements. Oliver Wehnert oversees the transfer pricing prac-

tice at EY. The team, which consists of 15 partnersand 160 other fee earners, offers a full range oftransfer pricing services. The services comprise allareas including documentation, planning, controver-sy, and tax effective supply chain management.Additionally, the team offers services related to theintegration and harmonisation of transfer pricing sys-tems after acquisitions or restructurings.

The team gives advice in setting up new TP sys-tems and the development of cost allocation andcost sharing systems. In terms of controversy, thepractitioners assist in defending existing TP systems

Germany


Germany



Corporate tax rate 15% (a)Capital gains 15% (a)Branch tax 15% (a)

Witholding tax Dividends 25% (a)(b)(c)(d) Interest 0% (e)(f) Royalties 15% (a)(b)(f)(g)(h)

Net operating losses (years) Carryback 1 (i) Carryforward unrestricted (j)

a) A 5.5% solidarity surcharge is imposed.b) On application, these rates may be reduced by

tax treaties.c) This withholding tax applies to dividends paid to

residents and non-residents. Under the 2009Annual Tax Act, for dividends paid to non-residentcorporate entities, this rate may be reduced to15% if the non-resident dividend recipientqualifies as an eligible recipient under theGerman anti-treaty shopping rules.

d) These rates may be reduced under the EUParent-Subsidiary Directive. Under the EU Parent-Subsidiary Directive, on application, awithholding tax rate of 0% applies to dividendsdistributed by a German subsidiary to an EUparent company if the recipient has owned10% or more of the share capital of thesubsidiary for a continuous period of 12months at the time the dividend distributiontakes place and if the German anti-treatyshopping rules do not apply.

e) A 25% interest withholding tax is imposed on thefollowing types of interest:

• Interest paid by financial institutions. The rateis 15% if the loan is not recorded in a publicdebt register.

• Interest from over-the-counter business. Over-the-counter business refers to banktransactions carried out over the bank counter,

without the securities being on deposit at thebank.

• Interest from certain types of profit-participatingand convertible debt instruments.

• The interest withholding tax is not imposed onintercompany loans. Non-residents may applyfor a refund of the withholding tax if a treatyexemption applies. If a non-resident is requiredto file an income tax return in Germany, thewithholding tax is credited against theassessed corporate income tax or refunded.

f) These rates may be reduced by tax treaties orunder the EU Interest-Royalty Directive. Under theEU Interest-Royalty Directive, on application,German withholding tax is not imposed oninterest and royalties paid by a German residentcompany to an associated company located inanother EU member state. To qualify asassociated companies, a minimum 25%shareholding or a common parent is required,among other requirements.

g) The withholding tax rate on royalties frompatents, know-how and similar items is 15% forpayments to nonresident corporations if suchitems are registered in Germany or used in aGerman permanent establishment.

h) This withholding tax applies to payments tonon-residents only.

i) The loss carryback, which is optional, is availablefor corporate income tax purposes, but not fortrade income tax purposes. The maximumcarryback is €1 million ($1.1 million).

j) The carryforward applies for both corporateincome tax and trade tax purposes. Effective fortax years ending after December 31 2003, themaximum loss carryforward that may be used forcorporate and trade tax purposes is restricted to€1 million for each tax year plus 60% of annualtaxable income more than €1 million (so-calledminimum taxation). The carryforward is subject tothe change-of-ownership rule.



in tax audits, and provide advice during litigation. EY’s German transfer pricing practice is one of the

strongest transfer pricing practices within EY and oneof the largest in the country. Flick Gocke Schaumburg’s transfer pricing team of

six partners and 16 specialists is headed by partnerXaver Ditz. Over the past year, transfer pricing hasbecome one of the cornerstones of the firm’s tax prac-tice, which joined the Taxand network this year. Theteam assists German and international corporationswith cross-border activities, especially within the fol-lowing sectors: pharmaceutical, manufacturing anddistribution of medical equipment, manufacturing anddistribution of machines, fashion retail, developmentand distribution of software and logistics.

The team regularly deals with high-profile taxaudits on transfer pricing issues. Other stable workfor the practice includes TP planning, relocation ofbusiness functions, and the initiation of mutualagreement procedures (MAP) and advance pricingagreement (APA) proceedings. This year, the teamworked on tax audit defence for the implementationof an entrepreneur model in Switzerland, TP audit ofglobal brand licensing, and TP audit of financialtransactions with a foreign group finance company.

Other significant partners are Hubertus Baumhoffand Markus Greinert. As a new member of Taxand,the firm will focus even more on cross-border workand will benefit from the international network. Lorenz Bernhardt is a senior transfer pricing partner

and oversees PwC’s German TP practice. He hasmore than 20 years of experience in tax consulting,particularly in planning, implementation and defenceof transfer pricing systems and international taxstructures. The team comprises 16 partners andmore than 160 professionals and offers specific prod-uct expertise that includes IT, business restructuringand compliance. It has a wide scope of internationalexperience and knowledge with team membersfrom a diverse range of countries, including Brazil,China, India and Russia. The firm has TP profession-als in every major city in Germany. Jörg Hanken is PwC’s German and global TP tech-

nology leader. Technology is a key area of practice

for the team which is known for its strong technicalcapabilities and its industry focus. It uses a range oftechnology solutions to prepare global documenta-tion and specific tools for CbCR as well as additionaltechnology solutions to facilitate the price setting formultinationals.

The team recently won two large pilot projects ren-dered by German blue chip groups with the aim ofstreamlining their global documentation approachand to fully comply with the CbCR requirements.

Tier 2The transfer pricing team at Baker & McKenzie isheaded by Stephan Schnorberger, a partner withexperience in international tax, transfer pricing andbusiness restructuring. The TP practice was estab-lished in 2005 and the team’s key focus areas aretax controversy, tax planning, business restructuring,APAs, valuations and documentation.

The team, which is comparatively small comparedto others in the market, has a global clientele withparticular focus on US and German multinationalswho are longstanding clients, attracted to the highstandards of Baker & McKenzie’s work.

Schnorberger advises clients on solving issues intransfer pricing and optimisation of business changeand competition economics. He works heavily in val-uations and regulatory economics. Achim Roeder leads the transfer pricing team at

KPMG in Germany. He has more than 15 years ofexperience in tax, including transfer pricing, andassists German and international multinationals fromvarious industries on TP planning, particularly inrespect to European supply-chain reorganisationsand transfer pricing implementation and documenta-tion. The team offers a full scope of services includ-ing planning, model implementation, operationaltransfer pricing, documentation, audit defence, dis-pute resolution and APAs.

The firm is developing unique tools to provide ahigh standard of work and project quality in terms ofoperational transfer pricing and documentation. It isemploying data analytic tools and is collaboratingwith the tax consulting and management team to

Germany


run and document clients’ transfer pricing systems.The clientele consists mostly of large German multi-nationals, German SMEs and financial service enter-prises, with particular focus on the manufacturing,pharmaceuticals, transport and logistics, internet andnew-economy industries. NERA Economic Consulting has developed one of

the largest in-house teams of economists offering afull range of transfer pricing services, independentadvice and valuation. The transfer pricing team isheaded by Alexander Voegele who has more than25 years of experience advising international corpo-rations and law firms on transfer pricing and intellec-tual property (IP) issues as well as assisting with doc-umentation, design and audit defence. NERA oftencollaborates with leading law firms to create solu-tions for multinational clients, applying unique eco-nomics-based techniques.

Tier 3Dentons’ international tax practice, which includestransfer pricing, is led by Michael Graf. The team reg-ularly advises clients on a range of TP matters withparticular emphasis on disputes. The team has nospecific industry focus but has a broad expertise areawith a fluid approach. Graf works closely withMichael Helm in Berlin to advise clients on transferpricing issues. Their services include disputes adviceand, as the allocation of risks and rewards requires acomprehensive analysis of the underpinning legalcontracts, documentation is also a key focus area forthe team.

International tax partner Norbert Schneider headsthe transfer pricing operations at FreshfieldsBruckhaus Deringer in Cologne and Düsseldorf,while overseeing the German and Austrian tax group.With more than 20 years’ experience, his expertiseand knowledge is extensive, particularly in cross-bor-der tax matters and advising on structuring andfinancing of M&A transactions and tax optimised cor-porate restructuring.

The transfer pricing team hold an array of expertisein economics, tax, IP law and dispute resolutionacross a wide range of industries. The TP practice is

split into three key areas: transactional services, reg-ulatory services and risk services. This ensures thatclients are provided with the maximum value intransfer pricing planning, dispute resolution andcompliance. Ulrich Siegemund leads the transfer pricing team

at Luther as the head of tax. He has more than 20years of experience in national and international taxlaw as well as experience working for Deloitte andArthur Andersen. The team consists of both lawyersand economists striving to achieve the perfect solu-tions to clients’ needs. The full service offeringincludes planning, documentation, and dispute reso-lution and audit services. The key fields of the prac-tice’s work is within the real estate, financial, soft-ware development and consumer goods industries.

As of January 1 2016, Luther left the internationalnetwork Taxand which is now affiliated with FlickGocke Schaumburg. Ansas Wittkowski is the head of transfer pricing at

LW Tax Lemaitre Wittkowski. He has special focuson transfer pricing compliance and VAT and has pre-vious experience at Big 4 firms. He works closelywith head of tax, Claus Lemaitre, on TP matters.

The firm embraces its boutique approach, Lemaitresaid: “We are small, we are specialised and havestrong focus.” Although the team is small, it has beena good year for transfer pricing and the firm is opti-mistic the following year will be even better. At theend of 2015, the firm joined the True PartnersConsulting International Network. Oppenhoff & Partners has assisted multinationals

with transfer pricing issues for more than 20 years.The transfer pricing team has a wealth of experiencein all areas of transfer pricing, including litigation andarbitration and is headed by Axel Bödefeld. His keyfocus areas are M&A and the structuring and restruc-turing of corporate groups.

The firm offers the full suite of services for a widerange of multinational corporations. This year, theteam advised several pharmaceutical companies ona new proposal for transfer pricing adjustmentsregarding parallel imports, as well as cash poolingconditions for transfer pricing.

Germany



The team comprises three partners and two otherfee earners, with the recent addition of MircoFlorczak as an associate, who advises German andforeign enterprises on German and international taxlaw, as well as represents clients in audits.

The transfer pricing team at Warth & Klein GrantThornton is led by head of tax Paul Forst. Theteam blends specialist skills in economic analysisand law with expert knowledge of national andinternational taxation. It provides reliable TP solu-tions that are easy to implement and manage ona day-to-day basis. Its advice covers various areasof transfer pricing, along with relevant tax aspectsto best cover its clients’ needs from all perspec-tives.

Among the projects that the team was engaged inthis year was the setting up of a TP structurebetween a German and a Swiss entity. The teamprovided an holistic approach to the structure toachieve minimal tax risks in all relevant tax areas.

Two professionals joined the team this year, JuliaBollermann from Deloitte and Matthew Harrisonfrom Baker & McKenzie, bringing the team to a totalof seven professionals.

Maik Thomas Heggmair heads up the transfer pric-ing team at WTS Germany. The team of three part-ners and 20 specialists offers a full range of TP serv-ices including TP conceptual design, documentation,IP structuring and reorganisations, benchmarkingservices, tax audit defence, litigation and arbitration.

New additions to the team this year are ChristianTschubel, Christina Derer, Dimitri Papoutsis andThomas Steinbach. In October this year the team willexpand further with Oliver Wanger joining as a direc-tor of transfer pricing in the Munich office. He haspreviously acted as the head of tax and accountingat Roland Berger, as well as head of transfer pricingat PwC.

Among the deals completed this year were devel-opment and implementation of a custom made TPsoftware solution based on the WTS TP manager;reorganisation of a European business model,including manufacturing and distribution; and theanalysis and development of a TP model for centralmanagement services.

Clients praised the firm, one said: “I would recom-mend them because they are reliable and respondpromptly, the service is outstanding.”

Germany


Franklinstrasse 5060486 Frankfurt am Main, Germany

Jobst WilmannsTel: +49 (0)69 75695 [email protected]

Deloitte’s transfer pricing team inGermany is led by Jobst Wilmanns whoworks alongside four partners, 11 direc-tors and a team of 90 further colleagues.This team includes business economists,economists, tax advisors, CFAs and attor-neys. With its eight hubs in GermanyDeloitte’s transfer pricing practice servesclients with a wide service spectrum inalmost all regions and industries. Theseindustries span a wide range like automo-tive, consumer business, chemical andpharmaceutical as well as financial servic-es. Our industry-specific competenciesallow for offering specialised services ,e.g. in the fields of business model opti-mization, transfer pricing operationaliz-ing, controversy and dispute resolutionand technology approaches.

For Deloitte’s practice, transfer pricing isnot a question of compliance but ofstrategic and risk-oriented planning, mon-itoring and defending. Besides, Deloittehas always an eye on efficiency and costoptimization by combining availableresources with innovative technology andsystem-related support. As innovationleader and transfer pricing firm of theyear, Deloitte offered sustainable transferpricing advice in a number of projects andwill proceed in optimizing its approaches.

Germany

Ernst & Young GmbHWirtschaftsprüfungsgesellschaftGraf-Adolf-Platz 1540213 Düsseldorf, Germany

Oliver WehnertTransfer Pricing LeaderPhone +49 211 9352 [email protected]

Germany





Flick Gocke SchaumburgJohanna-Kinkel-Straße 2-453175 Bonn, Germany

Tel: +49 228 9594-0Fax: +49 228 9594-100Email: [email protected]: www.fgs.de

About the firm:

Flick Gocke Schaumburg is an independ-ent law firm that has established itself asone of Germany’s leading tax law practices,combining the experience of lawyers, taxadvisors and certified public auditors todevelop tailor-made and tax-efficient legalstructures and solutions. The firm’s clientbase includes national and internationalgroups, affiliated corporations, family-owned businesses and high-net-worth indi-viduals. Transfer pricing is one of its majordisciplines. The team’s main strengthsinclude defense of TP mechanisms in taxaudits, tax litigation, mutual agreementsand APAs.Based in Bonn, Berlin, Frankfurt, Munichand Hamburg the firm counts 102 part-ners and associated partners plus morethan 260 professional staff with multiplequalifications in the fields of law and eco-nomics. Flick Gocke Schaumburg is the exclusiveGerman member of the internationalassociation of independent tax advisoryfirms Taxand.

Contact: Dr. Xaver DitzTel: +49 228 9594-0Email: [email protected]

NERA Economic Consulting GmbHMesseturm60308 Frankfurt am MainTel. +49 710 447 500www.nera.com

Firm profile:NERA Economic Consulting is a globalfirm of world-class economists who pro-vide expert valuation reports. In the con-text of international tax, NERA is the per-fect match to in-house tax departmentsand law firms for economic advice in:

• Field Tax Audits• Intellectual Property Valuation• Mutual Agreement Procedures• Advance Pricing Agreements

NERA has over 50 years of experience,and its experts are renowned for theirstandard-setting books and articles.

Your contacts:Philip de HomontSenior [email protected]

Tom [email protected]

Georg [email protected]

Alexander VoegeleChairman of the Advisory [email protected]

Germany



http://www.fgs.de


http://www.nera.com





PwC Germanywww.pwc.de

High-end advisory, best-in-class technolo-gy and comprehensive implementationexperience: With more than 15 transferpricing partners and dedicated teams,PwC provides specialist services in allmajor German cities. Contact us for moreinformation:

[email protected]

About PwC Germany: Our clients facediverse challenges, strive to put new ideasinto practice and seek expert advice.They turn to us for comprehensive sup-port and practical solutions that delivermaximum value. Whether for a globalplayer, a family business or a public insti-tution, we leverage all of our assets: expe-rience, industry knowledge, high stan-dards of quality, commitment to innova-tion and the resources of our expert net-work in 157 countries. Building a trustingand cooperative relationship with ourclients is particularly important to us –the better we know and understand ourclients’ needs, the more effectively wecan support them.

PwC. 9,800 dedicated people at 29 loca-tions. €1.65 billion in turnover. The lead-ing auditing and consulting firm inGermany.

WTS Steuerberatungsgesellschaft mbHThomas-Wimmer-Ring 1-380539 MunichGermanywww.wts.de

Key contact:Maik [email protected] +49 892 864 6212

Germany


http://www.pwc.de


http://www.wts.de



LEADING FIRMS


2 Dryllerakis & Associates Zepos & Yannopoulos, Taxand Greece UnityFour

Since the financial crisis of 2008 the biggest issuein Greece has been the country’s sovereign debtand the subsequent repayments of the bailoutpackage agreed with the EU. Tax reform has beenprioritised in an attempt to rid the system of cor-ruption and inefficiency as Greece seeks to get itspublic finances in order.“There are reforms taking place in Greece, but in

my opinion they are not in the right direction, theyincrease bureaucracy and increase the amount ofobligations on the taxpayers. I do not think theywill have the desired effect,” said MarthaPapasotiriou, tax lawyer at UnityFour in Greece.In October 2015, the law on penalties for late

submission of tax returns and TP documentationwas changed in an attempt to rationalise thesystem. This introduced an increasing penalty forthe longer documentation is left inaccurate or late.Repeated failure to file proper TP documentationyear on year can lead to significantly higherpenalties.

Greece has committed to engage in the sharing ofinformation between relevant tax authorities, but hasnot yet moved to introduce country-by-countryreporting (CbCR). On January 27 2016 the GeneralSecretary of Public Revenues signed the multilateralcompetent authority agreement for the automaticexchange of CbCR.A lack of sophistication when it comes to transfer

pricing is something that advisers blame for a some-times frustrating experience when dealing with thetax authorities. “I do not think they have a full andthorough knowledge of the transfer pricing methods– not all the auditors. They don’t always have theexperience to audit large firms, so this can make itdifficult,” said Papasotiriou.The General Secretariat of Public Revenues also

this year issued a new ministerial circular on June 6relating to the application of transfer pricing docu-mentation rules in cases of mergers by absorptionrelating to the Greek law on business restructuring.This provision requires that until the date of com-

pletion of the restructuring, the absorbed companyis liable for TP documentation to verify all transac-tions for itself and its associated enterprises are atarm’s-length.

Tier 1 Deloitte’s Greek transfer pricing practice is led byEftichia Piligou who, along with 16 other profes-sionals, advises clients in TP documentation,design, implementation and defence. Of theseadvisers, 14 work on TP compliance, and threecover TP litigation.


GreeceTax authorities Hellenic Republic Ministry of FinanceKaragiorgi Servias 10, GR-105 62 AthensTel: +30 210 337 5000Fax: +30 210 333 2608Email: [email protected]: www.minfin.gr


http://www.minfin.gr

This year has seen the team involved in businessmodel optimisation for two large Greek-based tech-nology groups in order to align their internationalbusiness structures with their transfer pricing policy,to ensure they are in line with the recommendationsof Actions 8-10 of BEPS.The team spent a lot of time identifying issues and

quantifying potential exposures relating to both groups’structures, which the management were not aware of,and so the company had not adequately prepared for.The firm primarily represents clients in the manu-

facturing, energy and utilities, fast-moving consumer

goods (FMCG), financial services and healthcare andpharmaceuticals industries.

EY has a well-respected transfer pricing team inGreece. Through its global network, the firm can offeran international perspective on transfer pricingdesign, implementation, defence and review. A key figure at the firm is executive director Chris

Kourouniotis, a tax and TP professional with morethan 12 years of experience.In Greece, KPMG’s TP practice consists of econo-

mists, tax practitioners and financial analysts. Theintention is that this multidisciplinary approach can

Greece



Corporate income tax 29%Capital gains tax 29% Branch tax 29%

Withholding tax Dividends 10% (a) Interest Bank interest 15% (b)(c) Interest on treasury bills and

corporate bonds 15% (b)(c) Repos and reverse repos 15% (b)(c) Other interest Paid to Greek legal entities 15% Paid to Foreign legal entities 15% (c)(d) Royalties 20% (c)(d) Technical service fees, management

service fees, consulting servicefees and fees for similar services 20% (f)


a) The 10% withholding tax rate applies todividends and interim dividends distributed bya Greek corporation (anonymos eteria, or AE; (incertain countries, a corporation is referred to asa société anonyme, or SA) and profitsdistributed by a Greek limited liability company

(eteria periorismenis efthinis, or EPE). This 10%withholding tax is subject to rates applicableunder double tax treaties or under theEuropean Union (EU) Parent-Subsidiary Directive(amended by Directive 2011/96/EC).

b) This 15% withholding tax is subject to ratesapplicable under double tax treaties or underthe EU Interest-Royalties Directive.

c) This is a final tax if the beneficiary is a legalperson (for example, a company) or legal entitythat satisfies both of the following conditions:

• It does not have its tax residency in Greece. • It does not maintain a permanent

establishment for corporate income taxpurposes in Greece.

d) This 20% withholding tax is subject to ratesapplicable under double tax treaties or underthe EU Interest-Royalties Directive. No tax iswithheld on payments of royalties made tolegal persons or legal entities that have theirtax residence in Greece or that have a Greekpermanent establishment in Greece.

e) If the 20% withholding tax does not exhaustthe final Greek corporate income tax liability ofthe beneficiary, it is credited against thebeneficiary’s final Greek corporate income taxliability.



help clients manage their company’s transfer pricingissues by providing advice on planning, complianceand documentation, and dispute resolution.The team creates structures that are intended to be

commercially viable and balanced, as well as gener-ating tax efficiencies and decreasing the risk of chal-lenge from the tax authorities.

PwC in Greece offers a transfer pricing advisoryservice, TP planning and compliance advice, assis-tance in preparing TP documentation in accordancewith Greek or other jurisdictions’ legislation, assis-tance during the process of TP audits, and the prepa-ration of benchmarking reports.

Tier 2The transfer pricing practice at Dryllerakis &Associates’ in Greece is led by Sophia Grigoriadou,a TP professional with nearly 20 years of experienceat the firm. As partner she oversees a team of fourother TP professionals. In the firm, two people cover transfer pricing dis-

putes and five others cover transfer pricing compli-ance. The firm offers a full tax and TP service toclients in the education, information technology,financial services, FMCG and healthcare and pharma-ceuticals industries, among others.This year saw the firm advise a client on the negoti-

ation of an advance pricing agreement (APA) with theGreek tax authorities. The provision to do so has onlyrecently been introduced in Greece.

It also managed to successfully defend a companyafter a preliminary assessment had found in favour ofthe tax authority.

Zepos & Yannopoulos, Taxand Greece in Greeceaims to deliver clear and careful advice on theimplementation of global TP policies in compliancewith local rules, including local documentation andreporting requirements. The firm assists clients inassessing, managing and planning related TPissues and offers advice to clients on defendingtheir transfer pricing policies at a litigation stageshould this become necessary. Through the Taxandnetwork clients have access to TP professionalsworldwide. Clients of Zepos & Yannopoulos include

AkzoNobel, Chevron, ExxonMobil and Universalmusic, among others.

UnityFour in Greece is led by Martha Papasotiriou,who joined this year from KPMG. Papasotiriou over-sees a team of three other transfer pricing profes-sionals, two of whom deal with TP disputes. Theother team members focus on TP compliance.The firm supports clients from a wide range of

industries, on the planning, implementation anddefence of their TP policies, as well as offering sup-port during the negotiation of APAs with the Greekrevenue authorities.This year has seen the team advise on the prepa-

ration of transfer pricing documentation for a Greekgroup in the IT industry.

Greece



Gulf Cooperation Council

Tax authorities

Ministry of FinanceBuilding 100, Road 1702, Block 317PO Box 333Diplomatic AreaManamaTel: +973 175 7 5000Fax: +973 175 3 2853Website: www.mof.gov.bh


Corporate income tax rate 0% (a)Capital gains tax rate 0%Branch tax rate 0%Withholding tax 0%

a) Oil and gas companies are subject to a specialincome tax. Oil and gas companies are subjectto tax on income derived from the sale of

finished or semi-finished productsmanufactured from natural hydrocarbons inBahrain and from the sale of such rawmaterials if produced from the ground inBahrain. The rate of tax is 46%.


BAHRAIN

http://www.mof.gov.bh




Tax authorities

Ministry of FinanceMinistries Complex, City of Kuwait 13001PO Box 9, SafatTel: +965 22480000Email: [email protected]: www.mof.gov.kw


Corporate income tax rates 15% (a)Capital gains tax rate 15% (a)Branch tax rates 15% (a)

Withholding tax Dividends 15% (b) Interest 0% (c) Royalties 0% (c) Management fees 0% (d) Branch remittance tax 0%

Net operating losses (years) Carryback 0 Carryforward 3 (e)

a) Under Law No. 2 of 2008, for fiscal yearsbeginning after February 3 2008, the tax rate isa flat 15%. Before the approval of this new law,Amiri Decree No. 3 of 1955 had provided thatthe maximum tax rate was 55%. The maximumrate under Law No. 23 of 1961, which applies

to profits derived from the operations in theDivided Neutral Zone, is 57%.

b) This rate applies only to dividends distributedby companies listed on the Kuwait StockExchange.

c) Under Article 2 of the Bylaws, income derivedfrom the granting of loans by foreign entities inKuwait is considered to be taxable income inKuwait, which is subject to tax at a rate of 15%.Previously, foreign banks that solely grantedloans in Kuwait were not taxed on the interestincome received with respect to these loans.

d) This income is treated as ordinary businessincome and is normally assessed on a deemedprofit ranging from 98.5% to 100%.

e) Article 7 of the Bylaws provides that losses canbe carried forward for a maximum of threeyears (as opposed to an unlimited period underthe prior tax law) if the entity has not ceasedits operations in Kuwait.


KUWAIT


http://www.mof.gov.kw



Tax authorities

Ministry of FinancePO Box 506, MuscatTel: +968 2473 8201Fax: +968 2329 5888Email: [email protected]: www.mof.gov.om


Corporate income tax rate 12%Capital gains tax rate 12%Branch tax rate 12%Withholding tax 10% (a)


a) This tax is imposed on certain payments toforeign persons that do not have a permanentestablishment in Oman. Companies orpermanent establishments in Oman that paythese items must deduct tax at source andremit it to the Secretary General for Taxation.


Tax authorities

Ministry of Economy & FinancePO Box 83, Al Corniche Road, DohaTel: +974 4446 1444Fax: +974 4443 1177Email: [email protected]: www.mof.gov.qa


Corporate income tax rates 10%Capital gains tax rate 0%/10%Branch tax rates 10%Withholding tax 5/7%



OMAN

QATAR


http://www.mof.gov.om



http://www.mof.gov.qa



Tax authorities

Ministry of FinanceAl Malaz, Riyadh, 12641Tel: +966 405 0000Fax: +966 405 9502Email: [email protected]: www.mof.gov.sa

Tax authorities

Ministry of FinancePO Box 433, Al Falah Street, Abu Dhabi Tel: +971 2 672 6000Fax: +971 2 676 8414Email: [email protected]: www.mof.gov.ae


Corporate income tax rates 0% (a)Capital gains tax rates 0% (a)Branch tax rates 0% (a)Withholding tax 0% (a)

a) No taxes are levied at a federal level in theUAE. VAT scheduled to be introduced within thenext few years.



Corporate income tax rateCompanies engaged in oil and other hydro-carbon production 30% to 85% (a)Other companies 20%Capital gains tax rate 20%

Withholding tax Dividends 5% Interest 5% Royalties 15%


a) The withholding tax rates in Saudi Arabia rangefrom 5% to 20%.


SAUDI ARABIA

UNITED ARAB EMIRATES


http://www.mof.gov.sa


http://www.mof.gov.ae

The Cragus Group LimitedHead office: Level 19, H Dubai Office Tower, No.1 Sheikh Zayed Road, Dubai 71985, United Arab EmiratesTel: +971 (0)4 705 0310Website: www.cragus.comEmail: [email protected]

Contacts:Dominic Treays ([email protected]);Matthew Moriarty; Abdelhamid Attalla;Clarence Ellis; Mark Stevens

Practice description:Transfer pricing – OECD, Middle East &Africa. International corporate tax planning,transactional, and controversy; coveringMiddle East & Africa.



http://www.cragus.com




LEADING FIRMS


2 Baker & McKenzie DLA Piper Quantera Global

The OECD’s BEPS Project is the hottest topic in thetransfer pricing market in Hong Kong at the moment.It is greatly impacting the transfer pricing landscape,particularly through localised BEPS initiatives andmore aggressive tax audits in Hong Kong.

Hong Kong is moving away from its isolated taxposition by joining in more closely with interna-tional tax discussions. On June 20 2016, HongKong announced it would join the BEPS Project asan associate jurisdiction, meaning that Hong Kongis committed to implementing the four minimumstandards under BEPS, namely: Action 5:Countering harmful tax practices; Action 6:Preventing treaty abuse; Action 13: Transfer pricingdocumentation; and Action 14: Enhancing disputeresolution.

“We have to look at the 15 BEPS action items tosee how Hong Kong can work with the other asso-ciates in terms of enhancing tax compliance andtransparency in terms of taxpayers’ information,” saidPhilip Wong of Deloitte.

It is also notable that Hong Kong has concluded 35double taxation agreements as it moves closer tothe centre of the international tax stage. The com-mon reporting standard (CRS) will also be active inHong Kong by the end of 2018.

These new transfer pricing rules, and the anticipatedinitiatives such as country-by-country reporting (CbCR),being implemented in Hong Kong will undoubtedlyincrease compliance costs for most taxpayers.

“Taxpayers have to become either more technicalor more sophisticated,” said Wong. “Technical meansthey have to grab the information within their report-ing. Sophisticated means that because CbCR can bevery laborious, from an IT perspective, they have tofind a way to track down the information in order tomake the report,” said Wong.

Triggered by the BEPS initiative, there has also beena noticeable increase in the volume of tax audits inHong Kong. “Historically, given Hong Kong’s relativelycompetitive tax landscape, subsidiaries of multination-als operating in Hong Kong often retained more thanan arm’s-length return for their contribution”, saidMartin Richter, head of transfer pricing at EY. “With thefocus of BEPS on the allocation of a multinational’sglobal profits across group contributors along the sup-ply chain, many multinationals have been revisitingtheir transfer pricing arrangements, and often reducingprofits in Hong Kong to arm’s-length levels.”

He also added that consistent with BEPS, thedeductibility of base-eroding charges such as man-agement service charges, royalty charges, and otherinter-company outbound charges were the majorfocus for the tax audits.


Hong KongTax authorities Inland Revenue DepartmentRevenue Tower, 5 Gloucester Road, Wan Chai, Hong KongTel: +852 2187 8088Fax: +852 2519 9316Email: [email protected]: www.ird.gov.hk


http://www.ird.gov.hk

Tax professionals predict the activities surround-ing BEPS will only increase in Hong Kong in thecoming years.

Tier 1 Deloitte Hong Kong is part of the China practice whichcomprises more than 200 transfer pricing profession-als across both jurisdictions. The transfer pricing teamis nationally headed by Eunice Kuo who has 29 yearsof experience in taxation as well as transfer pricing.

The firm’s transfer pricing practice helps domesticand foreign companies as well as private clients toefficiently administer risk with support of practicaltransfer pricing solutions and strategic documentation.

The firm has expertise in the areas of transfer pric-ing advisory and documentation, advance pricingagreements (APAs), dispute resolution includingmutual agreement procedures (MAPs), businessmodel optimisation and facilitation of transfer pricingrisk management.

Legislation often changes around the world inresponse to the dynamic economic developments,which the service delivery model of Deloitte China,including Hong Kong, is designed to adapt andevolve with as the marketplace shifts, allowing for aquick response in helping clients.

The transfer pricing team at EY Hong Kong, led byMartin Richter, advises clients in an array of transferpricing matters. It has a broad understanding ofdomestic and international matters and ample trans-fer pricing advisory experience in building, managing,documenting, reviewing and defending client’s trans-fer pricing policies and processes.

Richter advised a global multinational in 2015 onregional risk arising from anticipated CbCR require-ments and developed an alternative TP model andsubstance structure to address identified risks. Khoon Ming Ho is the national head of tax and

transfer pricing at KPMG in China, including Hong Kong.The team includes four other partners and specialisesin TP disputes, APA negotiation, documentation projectmanagement and financial services transfer pricing.

The practice assists clients in planning effectivetransfer pricing strategies with various service offer-ings, including: related-party filing, contemporaneousdocumentation, APAs, transfer pricing investigations,cost-sharing arrangements, thin capitalisation, riskassessment, planning, tax-aligned business modeloptimisation, tax valuation, operational transfer pric-ing and transfer pricing due diligence.

In December 2015, partner John Kondos advised alarge Hong Kong-based multinational on TP planning

Hong Kong



Corporate income tax rate 16.5%Capital gains tax rate 0%Branch tax rate 16.5%

Withholding tax Dividends 0% Interest 0% Royalties from patents, know-how, etc. Paid to corporations 4.95/16.5% (a) Paid to individuals 4.5/15% (a) Branch remittance tax 0%


a) This is a final tax applicable to persons notcarrying on business in Hong Kong. The generalwithholding tax rate is 4.95% for payments tocorporations. For payments to individuals(including unincorporated businesses), thegeneral withholding tax rate is 4.5%. However,if a recipient of payments is an associate of thepayer and if the intellectual property rights werepreviously owned by a Hong Kong taxpayer, awithholding tax rate of 16.5% applies topayments to corporations and, for payments toindividuals (including unincorporatedbusinesses), a 15% rate applies.



for cash-pooling arrangements. The team providedassistance in setting up a regional treasury centre, aswell as cash-pooling arrangement involving both across-border and an intra-China renminbi cash pool-ing system. Jeff Yuan heads PwC China’s transfer pricing team,

which covers Hong Kong, together with Cecilia Lee,the Hong Kong leader. The team has two partnersand more than 30 full-time tax professionals andspecialists. The Hong Kong team is part of Chinatransfer pricing team which consists of 15 partnersand directors and more than 200 professionalsacross Hong Kong and China.

Lee has participated in sharing practical experienceon enforcement and administration of transfer pricingin multiple jurisdictions with the Inland RevenueDepartment while new transfer pricing guidelineswere developed. This knowledge has also been pro-vided to clients, with global and regional transferpricing support especially concerning the BEPS proj-ect and tax audit preparation and defence.

PwC’s transfer pricing team sees management ofTP documentation as especially important given theincreased scrutiny of the tax authorities on inter-company transactions. The team is focused on doc-umentation, and offers global coordinated documen-tation which helps clients to ensure specific local taxauthority requirements are met.

Tier 2Richard Weisman heads the transfer pricing team atBaker & McKenzie in Hong Kong. Weisman, a seniortax partner, has held a variety of management posi-tions within the firm, including as head of the globaltax practice group and as a member of global exec-utive committee. He is also a frequent speaker oninternational tax issues.

Baker & McKenzie in China, including Hong Kong,provides combined legal and tax services includingtransfer pricing to clients with a multi-disciplinaryapproach and innovative technical concepts to facethe challenging audit and compliance environment.

The transfer pricing team has recently concludedseveral audit cases, led by Shanwu Yuan, a formerTP official at China’s State Administration of Taxation(SAT). The firm advised on a number of bilateral andunilateral APAs, transfer pricing audits as well astransfer pricing investigations over the past year.

DLA Piper’s China and Hong Kong transfer pricingpractice has a team of specialists covering both juris-dictions as well as a global transfer pricing teamhelping multinationals dealing with complex transferpricing matters. Daniel Chan is in charge of both tax and transfer

pricing in Asia and co-head the China investmentservices. He focuses on supply chain management,distribution and retail services in China. Chan is wellregarded in advising on the structuring of the Chinatransactions and distribution operations of majorEuropean, Japanese and US multinationals indiverse industries.

The firm’s transfer pricing team is competent inplanning new transfer pricing policies, valuing trans-fer prices, supporting dispute resolution and litiga-tion, APA negotiation and optimising transfer pricingwithin the BEPS frameworks.

The main clients of the firm are from the differentindustries of distribution, IT, technology, equipmentmanufacturing and semiconductors. Steven Carey oversees the transfer pricing advisory

service at Quantera Global in Hong Kong. Carey isthe sole partner in the firm and has four other trans-fer pricing specialists with specialisms ranging fromdesigning TP systems and pricing policies andbenchmarking to preparing master and local filereports. This allows the team to support global andlocal corporations and individuals in managing theirtransfer pricing risks.

The firm is very active in issuing blogs and speak-ing at events across the region, and is also keen onchallenging the use of planning structures like off-shore income exemptions in Hong Kong that usuallyignore transfer pricing risks, particularly in a post-BEPS environment.

Hong Kong


LEADING FIRMS


2 Mazars Tandax Advisory

3 BDO Magarorszag DLA Piper Horváth & Partners Law Firm Jalsovsky Law Firm Katjár Takács Hegymegi-Barakonyi Baker & McKenzie Orientax Consulting Ryan

Hungary has a reputation as a country with adeveloped and stable tax code but also as a coun-try where new taxes and taxation requirements canarise with little warning, generating uncertainty fortaxpayers in the jurisdiction and those looking toinvest there. This is exemplified in its transfer pric-ing requirements, which have been in place since1992, however are set to change with a suite ofBEPS-inspired legislation at an unconfirmed date. “It’s one of the major hurdles to investing in

Hungary, from the point of view of multinationals.The core of the tax system is relatively stable, andfrom the point of view of Hungary as a place to dobusiness, it is improving. Although every new tax ismaybe a step backwards, as it does cause someheadaches for investors,” said Gergely Riszter of

Kajtár Takács Hegymegi-Barakonyi Baker &McKenzie.Hungary is expected to implement BEPS in full.

“What we are expecting is that as a result of BEPS,the Hungarian government will within the next year,maybe two years, try to fully adapt to the BEPS reg-ulations,” said Riszter.The approach of the Hungarian revenue authority

has been characterised by taxpayers as aggressive.This perceived aggression is based on a principle ofanti-abuse, but advisers said that outside of anti-abuse, the authorities have increasingly begun toadopt a co-operative, rather than aggressiveapproach to taxpayers’ structures. Taxpayers who do not adopt artificial or overtly

aggressive transfer pricing stances can receive fairtreatment from the authorities increasingly with gooddialogue, despite their bureaucratic reputation.

Tier 1 Deloitte in Hungary offers a full range of transferpricing services. The firm aids its clients in thedesign, implementation and defence of TP policies.It also has strong competency in the negotiation ofadvance pricing agreements (APAs).Through the Deloitte offices internationally,

Deloitte in Hungary can help its multinationalclients in international taxation and transfer pricingissues. Hungary EY’s TP practice is led by Zoltan Liptak. A

TP partner with more than 15 years of experiencein transfer pricing, he leads a multidisciplinary teamof 30 TP professionals.


HungaryTax authorities National Tax and Customs AdministrationLarge Tax Payers’ Directorate1077 Budapest, Dob utca 75-81Postal Address: 1410 Budapest, Post Box 137Tel: +36 1 461 3300Website: www.nav.gov.hu

http://www.nav.gov.hu


The team offers their clients help in the develop-ment of their TP policies, negotiations with taxauthorities and litigation cases alongside their day-to-day transfer pricing.At KPMG in Hungary a team of 20 TP professionals

assists clients in the preparation of statutory transferpricing documentation, tax authority and court litiga-tion procedures and benchmarking studies. It also pro-vides assistance in APA negotiations and the prepara-tion and review of international TP documentation.The PwC transfer pricing team in Hungary is led by

Anita Mekler and offers a service that covers every-thing from beginning the documentation processthrough to TP audits. The firm assists its clients withall aspects of dispute resolution, documentation,APAs and transfer pricing design and implementa-tion.

Tier 2At Mazars a key contact is Gabriella Nagy, who hassignificant experience in the pricing of different typesof intragroup transactions and is currently participat-ing in editing the Hungarian language version of theOECD transfer pricing guidelines.The transfer pricing team at Mazars in Hungary

aids its clients in the planning of TP structures, the

management and mapping of TP risks, the prepa-ration of TP documentation, the planning, prepara-tion and negotiation of APAs and dispute settle-ment and litigation.Tandax Advisory’s transfer pricing department has

two professionals, one who covers compliance andone who covers disputes. The firm is headed byTamás Knébel, who founded the firm in 2012.This year Knébel helped a client to design a TP

method to be applied to software sub-licensing with-in its group. He also assisted the group in the devel-opment of a transfer pricing policy with respect to anew subsidiary of the group.This past year saw Orsolya Bardosi join the firm as

co-managing partner with more than 15 years’ expe-rience in the same setting.

Tier 3The consultant group BDO Magarorszag aids its clientsin planning and analysis of transfer pricing, preparationof TP plans and preparation and maintenance of TPrecords, as well as analysis of TP structures. The teamalso assists clients in APA negotiations and offersadvice on TP dispute resolution and litigation. DLA Piper Horváth & Partners Law Firm offers

transfer pricing services with the aim of supporting

Hungary



Corporate tax 10/19% (a)Capital gains 10/19%Branch tax 10/19% (b)

Withholding tax Dividends 0% Interest 0% Royalties 0%

Net operating losses (years) Carryback 0 Carryforward 5 (c)

a) The 19% rate is the standard rate of corporateincome tax. The 10% rate applies to the first

Ft500 million ($1.85 million) of taxable income.All taxpayers must pay tax on the alternativeminimum tax base if this base is more thantaxable income calculated under the generalrules.

b) Permanent establishments of foreign companiesare subject to special rules for the computationof the tax base.

c) Losses incurred before the 2015 tax year canbe carried forward until 2025. Losses incurredin the 2015 tax year or subsequent years canbe carried forward for five years.


clients on a range of issues that might arise in thisarea. These include the design and implementationof TP strategies and documentation, the valuation ofintangibles, dispute resolution and negotiation withthe Hungarian tax authority, the preparation andnegotiation of APAs, litigation support and the supplyof expert witnesses.Jalsovsky Law Firm focuses on disputes and liti-

gation and this year represented a company in courtin a key transfer pricing dispute. The case cameagainst a backdrop of a trend toward the courtsincreasingly ruling in favour of the tax authorities inHungary, however the firm successfully argued thattheir client’s TP study was in-line with the OECD’s TPguidelines and that the tax authorities’ own studywas not. This resulted in the court ruling in favour ofJalsovky’s client.The firm represents, or has represented several

well-known multinationals in the industries of ener-gy and utilities, financial services, fast-moving con-sumer goods, healthcare and pharmaceuticals, andtechnology.

Katjár Takács Hegymegi-Barakonyi Baker &McKenzie this year represented a major multinationalclient in a landmark transfer pricing case where thetax authority had challenged the applicability of theinter-bank interest rate measure that had been usedin the setting of the interest rate of an intra-group loan. A key contact at the firm is Gergely Riszter, a tax

and TP professional who was extremely well spokenof by his peers. Alongside Riszter, the firm employsthree other TP professionals, all of whom cover trans-fer pricing disputes and compliance.Orientax Consulting was established in 2009, since

then it has been offering TP services to its clientsincluding the mapping of Hungarian documentationrequirements, the review of market price analysis, thepreparation of Hungary specific documentation andthe preparation of ruling requests in APAs.Ryan’s Hungarian operation, headquartered in

Budapest, assists clients including multinationalsoperating across Europe with a suite of internationaltax, transfer pricing, and VAT advisory, recovery, com-pliance, and automation services.

Hungary



WTS Klient GroupStefánia út 101-103.1143 BudapestHungarywww.klient.hu

Key contact:Tamás Gyá[email protected] +36 188 737 36

Hungary


http://www.klient.hu


LEADING FIRMS


2 Ashok Maheshwary & Associates BDO India BMR Advisors, Taxand India Dhruva Advisors Grant Thornton SKP Group

3 Advaita Legal Economic Laws Practice G.M. Kapadia & Co Nangia & Co TP Ostwal & Associates

Firms to watch Lakshmikumaran & Sridharan

Indian transfer pricing regulations have been heavilyaffected by the changing global tax and transfer pric-ing environment prompted by the OECD’s BEPSProject. India has been one of the strongest supporters of

the BEPS project, quickly adopting many BEPS meas-ures despite not being an OECD member country.India adopted BEPS Action 13 to introduce the mas-ter file, local file and country-by-country reporting(CbCR) into its local legislation from April 1 2016. It

further signed the multilateral competent authorityagreement for the automatic exchange of CbCR. “There is heightened early-stage anxiety on the

part of companies that will be required to complywith CbCR, as the extensive nature of reporting andthe implications from a BEPS-risk assessmentstandpoint has dawned on them,” said GokulChaudhri, head of direct tax at BMR Advisors,Taxand India. On the other hand, Amit Maheshwari of Ashok

Maheshwary & Associates viewed India’s movestowards aligning with the international tax stan-dards as a positive for foreign investors. “The intro-duction of range concept in place of arithmeticmean has been proven to be another step in align-ment of the Indian regulations with the internation-al laws which has gained more confidence of for-eign investors in the Indian economy,” he said. Another trend identified in the Indian transfer pric-

ing market is that a number of advance pricingagreements (APAs) have been favourably adoptedby companies and the Indian tax authorities. “In the recent years, transfer pricing has been one

of the most litigated issues before the judicialauthorities. However, the government, in line withits efforts to cut the amount of litigations in thecountry, has tried to provide a little bit more stabilityto it. Consequently, the quantum of litigation hasbeen reduced considerably,” said Maheshwari. Indian companies and the government are active-

ly closing APA files, with more than 711 APA appli-cations filed as of March 2016. Of these applica-tions, 80 were bilateral.


IndiaTax authorities Department of Revenue, Ministry of FinanceRoom No 46, North BlockNew Delhi, 110001Tel: +91 11 2309 4595Email: [email protected]: www.dor.gov.in


http://www.dor.gov.in


“The number of APAs filed, unilateral as well asbilateral, has increased exponentially. The rollbackmechanism in the APA programme has given abreather to many multinationals. This shows thatAPA is being seen as a successful disputeresolution mechanism,” said Dinesh Kanabar, CEOof Dhruva Advisors. Further, the government has changed its

guidelines, leading to the tax authorities targetingaudits with a focus on a risk-based selection ratherthan the former value-based method. The numberof cases assigned to each transfer pricing officerhas also been reduced from 70 to 50 to improvehandling of complex and critical cases. There has been a significant debate on several

adjustments made by transfer pricing authorities inthe past year, particularly on marketing intangibles,like advertising and marketing promotion (AMP)spends. “Another pain point for many corporateswas the additions on account of alleged excessiveexpenditure on AMP. Recently, the Supreme Courthas admitted a special leave petition on AMPmatter. In the time to come, we expect the Apexcourt to decide the matter and put to rest the issueby providing clarity on this matter,” said Kanabar.

Tier 1The transfer pricing department at Deloitte in Indiais led by Vishweshwar Mudigonda. The transferpricing team has 17 dedicated partners and morethan 350 tax specialists. The firm hired three taxprofessionals into the team in the past year. Deloitte India has presence across all major cities

in India with a talented team ranging from taxpractitioners, management graduates andeconomists to legal experts and ex-revenueofficials. Many team members have experience innetwork offices in various countries around theworld. The firm’s transfer pricing practice covers all

aspects of the TP spectrum including complianceand documentation, planning and implementation,controversy management, global documentation,mutual agreement procedure (MAP), APA, financial

transactions, intangibles, valuation and businessmodel optimisation.Vijay Iyer oversees EY’s transfer pricing department

in India. The team works with clients to align TPpolicies with their business strategies by designing,documenting and reviewing clients’ TP status andalso preparing for controversy management. Theteam also focuses on assisting taxpayers in adaptingto new documentation requirements and dynamictransitions both locally and internationally. With around 400 transfer pricing professionals in

India, KPMG is one of the key practices in the AsiaPacific region. Rahul Mitra leads the team, whichincludes 35 senior transfer pricing specialistsincluding 13 partners with significant skills in avariety of services and industries.The TP team is one of the market leaders in the

APA space, handling nearly 200 out of the morethan 700 applications filed in India so far. Thesenior ex-regulator in the team brings deepunderstandings in controversy-related issues andenables the team to analyse both from theauthorities’ perspective and the taxpayer’sperspective. The transfer pricing department at PwC India is

directed by Gautam Mehra. A key partner intransfer pricing is Sanjay Tolia who has more than22 years of expertise in taxation including transferpricing. Tolia has been advising on TP strategiessince the introduction of transfer pricing regulationsin India. The team helps organisations to effectively deal

with the challenging global transfer pricingenvironment. From documentation planning toimplementation, the team also manages transferpricing and customs risk and can advise on thenew regulations under BEPS, especially CbCR.

Tier 2Ashok Maheshwary & Associates’s transfer pricingpractice is led by Amit Maheshwari. He is the solepartner of the practice, and works with five othertransfer pricing specialists. Shilpa Bhatia was hired inthe past year from Ajay Sethi & Associates.

India


The team offers a wide range of TP services rang-ing from tax advisory, tax compliance, litigation, TPdocumentation, tax assessments, APAs, cross bordertax advice, M&A, and transaction structuring. Significant clients for the firm include companies

from the construction, healthcare, computers, soft-ware, online and digital, technology and media,energy and utilities industries. Maheshwari and two other professionals, Shilpa

Bhatia and Aiyna V, were engaged in preparation ofthe TP documentation and certification forContinental Engineering Corporation (CEC) in India.The deal was valued at $193 million and was com-pleted in November 2015. Milind Kothari is the managing partner of BDO

India. He heads the firm’s tax and transfer pricingadvisory department and has 33 years of experienceguiding significant transfer pricing and cross bordertax issues in the firm. The TP team consists of fivepartners and 33 other professionals. The team thisyear welcomed a new director, Abhay Upadhyaya,along with two managers and four associates. The team works as a single unit to offer dedicated

compliance, advisory and litigation support services.This is done through a multidisciplinary approachthat involves all relevant parts of business includingcommercial, economic, legal, and tax matters. The services the firm provides covers global TP pol-

icy, risk management strategy, process implementa-tion and documentation protocols, benchmarking,APA and MAP, and compliance and litigation services. The firm assisted an Indian company engaged in

offering telecom and electronics with a transferpricing audit in January 2016. The arm’s-length pric-ing was challenged for international transactions(brand royalty, management fee) in view of lossesincurred by the client. The TP team successfully col-lated specific and relevant evidence to convince therevenue during the course of audit to waive theadjustment. The transfer pricing practice at BMR Advisors,

Taxand India consists of four partners, one counsel,three directors, and more than 50 TP professionalsand is led by Gokul Chaudhri. The firm has added a

new partner, Bhavik Timbadia, to the transfer pricingteam in 2016. The firm serves clients in all dimensions of transfer

pricing, including planning and advisory, compliance,dispute resolution and APAs. The firm is also involvedin transfer pricing transaction advisory, as well asconsulting on the implications of the BEPS project forcompanies with an Indian footprint.The main industries the firm’s TP team advises on

include energy, automobile, technology, oil and gas,retail, real estate and life sciences.Notable successes for the practice in the past year

have included an APA on performance guarantee,which was completed in less than a year. One client said: “We have a positive experience in

that they are result oriented and do not prolong thematter to the next level.”Both the tax and transfer pricing practices of

Dhruva Advisors are led by Dinesh Kanabar. Twopartners and 15 professionals work in the transferpricing team focusing on TP disputes and TP compli-ance. Saptarishi Basu joined the team as seniormanager in November 2015. The partners of the firm have substantial expertise

in the field of transfer pricing advisory and litigation.The firm has been advising different large corporateson complex transfer pricing matters including design-ing and planning TP policy, documentation, businessrestructuring, dispute resolution, APA and MAP. Computer and online services, financial services,

healthcare, telecommunications and technology,manufacturing and energy and utilities industries arethe main sources of work for the firm. Kanabar and Sudhir Nayak successfully assisted a

leading fund in its complex pricing litigation onimputed interest on its debentures. They devised astrategy to minimise the impact of recurring TPadjustments. The case was completed in March2016 and was valued at $10 million. Arun Chhabra, head of the transfer pricing practice

of Grant Thornton in India, has more than 15 yearsof experience as a tax expert specialising in interna-tional tax and transfer pricing services. His area ofexpertise includes tax controversy avoidance and

India



resolution. The TP team has three partners and 32other specialists working on both TP compliance andTP disputes. The team’s work ranges from the provision of APA

services to handling huge global projects and offer-ing an exceptional deliverable process with regard toCbCR. Professionals at the firm assist companies incorporate decision making at many stages of inter-company transactions which includes planning, pol-icy making, implementation, documentation andcompliance and defence before the revenue appel-late authorities. The team, led by Chhabra and Gaurav Jain, worked

on an assignment which involved the transfer pricinganalysis of specified domestic transactions for amajor real estate developer in India. To manage thecompany’s multiple business segments, whichinclude certain tax holidays, the transfer pricinganalysis required analysing the same transactionfrom multiple perspectives.SKP Group’s transfer pricing team provides practi-

cal TP solutions including the formulation and imple-mentation of an ideal transfer pricing policy, as wellas maintaining documentation, providing bench-marking support based on databases, provision of TPcompliance and dispute resolution. Formerly called Sudit K Parekh & Co, the firm’s tax

and transfer pricing operations are both overseen bythe founder of the firm, Sudit Parekh. The team com-prises two partners and 33 other professionals. Anotable partner in transfer pricing is Maulik Doshiwhose experience in advisory and formulating globalTP policies exceeds 14 years. Led by Doshi, the team helped defend the Indian

subsidiary of a global cosmetic company withrespect of transfer pricing adjustment on account ofAMP expenses before the Dispute Resolution Panel(DRP). Based on submissions made by SKP andbacked by judicial precedents, SKP was able to suc-cessfully argue with the DRP to completely delete thetransfer pricing adjustment. This helped the companynot only avoid payment of the disputed tax demandbut allowed it to successfully argue the case forother years by setting this as a precedent.

Tier 3Sujit Ghosh manages both the tax and transfer pric-ing teams in Advaita Legal, where transfer pricingissues are handled by the direct tax team. The firm does not have separate tax disputes,

compliance or accounting practices. The teaminstead is split between indirect and direct tax teamswhich deal with disputes as well as transfer pricing. A team involving Harsh Shah and Pratik Poddar

advised SI Group India on defending a TP additionmade by the tax department, before the Income TaxAppellate Tribunal (ITAT), on three counts: royalty,import of product and export of product. The value ofthe dispute was nearly $1 million. Economic Laws Practice’s transfer pricing team is

looked after by Rohan Shah, and consists of threepartners and seven other professionals. The firm’s transfer pricing services provide solu-

tions across various industries with the focus oncomprehensive analysis as well as on assistingclients in planning their transfer pricing. The servic-es include: transfer pricing study and documenta-tion, inter-company transfer pricing policies for bothtangible goods and intangibles, transfer pricingplanning, litigation across all levels from the tax offi-cer to the supreme court level, supply chain adviso-ry, analysing existing policies, and evaluating thepositions taken in the past to manage the continu-ally evolving tax positions. The team supported a client on TP litigation regard-

ing adjustments related to royalty and support serv-ice fees paid to foreign associated entities. EconomicLaws Practice’s transfer pricing professionals assistedand represented the client before tax authorities, pro-viding strategic advice and related assistance.Ashwin Damania heads G.M. Kapadia & Co’s tax

practice, including its transfer pricing services, withsupport from 14 partners and 200 tax professionalsacross offices in India. Damania is a specialist in localand international tax. One of the main partners in transfer pricing is

Harsh Shah who primarily deals with internationaltaxation, transfer pricing, non-resident taxation,exchange control and corporate law.

India


The firm’s domestic and international clientsinclude private enterprises as well as public listedcompanies comprising Fortune 500 companies,banks, insurance companies, investment banks, ven-ture capital funds, mutual funds, private equity funds,and high net-worth individuals.Rakesh Nangia and Amit Agarwal jointly manage

the tax and transfer pricing practice of Nangia & Co.Three partners and 17 other professionals concen-trate on transfer pricing services involving TP disputesand TP compliance. Professionals and specialists in the team advise on

all aspects of transfer pricing for both domestic andinternational firms including documentation, litigation,supply chain restructuring, dispute resolution, MAP,APA, cost allocation and profit attribution. Agarwal isespecially expert in transfer pricing area with decadesof experience in advising listed public companies. The main industries the firm advises include IT, oil

and gas, hospitality, manufacturing and automotive,telecommunications and media, and transport. In July 2015, Agarwal assisted Quanta Towergen

which entered into an agreement with an Indianentity for generating and distributing electricity bysetting up a hybrid solar system at the various sites.The team advised the client not only on devising thecost allocation mechanism for apportionment of the

common cost incurred among the separate units, butalso helped in implementing the mechanism in itsexisting business system. TP Ostwal & Associates is named after the

founder and the senior partner of the firm, T.P.Ostwal. He manages both tax and transfer pricingmatters with a focus on international tax and auditdefence. He is a member of government for India forframing transfer pricing regulation. Another important partner in the practice is Sharad

Jain, who is specialised in non-resident taxation,cross border transactions, structuring both inboundand outbound investments, TP planning and compli-ance and active representation in TP audits.

Firm to watchLakshmikumaran & Sridharan’s transfer pricingpractice is managed by V. Lakshmikumaran, thefounder and managing partner of the firm.Lakshmikumaran was an official in the IndianRevenue Service for a decade. He advises on allaspects of taxation including international tax, trans-fer pricing, customs, GST, VAT, foreign trade policy,special economic zones and more. The professionals in the firm are experienced in lit-

igation, customs and services valuation as well asAPA preparations.

India



India



Domestic company income tax rate 30% (a)Capital gains tax rate 20% (a)Branch tax rate 40% (a)

Withholding tax Dividends n.a. Interest Paid to domestic companies 10% (b)(c) Paid to foreign companies 20% (a)(b)(c)(d)(e) Royalties from patents,

know-how etc 10% (a)(b)(e)(f) Technical services fees 10% (a)(b)(e)(f) Branch remittance tax n.a.

Net operating losses (years) Carrybacks 0 Carryforwards 8 (i)

a) The rates are subject to an additional levy consisting of a

surcharge and a cess. They are increased by the following

surcharges on such taxes:

• Domestic companies with net income exceeding

INR100 million: 12%

• Foreign companies with net income exceeding INR100

million: 5%

• Domestic companies with net income exceeding INR10

million: 7%

• Foreign companies with net income exceeding INR10

million: 2%

No surcharge is payable if the net income does not

exceed INR10 million. The tax payable (inclusive of the

surcharge, as applicable) is further increased by a cess

levied at 3% of the tax payable. The withholding tax rates

are increased by a surcharge for payments exceeding

INR10 million made to foreign companies and a cess (see

above).

b) A Permanent Account Number (PAN) is a unique identity

number assigned to a taxpayer in India on registration

with the India tax authorities. If an income recipient fails to

furnish its PAN, tax must be withheld at the higher of the

rate specified in the relevant provision of the Income Tax

Act and 20%.

c) Interest paid by business trusts is subject to a withholding

tax at a rate of 10% for payments to residents and 5% for

payments to non-residents (including foreign companies)

plus applicable surcharge and cess.

d) This rate applies to interest on monies borrowed, or debts

incurred, in foreign currency. Withholding tax at a rate of

5% (plus a surcharge of 2% or 5%, as applicable, and a

3% cess) is imposed on interest payments to non-residents

(including foreign companies) with respect to the following:

• Infrastructure debt funds

• Borrowings made by an Indian company in foreign

currency by way of loans between July 1 2012 and July

1 2017, infrastructure bonds issued between July 1

2012 and July 1 2017 or long-term bonds issued

between October 1 2014 and July 1 2017, subject to

prescribed conditions

• Rupee-denominated bonds of an Indian company or a

government security issued to a foreign institutional

investor or a qualified foreign investor, with respect to

interest payable between June 1 2013 and June 1

2017

• Interest received from units of business trusts in India

Other interest is taxed at a rate of 40% (plus the surcharge

of 2% or 5%, as applicable, and the 3% cess).

e) If a recipient of income is located in a Notified Jurisdictional

Area (NJA), tax must be withheld at the higher of the rate

specified in the relevant provision of the Income Tax Act and

30%. Cyprus has been notified as an NJA.

f) The 10% rate (plus the 2% or 5% surcharge, as applicable,

and the 3% cess) applies to royalties and technical

services fees paid to foreign companies by Indian

enterprises. However, if the royalties or technical services

fees paid under the agreement are effectively connected

to a permanent establishment or fixed place of the non-

resident recipient in India, the payments are taxed on a

net income basis at a rate of 40% (plus the 2% or 5%

surcharge, as applicable, and the 3% cess).

g) Unabsorbed depreciation may be carried forward

indefinitely to offset taxable profits in subsequent years.


Headquartered in Delhi NCR, AshokMaheshwary & Associates LLP is a leadingfull service accounting and tax firm inIndia. With offices in New Delhi,Gurgaon, Mumbai, Pune, Bangalore andSingapore, the firm provides an array ofservices including Transfer Pricing Study& Documentation, Business Advisory, Tax& Regulatory Compliance, InternationalTax Advisory, Assurance, TransactionAdvisory, Valuation, M&A Tax and IndiaEntry Strategy to a wide range of clients.The firm’s clients include Fortune 1000,Fortune 500 companies, ListedMultinationals, Listed Companies,Privately held Multinationals, Funds,Investment Firms, Asset ManagementCompanies, Exciting Start-ups, LargeDomestic Corporate houses, NRIs andExpatriates.

The firm’s International Tax and ForeignExchange Management (‘FEMA’) practiceis led by Amit Maheshwari, who serves asa Managing Partner at the firm and is aleading tax expert in India. The firm pro-vides it’s services span India and acrossthe globe though its’ alliance networks.Amit Maheshwari has also authoredbooks on Expat Taxation, NRI Taxationand Transfer Pricing in India with WoltersKluwer (CCH) and Lexis Nexis.

The firm is known for high quality advicewhile maintaining excellent turnaroundtime. It specializes in handling complextax advisory and structuring assignmentsby providing cutting edge opinions withpractical insights. The firm, through itsparticipation in various prestigious

committees of Industry chambers, workswith the government on various tax andregulatory matters. The clients benefitfrom the deep insight which the partnersbring on the various existing/proposedpolicy formulations of the governmentIn transfer pricing, it also specializes inassisting the clients in decision making atvarious stages of inter-company transac-tions – planning, policy making, strategy,implementation, compliance and justifi-cations. The firm aims to facilitate com-panies by providing practical transferpricing solutions that are aligned to theirglobal business and objectives and alsoprovide controversy management. Theirtransfer pricing services include prepara-tion of Transfer Pricing documentation,Transfer Pricing Audits, Advice on trans-fer pricing compliant supply chain,Benchmarking on Global Databases,Representation before RevenueAuthorities and negotiation of AdvancePrice Agreement (APAs).

Key Contacts:Amit MaheshwariPartnerT: + 91 124 4637533 M: +91 98101 88104E: [email protected]

Sumit MaheshwariPartnerT: + 91 124 4637532 M: +91 9811987402E: [email protected]

India





One Indiabulls Centre, Tower 2B, 1101-02, Elphinstone Road, Mumbai 400 013,Indiawww.dhruvaadvisors.com

The winner of the Best Newcomer of theYear – Asia award by ITR in 2016, DhruvaAdvisors LLP is a boutique tax and regu-latory services firm. It advises corporategroups on complex TP mandates includ-ing on designing TP policy, on documenta-tion and approach for restructuring busi-nesses and supply chain management.The firm is well known for providinginnovative TP solutions including on TPissues emanating from BEPS & CbC andproviding litigation support at various lev-els – Dispute Resolution Panel, MAP, APAand AAR.

Founded in 2014 by Dinesh Kanabar, oneof India’s leading tax experts, the firmcurrently has over 150 professionals andboasts of a client roster comprising severalglobal and Indian multinationals. The firmhas offices in Mumbai, Delhi,Ahmedabad, Bengaluru and Singapore. Itis a local member of WTS Global.

Dinesh Kanabar (CEO)[email protected]

NOIDA | NEW DELHI | MUMBAIGURGAON | DEHRADUN

SINGAPORE

A-109, Sector-136, Noida (Delhi – NCR)– 201304India Tel: +91-120-2598000Fax: +91-120-2598010www.nangia.com

Nangia & Co is considered as one of thelargest tax and transfer pricing firms inIndia, with over 165+ fee earners and astrong client base comprising of Indianand multi-national clients. The firm ren-ders its services from 7 offices spreadacross Delhi, Noida, Gurgaon, Mumbai,Dehradun, Mumbai and Singapore. Interms of service offerings, the firm offersthe entire gamut of corporate tax, trans-fer pricing, transaction tax, indirect taxand regulatory services to its clients.

The firm has a dedicated transfer pricingpractice team comprising of CharteredAccountants, MBAs, CFAs, Economists,and Legal Experts who focus on deliver-ing quality work and sound transfer pric-ing solutions to a wide range of industriesincluding oil and gas, e-commerce, hospi-tality, automotive, technology, media andcommunications, industrials and manu-facturing etc.

The transfer pricing service offerings ofthe firm is briefly summarized as below:

• Transfer Pricing Documentation;• Transfer Pricing Planning

India


http://www.dhruvaadvisors.com


http://www.nangia.com

• Intra Group Services documentation • Business model optimization• Audit Defense and Litigation Support• Advance Pricing Agreement• Mutual Agreement Procedure

Key Contacts:

Rakesh Nangia, Managing [email protected]

Amit Agarwal – Partner, Transfer [email protected]

India





LEADING FIRMS


2 DANNY DARUSSALAM Tax Center Hadiputranto, Hadinoto & Partners MUC Consulting PB Taxand, Taxand Indonesia SF Consulting

The Indonesian tax office has actively been involvedin implementing the guidance in the BEPS actionpoints, especially country-by-country reporting (CbCR)and the automatic exchange of information.

The government has announced it will implementautomatic exchange of information in September2017, earlier than the original plan of September2018. The timeline for CbCR implementation is moreuncertain, however the Directorate General of Tax(DGT) has already informally conveyed an intentionto adapt its TP documentation requirement to reflectthe BEPS recommendation.

Further changes to transfer pricing are also on thehorizon in Indonesia. “We predict that the govern-ment is going to revise the arm’s-length principleapplication regulations, specifically on the areas ofintangibles, intra-group services, transaction on com-modities, and the possibility of safe harbour,” said

Danny Septriadi, senior partner at DANNY DARUS-SALAM Tax Centre.

Numerous transfer pricing practitioners haveexpressed concern over the greater focus on the TPissues by the DGT during recent years. “More andmore taxpayers are realising that there is a need toprepare adequate transfer pricing documentation asa first line of defence against challenges from theIndonesian Tax Office (ITO),” said Iwan Hoo, head oftransfer pricing at KPMG. “As the ITO is becomingmore sophisticated, its challenges are now oftensupported by its own economic analyses, althoughthe more common adjustments to service and royal-ty charges remain a common occurrence,” he added.

Moreover, Ponti Partogi, head of tax and transferpricing at Hadiputranto, Hadinoto & Partners hasobserved that the transfer pricing market will still bea hot topic in the coming years as the tax authoritiesare focusing more on transactions with affiliates. “Ibelieve that this is only the beginning. There will bemore and more attention given to affiliate transac-tions soon and therefore it is imperative that the tax-payers should be more careful and be prepared indealing with affiliated transactions,” he added. Theemphasis is on the tax authorities’ enhanced abilityin handling transfer pricing cases, in terms of auditskills, knowledge and experiences.

As an alternative transfer pricing dispute resolu-tion, the government introduced a mutual agree-ment procedure (MAP) process in late 2014 andrevised the advance pricing agreement (APA)process in 2015.


IndonesiaTax authorities Directorate General of TaxesJalan Gatot Subroto, Kavling 40-42Jakarta 12190, PO Box 124Tel: +62 21 5250208; +62 21 5251509Fax: +62 21 584792Email: [email protected]: www.pajak.go.id


http://www.pajak.go.id

“MAP is gaining popularity as an alternative solu-tion to dispute resolution or in addition to thedomestic objection and appeal process,” said Hoo.

The latest APA regulation updated the 2010 proce-dure and implementation and included additionaldetails required for the APA submission, the applica-tion forms that must be prepared by the taxpayerand completion deadlines of APA.

DGT has set up a new international tax departmentwith one of its specific purposes being the managingof APA and MAP.

“In the coming years, the APA should be used asan alternative solution to avoid transfer pricing dis-putes in Indonesia,” said Wahyu Nuryanto, head oftransfer pricing at MUC Consulting. “We expect thatIndonesia will be more in line with international rulesand will be promoting better transfer pricing environ-ment with more certainty for the taxpayers,” headded.

Tier 1Roy David Kiantiong heads the transfer pricing prac-tice at Deloitte Indonesia. He took up the role in June2016, taking over the leadership from Carlo LlanesNavarro who moved to lead Deloitte’s SoutheastAsia transfer pricing delivery centre. A notableappointment in the practice is Amit Sharma, whojoined as director.

Over the last two years, the transfer pricing teamhas grown by 25% in terms of both revenue andstaff size. Professionals at the firm offer advice tocompanies from diverse industries including thosefrom the energy and resources, financial services,manufacturing, media and technology sectors.

The advisers at Deloitte Indonesia have a goodworking relationship with the Indonesian tax office,consulting regularly with them on policy issues andprovide training to the tax officers. The team alsooffers in-depth market knowledge. The servicesDeloitte offers range from structuring and planning,TP documentation, audit defence and assistance inbilateral negotiations for both MAP and APA.

EY’s transfer pricing team in Indonesia is led byJonathon McCarthy. The professionals at the firm

are capable of executing multiple transfer pricingstrategies and help businesses facing various TPchallenges. The global network of EY helps clientsto align with global trends and stay up-to-date atall times.

EY serves clients from all industries, including thosefrom wealth and asset management, automotive,banking and capital markets, financial services, insur-ance and media and entertainment. The adept TPteam helps clients to achieve their objectives andcompete successfully in their industry. Iwan Hoo is the sole partner and the head of the

transfer pricing practice of KPMG Indonesia, support-ed by 14 dedicated TP professionals.

The team not only understands the local transferpricing policy and environment, they also have awealth of experience in global transfer pricing fromworking with international KPMG member firms.

The team offers documentation and other compli-ance services including planning services to help tax-payers prepare justifiable TP policies that can resistany scrutiny from the government; implementationadvice to help taxpayers on their existing and futurepolicies; inter-company agreements and dispute res-olution in defending their transfer pricing policies aswell as APAs and MAP.

This year, the firm advised on a bilateral APA appli-cation with Australia, the transfer pricing for non-going concern situations, and the removal of risk innatural resources operations.

As the tax officials not only in Indonesia but alsoglobally are targeting more and more businesses fortransfer pricing arrangements and intercompanytransactions, PwC’s transfer pricing team, directed byAy Tjhing Phan, is giving more attention to effectivelymanage client’s TP risks.

The team focuses on developing competent trans-fer pricing strategies including the preparation of cor-rect TP documentation in line with internationalrequirements, functional analysis and benchmarkingadvice. The team also supports clients in tax auditsand disputes along with assisting in rearrangementof the client’s related-party transactions if necessaryto mitigate transfer pricing risks.

Indonesia



Tier 2DANNY DARUSSALAM Tax Center (DDTC)’s transferpricing service is led by Romi Irawan and comprisestwo partners and 28 active TP specialists. The teamhas greatly expanded in the past year by adding 14new TP professionals and one economist.

The firm offers an array of different TP servicesincluding advisory, documentation, transfer pricingvaluation, TP risk management and planning, APA,MAP, audit defence, litigation and inter-companyagreement drafting.

Every professional in the team has extensive expe-rience enabling them to provide technical solutionsthat are supported by academic strength in varioustransfer pricing arenas including: business restructur-ing, pricing policy, sales and purchase, inter-companyloan, guarantee fees, services, intangibles and leasing.

In September 2015, the transfer pricing team led byIrawan and senior partner Danny Septriadi guided aTP dispute concerning tax year 2008, when therewas limited guidance on the application of thearm’s-length principle in domestic legislation. Thecase concerns a transfer pricing dispute in relation toa member company of a Japanese multinationalwhich manufactures consumer electronics products.The team’s litigation strategy succeeded in the endand it successfully argued before the tax court usingvarious interpretation materials.

The transfer pricing team at Hadiputranto,Hadinoto & Partners is overseen by Ponti Partogi.The team comprises two partners and seven TP spe-cialists. Wimbanu Widyatmoko is a senior partnerconcentrating on transfer pricing matters and ismostly involved in a broad range of corporateIndonesian tax and international tax planning aswell as tax controversy and dispute.

The TP team has been busy over the year handlingtransfer pricing litigation and dispute resolution,including APAs, and general TP documentation astransfer pricing continues to be a hot topic underactive review by the Indonesian tax officials.

In April 2016 the firm assisted a manufacturingcompany in Indonesia in preparing their transferpricing document. The company made payments to

its head office in Germany using a cost contributionagreement method, which is not commonly used inIndonesia. Partogi and two other associates assistedthe company in preparing the draft TP document tobe submitted to the Indonesian authorities duringtheir tax audit process. They also assisted the taxconsultant of the company to defend the transferpricing document before the authorities. Wahyu Nuryanto leads MUC Consulting’s transfer

pricing and international taxation department as theonly partner supported by 13 other professionals.

The firm assist clients from different backgroundsincluding oil and gas, automotive, energy and utili-ties, shipping and transportation, fast-moving con-sumer goods (FMCG), chemical and pharmaceutical.The firm assists clients primarily with TP review, TPdocumentation and TP audits.

The team successfully handled the transfer pricingdocumentation for the biggest oil and gas companyin Indonesia for several years. MUC also expandedthe TP planning services for multiple multinationalsto comply with transfer pricing regulations inIndonesia.

In July 2015, the transfer pricing team, led byNuryanto and Karsino, successfully managed thetransfer pricing audit of an automotive manufacturerin Indonesia and saved tax amounting to $17 million.

PB Taxand, Taxand Indonesia’s transfer pricingteam has one partner, Permana Adi Saputra, who isthe leader of the practice. There are 21 dedicatedtransfer pricing team members capable of advisingon TP compliance and of handling TP audit and liti-gation cases.

The transfer pricing services that the firm offersconsist of conducting both forecast and review trans-fer pricing studies; advising on supply chain func-tions and corporate restructuring; supporting APAapplications and helping in dispute processes whichincludes tax audit, tax objection, and tax appeals aswell as MAPs. The firm has prepared more than 400transfer pricing documents.

The team members are particularly skilled in pro-viding advice to local and multinational companies,including those operating in the manufacturing, phar-

Indonesia


maceuticals, agriculture, FMCG, technology, energyand utilities sectors. Sri Wahyuni Sujono, managing partner, leads both

the tax and transfer pricing practices at SFConsulting. There are two partners and over 30 otherprofessionals in the practice. Senior partner StanPranoto has many years of experience in Big 4accounting firms and he specialises in advisingclients on tax planning, corporate and financerestructuring, M&A and transfer pricing matters.

Consultation, documentation, dispute resolution,MAP and APA, and audit are the core transfer pricingservices that the firm offers to local and internationalclients.

The main industries of the practice’s clients are bank-ing and financial services, manufacturing, chemical andpaper, distribution, and mining support services.

In April 2016, the team advised PT Pacific PalmindoIndustri, one of the biggest refineries in NorthSumatera, on a transfer pricing issue where the taxoffice did not agree with the set of comparables thatthe company had provided. Instead of arguing onthe set of comparables, the team put forth an argu-ment challenging the tax office on the basis that thetax office had falsely made an adjustment on thelocal intercompany sales (consisting of 78% of thetotal sales) which had no impact on the amount oftax paid to the government.

Indonesia



Indonesia



Corporate income tax rate 25% (a)Capital gains tax rate n.a.

Withholding tax Dividends 10/15/20% (b) Interest 15/20% (b) Royalties from patents, know-how, etc. 15/20% (b) Rent Land or buildings 10% (c) Other payments for the use of assets 2% (d) Fees for services Payments to residents Technical, management and

consultant services 2% (d) Construction contracting services 2/3/4% (e) Construction planning and supervision4/6% (e) Other services 2% (d) Payments to non-residents 20% (f) Branch profits tax 20% (g)

Net operating losses (years) Carryback 0 Carryforward 5 to 10 (h)

a) This rate also applies to Indonesian permanentestablishments of foreign companies.

b) A final withholding tax at a rate of 20% isimposed on payments to non-residents. Taxtreaties may reduce the tax rate. Certaindividends paid to residents are exempt from taxif prescribed conditions are satisfied. If theexemption does not apply, a 15% withholdingtax applies on dividends paid to tax residentcompanies and a 10% final withholding taxapplies to dividends paid to tax resident

individuals. A 15% withholding tax is imposedon interest paid by non-financial institutions toresidents. Interest paid by banks on bankdeposits to residents is subject to a finalwithholding tax of 20%.

c) This is a final withholding tax imposed ongross rent from land or buildings.

d) This tax is considered a prepayment of incometax. It is imposed on the gross amount paid toresidents. An increase of 100% of the normalwithholding tax rate is imposed on taxpayerssubject to this withholding tax that do notpossess a Tax Identification Number.

e) This tax is considered a final tax. Theapplicable tax rate depends on the type ofservice provided and the “qualification” of theconstruction companies. The “qualification” isissued by the authorities with respect to thebusiness scale of a construction company (thatis, small, medium or large).

f) This is a final tax imposed on the grossamount paid to non-residents. The withholdingtax rate on certain types of income may bereduced under double tax treaties.

g) This is a final tax imposed on the net after-taxprofits of a permanent establishment. The ratemay be reduced under double tax treaties. Thetax applies regardless of whether the income isremitted. An exemption may apply if the profitsare reinvested in Indonesia.

h) Losses incurred by taxpayers engaged in certainbusinesses or incurred in certain areas may becarried forward for up to 10 years.


MUC BuildingJl. TB Simatupang 15, Tanjung Barat South Jakarta 10510, IndonesiaTel : +62 21 788 37 111 (hunting)Fax: +62 21 788 37 666www.mucglobal.com

Other locations: Surabaya and Balikpapan

Contact:Wahyu Nuryanto (English)Email: [email protected] (Japanese)Email: [email protected]

Menara Karya 21st Floor Jl. HR. Rasuna Said Block X-5 Kav. 1-2Jakarta 12950IndonesiaPhone: +62 21 57944548Fax: +62 21 57944549Website: www.sfconsulting.co.id

Contact:Sri Wahyuni [email protected]

Indonesia


http://www.mucglobal.com



http://www.sfconsulting.co.id



To understand the audit profile of Ireland, itis useful to understand the legislative trans-fer pricing position in Ireland. Under Irish transfer pricing law, the Irish Tax

Authorities (Irish Revenue) can make an upwardincome adjustment or a downward expenseadjustment if they consider the pricing agreedbetween related parties to be inconsistent withthe arm’s-length principle. The Irish Revenuewill look to the 2010 TP guidelines produced bythe OECD in assessing whether related-partypricing is in accordance with the arm’s-lengthprinciple. The revised recommendations pro-duced by the OECD under Actions 8-10 of theBEPS Project have not yet been introduced inIrish domestic TP law but will be adhered to intreaty-based bilateral advance pricing agreement(APA) negotiations.In recent years we have seen an increase in

TP audit activity by Irish Revenue in areas thatthey perceive to be high risk from a TP perspec-tive. In our view, this trend is likely to continueover the short to medium term.

How does the tax authority select transferpricing audit cases?Irish Revenue aims to make the audit processefficient and optimise its resources. It is aware

that TP cases hinge on facts and circumstancesand that tax authorities need to have a goodunderstanding of the specific commercial con-text of each case. Irish Revenue also views a riskassessment process as central to the success ofits TP programme.With this in mind, the TP compliance moni-

toring programme operated by Irish Revenuewill often begin with TP compliance reviews(TPCRs), which do not constitute a TP audit,before progressing to full TP audits wheredeemed appropriate. This incrementalapproach is intended to build on the knowledgeand experience gained at each stage.In other situations, a TP audit may be initiat-

ed from a TP risk assessment conducted byIrish Revenue, where certain TP risk indicatorsimply intra-group transactions are not at arm’slength. We expect that Irish Revenue, like other tax

authorities, will use the unprecedented level oftransparency presented by the three-tiered doc-umentation approach (consisting of the masterfile, the local file and the country-by-countryreport) and the automatic informationexchange provisions being implemented at EUand OECD level, to further assist in the risk-assessment process for determining whether a


An audit profile by Gerard Feeney, head of transfer pricing, and James Smyth, seniormanager, transfer pricing, at Deloitte Ireland.

Ireland

Tax authorities Revenue CommissionersLarge Cases DivisionBallaugh House73-79 Mount Street LowerDublin 2Tel: +353 1 702 3084Email: [email protected]: www.revenue.ie


http://www.revenue.ie

TP audit should be initiated. This will result inan increased level of TP audit activity in Irelandand indeed elsewhere.

How will a company find out it has beenselected for audit? What is the officialnotification?Where a TP audit is to be initiated by IrishRevenue, an authorised officer will issue anaudit notification letter.The taxpayer and their agent are generally

given 21 days’ notice of a Revenue audit. Wherea Revenue audit is to be scheduled, the letterissued will include the wording: ‘Notification ofa Revenue Audit’ and will show the date theaudit will start.All audit notification letters issued to a tax-

payer and their agent will clearly indicate thenature of the Revenue intervention. The scopeof the audit will also be set out and will rangefrom a single tax head, or single issue for a spe-cific period or year, to a comprehensive auditfor a number of years.The potential use of extensive ‘e-auditing’

techniques will be noted in all audit notificationletters.

When a company has been notified of anaudit, what is the first thing it should do?Based on our experience, a well-plannedapproach to preparing for a Revenue audit canassist in identifying potential risk areas andmay help to reduce any final settlement thatmay result. As an initial step in preparation forthe TP audit, the taxpayer should review thecorporate tax return(s) for the period(s) inquestion. They should also review the accom-panying financial statements and TP documen-tation which validates the arm’s length natureof the intra-group pricing. A review of applica-ble legal agreements should also be undertakenas this is all information that will likely berequested by Irish Revenue during the earlystages of the TP audit.

Irish Revenue has stated that in the eventthat a TP adjustment is made during an audit,the quality of supporting documentation will bea key factor in determining whether the adjust-ment should be regarded as correcting an inno-cent error, generally not subject to tax penalties,or as being a technical adjustment, subject totax penalties. Therefore, any discrepancies insupporting documentation should be rectifiedas a matter of priority in preparation for theaudit in order to help mitigate any potential taxpenalty exposure. Upon review of the above-mentioned docu-

mentation, the taxpayer should self-assess todetermine whether any TP risks are present andto quantify the potential tax exposure arising. Consideration could then be given to making a

‘prompted qualifying disclosure’ of previouslyunreported or undeclared additional tax liabilitiesresulting from the TP methodologies adopted toIrish Revenue. This should be done where thetaxpayer considers there is a strong likelihood theaudit will result in a settlement, as it will assist inmitigating tax penalties if it is not submitted.

Are there legislative, regulatory or otherprocedures applicable to taxpayers subjectto a transfer pricing audit? If not, what isthe recommended practice?There are no specific legislative, regulatory orother procedures applicable to taxpayers subjectto a TP audit but the general requirements inrespect of tax audits apply. For example, wherea taxpayer decides to make a prompted qualify-ing disclosure to mitigate potential tax penalties,this must be submitted in advance of the open-ing meeting of the audit on the agreed date.

How does Ireland differ in its approach totransfer pricing audits from othercountries? The principal way that Ireland differs in itsapproach to TP audits is via the incrementalapproach to monitoring compliance, which is

Ireland



needed in light of the limited resources of the TPaudit team within Irish Revenue. Irish Revenuewill typically, but not always, commence itsapproach to monitoring compliance of a giventaxpayer through conducting a TPCR. Wherecertain areas remain unclear after this review,Irish Revenue is likely to conduct a risk assess-ment to determine whether escalation to a fullTP audit is warranted. If at that stage escalationto audit is deemed appropriate, an authorisedofficer will issue an audit notification letter.

How does the tax authority compileinformation on a taxpayer for a transferpricing audit?Generally, Irish Revenue will look at the taxreturns submitted for a given taxpayer, alongwith the financial statements submitted to theCompanies Registration Office, and then willdevelop an initial information request list basedon the information contained therein.Irish Revenue may also look at the company’s

website and any other publicly available infor-mation in compiling information on the taxpay-er in their preparations.The TPCR programme provides Irish Revenue

with an opportunity to request additional infor-mation from a taxpayer prior to the initiation ofa TP audit should the required information notbe available via the above-mentioned sources.The information that can be obtained by IrishRevenue via the TPCR process includes:• The group structure;• Details of each category or type of related-party transaction and the associated compa-nies involved;

• The pricing structure and TP methodologyused in relation to each category or type ofrelated-party transaction;

• A summary of the functions, assets and risksof both parties;

• A summary list of relevant documentationavailable; and

• Details of the basis on which it has been

established that the arm’s-length principle issatisfied.

What are some of the issues more likely totrigger a transfer pricing audit by the taxauthorities?• Profitability – for example, if a group serviceprovider with routine functionality was in aloss-making position this may indicate thatthere is a TP risk that should be investigatedfurther.

• Transactions with related parties in low-taxjurisdictions – for example, the existence oflarge royalty payments to a tax haven.

• Intra-group service transactions – for exam-ple, the existence of non-routine intra-groupservices and the value attributed to same.

• Royalty, management fees and insurance pre-mium payments, particularly to entities inlow-tax jurisdictions – for example, royaltyor management fee payments to low- or no-tax jurisdictions.

• Marketing or procurement companies locat-ed outside market countries or countrieswhere manufacturing takes place.

• Excessive debt and/or interest expense.• Transfer or use of intangibles to/for relatedparties.

• Cost contribution arrangements.• Business restructurings. Historically, tax authorities may have strug-

gled to conduct a thorough risk assessment toidentify some or all of the above TP risk indica-tors. However, this is no longer an issue in lightof the three-tiered TP documentation approachto include the country-by-country (CbC) reportwhich, for example, will show the revenue gen-erated and tax paid in each jurisdiction. When the CbC report is looked at in conjunc-

tion with the master file and the local file and theinformation exchanged via the automaticexchange of information provisions introduced atEU and OECD level, it is clear that tax authori-ties will now be able to conduct an in-depth TP

Ireland


risk assessment with relative ease. Our view isthat this will lead to a significant increase in TPaudit activity, both in Ireland and elsewhere.

What documents are requested from thetaxpayer during a transfer pricing audit?At the commencement of a TP audit, the docu-ments likely to be requested from the taxpayerwould include:• Corporation tax computations and returnsfor the period(s) in question;

• Full financial statements for the period(s) inquestion;

• TP documentation prepared for the period(s)in question; and

• Any legal documentation governing the intra-group transactions under review.

Are there any restrictions on a company’sbusiness during a transfer pricing audit?Under Irish tax law, there are no specificrestrictions on a company’s business during aTP audit.

Are there any restrictions on the taxpayer’sadvisers during the transfer pricing audit?Under Irish tax law, there are no specific restric-tions on the taxpayer’s advisers during a TP audit.

How long does a transfer pricing auditlast?The duration of the TP audit will depend on anumber of factors, including the scope of theaudit, the extent of TP issues identified duringthe course of the audit, the quality of documen-tation available to support the TP methodolo-gies adopted, and the availability of the requiredinformation to enable the Irish Revenue to con-clude their investigation.

What happens after an audit has beencompleted?At the conclusion of the audit, Irish Revenuewill then confirm the position in writing to the

taxpayer, as follows:• Where the audit result indicates that thetaxpayer’s return is acceptable and no TPadjustment is required, a letter will be issuedto the taxpayer and their agent notifyingthem accordingly;

• Where agreement is reached with the taxpay-er regarding a qualifying disclosure or otheradditional tax liability resulting from a TPadjustment, a final letter will issue from IrishRevenue to the taxpayer and their agent set-ting out details of the agreed settlement, gen-erally drawing the taxpayer’s attention to anyinadequacies in the records or the TP policiesapplied, and, where appropriate, noting thetaxpayer’s confirmation that the mattershave been rectified;

• Where agreement is not reached with the tax-payer on the TP audit result, a letter will issuefrom Irish Revenue summarising the proposedadjustments that gave rise to the additional lia-bility to tax, interest and penalties (if applica-ble) and will invite the taxpayer to agree to thefigures or, if not, to explain why not. If noagreement is then reached, Irish Revenue willmake all necessary assessments and will issuethe notices to the taxpayer and their agent. In the latter situation where no agreement

can be reached between Irish Revenue and thetaxpayer, the taxpayer is entitled to lodge anappeal against Irish Revenue’s findings in rela-tion to the TP adjustment being proposedresulting in the additional tax liability assessedin a revised assessment or tax estimate.

Tips on negotiating with the authorities?Irish Revenue endorse a cooperative approach totax compliance and therefore cooperationthroughout the TP audit process will be viewedfavourably by Irish Revenue in arriving at thefinal tax assessment resulting from the TP audit.Where the relevant tax liability has not

already been quantified by the taxpayer in a dis-closure, Irish Revenue will quantify the under-

Ireland



charge in respect of tax, interest and penaltiesand invite a written offer and payment of theliabilities so quantified.

How can a company manage its audit risk?• Periodically review TP policies and documen-tation to ensure consistency with the arm’s-length principle.

• Review and consider whether all legal and TPdocumentation available actually support thefacts and that no divergence exists betweenthe two.

• Review arrangements entered into pre-2010that are currently considered grandfatheredfor Irish TP purposes and are therefore out-side the scope of Irish TP law. This will likelybe an area of focus for Irish Revenue in yearsto come, as the terms and conditions applica-ble to such arrangements evolve, removingthe grandfathered status applicable to the rel-evant arrangements.

• Consideration should be given to the TP doc-umentation strategy for each country that the

taxpayer operates in and the tailoring of therelevant reports to meet local requirements.For example, the preparation of a single TPmaster file to be submitted to all jurisdictionsthat the taxpayer operates in with a masterfile requirement is a sub-optimal strategyfrom a TP documentation perspective in apost-BEPS era.

• Review the contents of the CbC report to besubmitted in 2017 to identify high-risk areasthat will likely attract the attention of theIrish Revenue and take corrective action as amatter of priority.

• Review all cross-border tax rulings and APAsthat are currently still valid to determinewhether they will either be subject to theautomatic exchange of information provi-sions, or will be required to be disclosed inthe master file, and assess any arising result-ant TP audit risk.

• Consider applying for a bilateral APA to pro-vide certainty in respect of certain high-riskintra-group transactions.

Ireland


LEADING FIRMS

1 Deloitte EY KPMG Matheson PwC

2 William Fry, Taxand Ireland

3 A&L Goodbody Grant Thornton Mason Hayes & Curran

This year, Ireland took additional steps towards anevolved transfer pricing regime. While initially slow informally adopting transfer pricing into its legislativesystem, the country is slowly picking up the pace. TPlegislation was first introduced in Ireland in 2010, laterthan many of its neighbours, and advisers have beenbusy keeping up with the new introductions this year.Ireland introduced a formal bilateral advance pric-

ing agreement (APA) programme which came intoeffect on July 1 2016. Although there previously wasno formal regime, the Irish revenue did facilitate bilat-eral APAs. “It’s just another step in Ireland’s progression

around having a mature transfer pricing regime. Itstarted off with introducing transfer pricing into ourtax laws and the next step then after that was Irishrevenue starting to take a number of formal transferpricing reviews and transfer pricing audits and nowthere is a formalised transfer pricing audit team with-in Irish Revenue. Now the next step is the introduc-tion of a formal bilateral APA regime,” said Deloitte’shead of TP, Gerard Feeney. The programme was launched in response to the

OECD BEPS project, which has remained a majortopic around the globe. Ireland has actively beenimplementing BEPS action points with country-by-country reporting (CbCR) introduced this year, as wellas Ireland’s Knowledge Development Box, a patentbox system in-line with the OECD’s modified nexusapproach.

The impact of BEPS is starting to show. As in manyother jurisdictions, Irish taxpayers are becomingmore aware of transfer pricing. “I think in terms ofBEPS, people are becoming more and more focusedon it at the moment because we are movingtowards an implementation stage and there arequite a few changes coming down the line,” saidSonya Mazor, partner at William Fry, Taxand Ireland.As in various jurisdictions around the globe, Ireland

has seen increasing aggression from the tax authoritiesand transfer pricing has become a key interest area. “There’s increased focus on transparency, with

CbCR introduced by 2016 and more visibility for taxauthorities on a multinational group’s operations andalso potentially with the EU’s public CbCR getting thego-ahead,” Feeney said.The Irish economy is certainly picking up, with a

continued interest of inward investment. Advisersreported Ireland is a hub for international groups andparticularly US operations are using Ireland as agateway to Europe. However, following the UK’s voteto leave the EU, there is uncertainty on how it willaffect the position of the Irish market.

Tier 1Deloitte’s Irish transfer pricing team is led by GerardFeeney, who was appointed head of the departmentin October 2015. The practice offers a full range ofservices including the design and implementation ofunilateral and bilateral APAs. In the past year the team have acted in complex

large-scale projects which required innovativeapproaches and solutions, while considering theevolving nature of the TP market. One of the dealsinvolved a client implementing a franchise model forthe suite of intangibles and operating assistance to bemade available to the acquired business. The totalvalue of the acquired businesses in receipt of thevalue-based charges was in the excess of $6.5 billion. Apart from the standard services, the team is

actively involved in advising clients on matters relat-ed to BEPS and have hosted numerous BEPS events,client breakfast briefings and industry sessions in thepast year.

Ireland



The team comprises eight dedicated specialistsand grew with five new hires this year. Among thenew professionals are Kumar Das, who previouslyworked for EY in Sydney, and Wilko Froneman, for-mer manager at BDO in Cape Town. The team worksclosely with Deloitte’s transfer pricing specialists inother jurisdictions on many cross-border projects. Dan McSwiney is the head of transfer pricing at EY.

He is an economist with more than 20 years ofexperience in transfer pricing in the US, UK andIreland and specialises in the valuation of intellectualproperty (IP) which has become the firm’s uniqueselling point. The team comprises 12 dedicated spe-cialists offering the full suite of transfer pricing serv-ices including planning, documentation and contro-versy and dispute resolution to Irish and internationalmultinationals. This year the team worked on a number of exciting

projects which involved performance guarantee fees,group restructuring aligning substance to BEPSactions and international documentation. Key industries for the team include information and

communications technology, life sciences, engineer-ing and construction and financial services. The TP team at KPMG Ireland focuses on providing

transfer pricing and tax structuring advice to Irish multi-nationals and private equity clients within the soft-ware, communications, healthcare and retail and dis-tribution industries. It is headed by Eoghan Quigley,who has been a partner at KPMG for more than 20years and has previously led the tax practice. Theteam’s mission statement is to help clients under-stand, plan for and manage all the complex anddynamic issues that may arise from their TP policies. A full scope of services is offered, including design

and implementation, compliance and documenta-tion and dispute resolution, focusing on respondingto authority challenges with comprehensive eco-nomic justifications for transfer prices. The team of seven transfer pricing professionals,

including three partners and one consultant, atMatheson comes highly recommended by its clientsand peers. The team is headed by Turlough Galvin,head of tax, who specialises in tax structuring, secu-

ritisation, derivatives, M&A and stamp duty. He is alsoan experienced transfer pricing specialist, advisingthe financial services industry and is often involvedin dispute resolutions and tax litigation matters. Heworks closely with Joe Duffy who specialises in inter-national tax matters with particular focus on transferpricing, supply chain and IP structuring. Matheson offers the traditional services, but are

regularly also engaged to negotiate transfer pricingsettlements, APAs and correlative adjustments. Theteam has a strong focus on its advisory services andworks within a range of areas including classic prod-uct and service pricing, IP transfers and the allocationof profits to permanent establishments. The teamalso advise a number of its multinational clients onon-going compliance with Irish transfer pricing rules,including reviewing their transfer pricing methodolo-gies and preparing appropriate legal documentationto underpin the policies. PwC’s head of transfer pricing Gavan Ryle advises

multinationals on TP planning as an element ofmanaging their effective tax rate. He has a wealth ofexperience in structuring related party transactions totake advantage of the Irish corporate tax rate. Ryleworks closely with partner, Ronan Finn, on transferpricing ventures. Finn advises multinationals invest-ing in Ireland on Irish, European and global struc-tures. The team regularly coordinates international TPprojects to implement intragroup TP models, assistclients with dispute resolution and prepare docu-mentation across various industries. The team hasdedicated specialists in the insurance, asset man-agement, banking and capital market sectors. The practice’s unique selling point is its risk assess-

ments in relation to BEPS and its use of globalinsight to develop compliant, tax-efficient structuresto safeguard all business goals and locations.

Tier 2William Fry, Taxand Ireland’s head of tax MartinPhelan oversees the firm’s transfer pricing practice.The team comprises two partners and three dedicat-ed professionals. A full range of services is offeredwith key focus on supply chain management,

Ireland


benchmarking and economic input-output analysis,group charges, IP valuations and share valuation. In the past year, the firm engaged in a number of TP

projects and their clientele includes various high profileinternational companies. The firm is highly recom-mended by its clients, one said: “We would recom-mend this firm because of the ability to speak directlyto partners and get prompt and practical responses.”

Tier 3Peter Maher is in charge of the transfer pricing opera-tions at A&L Goodbody. The firm offers a range ofstandard TP services, including preparation of docu-mentation, implementation of models and dispute res-olution. As head of tax, Maher specialises in inboundinvestment procedures, cross-border financing andstructuring and capital market transactions. As the Irishtax market is changing, the firm has beefed up theirtransfer pricing resources to prepare for what is coming

down the tracks and the firm has been busy assistingclients with new structures as a result of BEPS. Grant Thornton’s transfer pricing team is led by Peter

Vale. He has expansive expertise in international cor-porate tax structuring, including financing structures,company migrations and international reorganisations.Before joining Grant Thornton in 2007, Vale spent morethan 10 years at PwC. Apart from transfer pricing, healso specialises in property tax planning, financial serv-ices, M&A tax planning and due diligence. The firm’s clientele includes Irish and foreign multi-

nationals and large-scale indigenous Irish compa-nies. Significant clients come from the distribution,energy, food and financial sectors. Mason Hayes & Curran’s transfer pricing team pro-

vides input on domestic and cross-border transac-tions, as well as the classic transfer pricing worksuch as drafting and reviewing APAs. The team is ledby John Gulliver who works closely with Robert

Ireland



Corporate income tax 12.5% (a)Capital gains tax 33% (b)Branch tax 12.5% (a)

Withholding tax Dividends 20% (c)(d) Interest 20% (d)(e)(f) Royalties 20% (d)(f)(g)


a) This rate applies to trading income and tocertain dividends received from non-residentcompanies. A 25% rate applies to certainincome and to certain activities.

b) A 40% rate applies to disposals of certain lifeinsurance policies.

c) This withholding tax is imposed on dividendsdistributed subject to exceptions

d) Applicable to both residents and non-residents.

e) Interest paid by a company in the course of atrade or business to a company resident inanother European Union (EU) member state or ina country with which Ireland has entered into adouble tax treaty is exempt from withholding tax,subject to conditions. Bank deposit interest issubject to a 41% deposit interest retention tax(DIRT). DIRT exemptions apply to bank interestpaid to non-residents and, subject to certainconditions, bank interest paid to Irish residentcompanies and pension funds.

f) Ireland implemented the EU Interest andRoyalties Directive, effective from January 1 2004.

g) Under Irish domestic law, withholding tax onroyalties applies only to certain patent royaltiesand to other payments regarded as “annualpayments” under Irish law. The Irish Revenuehas confirmed that withholding tax need not bededucted from royalties paid to non-residentswith respect to foreign patents (subject toconditions).



Henson and Maura Dineen. The three partners fre-quently deal with overseas challenges to transferpricing involving Irish entities, working closely withthe firm’s IP law department to ensure the underlyingframework supports the transfer pricing.

One client described the firm as excellent and said:“John Gulliver and Robert Henson are the two taxpartners I deal with most frequently and both are apleasure to work with – very responsive, very flexibleand technically sound.”

Ireland


Deloitte & Touche HouseEarlsfort TerraceDublin 2Ireland

Contact:Gerard FeeneyHead of Transfer PricingTel: +353 1 417 2403 Email: [email protected]

The award-winning Deloitte Irelandtransfer pricing team comprises seniorpersonnel with global experience in prac-tice and industry. The team, which is alsopart of the wider Deloitte TransferPricing team globally, has significant expe-rience working with multinational compa-nies and indigenous Irish businesses onthe challenges posed due to significantchanges in the transfer pricing environ-ment globally.

Many multinationals based in Ireland, andoperating in Europe and beyond, face sig-nificant transfer pricing challenges arisingfrom the OECD/G20 Base Erosion andProfit Shifting (BEPS) project andEuropean Union changes. By providinglocal expertise, along with a global sup-port network, the Deloitte Ireland trans-fer pricing team brings clients the breadthof knowledge and support that theyrequire to assist them in facing these sig-nificant challenges.

The transfer pricing team are activelyengaged with clients in relation to theimpact of the BEPS project from a transfer

pricing perspective; namely, businessmodel optimisation, intellectual propertystructuring, advice regarding PermanentEstablishments, transfer pricing docu-mentation and Country-by-CountryReporting. In addition, we are advisingclients on the implications of the formalBilateral APA program in Ireland and thepotential for an increased level of dis-putes in light of the changing transferpricing landscape.

The Deloitte Ireland practice has a strongtrack record in liaising with tax authori-ties on transfer pricing matters and canprovide comprehensive support in thedesign and execution of audit defencestrategies in dispute resolution cases.

We are very pleased that our DeloitteIreland transfer pricing team were recog-nised with the 2016 Ireland TransferPricing Firm of the Year award in theInternational Tax Review’s (ITR)European Tax Awards. This was the thirdtime in five years that we have earned thisprestigious recognition, which is testa-ment to how the transfer pricing team atDeloitte are helping clients to respond tothe very significant challenges facing theirbusinesses, as well as to our leading posi-tion within the Irish market.

Ireland




LEADING FIRMS

1 EY PwC

2 BDO Israel Deloitte Fahn Kanne & Co – Grant Thornton Gornitzky & Co Herzog Fox and Neeman KPMG

The BEPS Project has been the main transfer pricingtopic this year, especially where the Israeli govern-ment is taking actions to implement some of the rec-ommendations given by the OECD.

Multinationals in Israel have started examiningtheir intercompany arrangements with the new stan-dards in mind to evaluate what changes arerequired. “This could relate to intercompany modelsthe BEPS Project is targeting, such as the commis-sionaire and marketing support arrangements, or tomodels that may require a different pricing methodthat could significantly change the multinationalseffective tax rate,” said Guy Attias, head of transferpricing at Deloitte in Israel.

One of the immediate impacts from BEPS in Israelis an update to the transfer pricing documentationrules. Israel has announced that they will adoptcountry-by-country reporting (CbCR) which has result-

ed in multinationals hastening to make the appropri-ate preparations.

The Israeli authorities are focusing on the sub-stance over form concept, a core component drivingthe OECD BEPS Project, even before the general BEPSrules are formally adopted. “When auditing inboundand outbound intercompany transactions, they arefocusing on value creation and on the location of thepeople aspect of the audited multinational,” saidEyal Bar-Zvi of Herzog Fox and Neeman.

The pressure from the tax authorities has becomestronger and it is expected that the government offi-cials will carefully scrutinise transfer pricing issues inthe coming year. “Taxpayers should be more careful,”said Daniel Paserman of Gornitzky & Co.

Tier 1EY Israel’s transfer pricing practice is integrated intothe international tax practice. The TP group, compris-ing two partners and 25 other professionals is led byLior Harary-Nitzan and covers the complete spec-trum of transfer pricing issues.

As one of the most prominent firms in the country,the team serves a myriad of international anddomestic clients, offering a range of services fromplanning and documentation to controversy services.The TP professionals have a deep understanding ofinternational legislation including the BEPS guide-lines and local regulations. Vered Kirshner is the head of PwC Israel’s transfer

pricing practice. The head of tax, Doron Sadan also


IsraelTax authorities Income Tax Office66 Kanfei Nesharim StreetJerusalemTel: +972 2 654 5111; +972 2 654 5415Fax: +972 2 654 5183; +972 2 654 5413

Department of Customs and VAT5 Bank of Israel StGovernment Complex POB 320Jerusalem 91002Tel: +972 2 666 4000Fax: +972 2 666 4011Email: [email protected]: taxes.gov.il; ozar.mof.gov.il


supports the TP team. The team consists of twopartners and 15 transfer pricing specialists experi-enced in economics, accounting, project manage-ment and law.

The team optimise clients’ business models fromthe transfer pricing perspective by providing servicesincluding: high-level analysis of a group’s TP policies,benchmark and comprehensive studies, TP docu-mentation, TP strategy planning, TP policy planningto align with local and foreign regulation, and nego-tiation of pre-rulings and advance pricing agreement(APA) procedure.

PwC is the first service provider in Israel thatobtained an APA from the Israeli tax authorities aswell as the first firm to start carrying out innovativetransfer pricing projects in the oil and gas industry.

The top four industries the firm advises on aretechnology, media and telecommunications, phar-maceuticals, financial services and energy and utili-ties, including oil and gas.

Tier 2The transfer pricing department at BDO Israel isdirected by Amit Shalit who has more than 12 yearsof experience in international taxation, particularlyrelated to inbound and outbound investments. Healso has vast experience in transfer pricing.

The team offers services in TP policy advice, docu-mentation, audit support, APA services, and access tothe global BDO TP team.

The transfer pricing department of Deloitte in Israelis comprised of 10 professionals and is headed byGuy Attias, the sole partner. Attias took over theleadership from Jacob Houlie who retired from thefirm this year. He has extensive experience in alloca-tion of functions and risks between group associatesas well as establishing operative tax supply chainsresulting from different intellectual property (IP) own-ership structures.

The group provides a wide spectrum of TP servicesto more than 100 multinationals from various indus-

Israel



Corporate income tax rate 25% (a)Capital gains tax rates 25% (a)Branch tax rate 25% (a)

Withholding tax Dividends 0/15/20/25/30% (b)(c) Interest 0/25% (a)(b)(d)(e) Royalties from patents,

Know how, etc. 25% (a)(b)(d) Branch-remittance tax n.a.


a) This is the regular company tax rate for profitsand real capital gains. Reduced rates ofcompany tax are available in accordance withthe Capital Investment Encouragement Law

b) The withholding tax may be reduced byapplicable tax treaties.

c) The 0% rate generally applies to distributions toIsraeli parent companies. In addition, reducedwithholding tax rates of 15% and 20% mayapply under the Capital InvestmentEncouragement Law.

d) In principle, the withholding taxes on interestand royalties are not final taxes.

e) Interest paid to non-residents on Israelicorporate bonds registered for trading on theTel-Aviv Stock Exchange is exempt. In general,interest paid to non-residents on Israeligovernmental bonds is exempt. However,interest on short-term bonds (issued for 13months or less) is taxable.



tries. This includes providing TP documentation com-pliance as well as planning and analysis whichincludes migration of IP, risks and functions in addi-tion to the more simplified restructuring of intercom-pany transactions.

Lately, the TP team’s focus is on assisting clientswith consideration of the new tax environment asreflected by the BEPS Project. Fahn Kanne & Co – Grant Thornton’s transfer pric-

ing practice is part of the tax department which ismanaged by Yigal Rofhe. The professionals in theteam have in-depth understanding and expertise inthe areas of accounting, tax, law, and economics.

The firm provides various transfer pricing servicesensuring clients obtain seemly solutions across awide range of industries. The team members are ableto offer TP strategy planning, TP benchmarking, devel-opment and formulation of transfer pricing policy, TPstudies, preparation of the transfer pricing report, APAand advice through transfer pricing audits. Gornitzky & Co’s transfer pricing practice is headed

by Daniel Paserman who is also the leader of the taxpractice of the firm. The transfer pricing team hasthree partners and three other fee earners focusingon TP disputes. The team also negotiate APAs withthe Israeli tax authority.

Paserman is often engaged in complex corporateand individual tax planning, tax rulings, reorganisa-tions and tax assessments. He also manages thefirm’s funds practice, advising private equity funds invarious transactions. He is also familiar with interna-tional M&A transactions.Meir Linzen is the managing partner overseeing

both the tax and transfer pricing group at Herzog Foxand Neeman. Linzen concentrates on cross-bordertransaction tax planning as well as M&A. A notablepartner specialising in transfer pricing is Eyal Bar-Zvi,who has vast experience in advising not only multi-national companies on their intercompany transferpricing and transactions but also start-up companiesfrom their integration stage through to M&A.

The transfer pricing team provides comprehensiveguidance on a complete range of transfer pricingissues with regard to the latest BEPS recommenda-tions and their implementation in Israel. The servicesinclude transfer pricing studies, intercompany agree-ments, TP policy, APAs, TP implementation, intercom-pany finance, valuations, representation in front ofthe tax authorities and courts, and BEPS readiness.KPMG’s transfer pricing practice in Israel is man-

aged by Dina Pasca-Raz and she is also in charge ofinternational tax services of the firm.

Israel


1. How does the tax authority selecttransfer pricing audit cases?Based on the level of risk attributed to taxpay-ers, which, in turn, depends broadly on the fol-lowing:• Size and type of intercompany transactionswith foreign entities (large royalty or inter-ests payments abroad increase the level orrisk);

• Size of the business (large businesses, i.e.with an annual turnover equal or larger than€ 100 million ($112 million) are supposed tobe audited every two years);

• Repeated losses and/or variable results;• Recent business restructurings and/orextraordinary operations;

• No option for accessing a penalty protectionTP documentation regime,

• Bad transfer pricing tax audits record; and• Increasingly, pursuant to requests or informa-tion received from foreign tax authorities.

2. How will a company find out it hasbeen selected for audit? What is the officialnotification?Companies are generally notified one to twoweeks in advance about the starting of anaudit.However, audits can take place with nonotice, especially when conducted upon theinitiative of the tax police instead of that ofthe tax agency. The notice of audit contains

the reason for the audit, the financial years tobe audited and the taxes under inquiry. The tax office can also request taxpayers to

respond to questionnaires. The sending of aquestionnaire does not mean that an audit willbe started, however this is very likely to startshould the taxpayer’s answers not be satisfacto-ry to the tax authority.

3. When a company has been notified ofan audit, what is the first thing it shoulddo?In the event it applied for the penalty protec-tion TP documentation regime, the companyshould check whether the relevant documenta-tion package is complete, compliant with theregulations and ready for being handed over tothe auditors upon their request. The deadline is10 calendar days since a specific request ismade but such a request can also be made bymeans of the questionnaires mentioned above. Secondly, it is advisable to inform the compa-

ny’s TP advisors and involve them from thebeginning of the audit procedure. Adressing taxauditors’ requests and inquiries correctly duringthe audit is the most effective mean to avoid bigfinal re-assessments and costly settlements orlitigation procedures.


Italy

Tax authorities Agenzia EntrateCristoforo Colombo n. 426 C/D, 00145 RomeTel: +3906 9666 8933Email: [email protected]: www.agenziaentrate.gov.itWebsite in English: www1.agenziaentrate.it/inglese/

An audit guide by Aldo Castoldi of Deloitte Italy.


http://www.agenziaentrate.gov.it


4. Are there legislative, regulatory, or otherprocedures applicable to taxpayers subjectto a transfer pricing audit? If not, what isthe recommended practice?A TP audit follows the same rules applicable toevery tax audit, which are stated by the law, set-ting forth the rights and duties of both taxpay-ers and the tax authorities. In particular, therights of taxpayers are established in the Lawn.212 of July 27, 2000 (Statuto delContribuente).

5. How does Italy differ in its approach totransfer pricing audits from othercountries?The aggressiveness of the Italian tax office inrespect to transfer pricing is among the highestwithin OECD countries and, until recently, thelack of any prior notice to taxpayers aboutupcoming audits makes the Italian TP auditenvironment a challenging one. It must benoticed that the percentage of TP audits whichend up in a re-assessment of the taxable incomeis about 90%.

6. How does the tax authority compileinformation on a taxpayer for a transferpricing audit?Mainly from its tax returns and financial state-ments. Italian companies are obliged to filetheir statutory financials with the competentChamber of Commerce, from where they canbe accessed by anyone wishing to do so.Previous audit records also play an importantrole as a primary source of information. In addi-tion, an audit may be prompted by informationgathered by the tax authority through the auditof one or more business partners. Finally, infor-mation may be requested and received fromforeign tax authorities, based on tax administra-tion cooperative agreements and treaties.

7. What are some of the issues more likelyto trigger a transfer pricing audit by the taxauthorities?• Lack of positive taxable income for a numberof financial years in a row;

• A sudden change in the business model, espe-cially in case it triggers a significant reductionin the taxable income;

• The disposal of significant assets, especiallyintangible assets;

• A functional/risk profile transformation (e.g.from fully-fledged manufacturers/distribu-tors to limited-risk ones or to agents/tollmanufacturers);

• The payment of high royalties and/or inter-ests.

8. What documents are requested from thetaxpayer during a transfer pricing audit?Full statutory financial statements packages,general ledger, VAT ledger, inventory book andall remaining accounting and statutory books(shareholders meeting minutes, board of direc-tors meeting minutes, etc.) are normallyrequested. Specific TP documentation is alsorequested if the company applied for the rele-vant penalty protection documentation regime,including intercompany agreements and con-tracts. Otherwise, not specific TP documenta-tion is required, although it is highly advisable toprepare a defensive package anyway, since tax-payers are usually requested to provide compre-hensive TP information during the audit. To beconsidered that, more and more often, segregat-ed profits and losses are requested per foreignrelated party/transaction in order for the audi-tors to be able to check intercompany transferpricing transaction flow by transaction flow.

9. Are there any restrictions on acompany’s business during a transferpricing audit?There not any restrictions, on the contrary, theaudit shall be conducted in a way such as not to

Italy


prevent, nor significantly disturb the ordinarybusiness of the taxpayer. Of course, the simplepresence of the auditors at the company’spremises, the fact that the tax auditors mayrequest that a certain space is made available tothem for a few weeks or months on an exclusivebasis all through the audit, as well as their fre-quent (sometimes massive) requests for docu-mentation, creates some additional organisa-tional burden.

10. Are there any restrictions on thetaxpayers’ advisers during a transferpricing audit?No, there are no restrictions. Taxpayers mayappoint their advisors to assist all through theaudit and to serve as the first point of contact tothe auditors.

11. How long does a transfer pricing auditlast?An audit cannot exceed 30 working days ofphysical presence of the auditors at the compa-ny’s premises. This term is renewable for anoth-er 30 days, upon a formal and reasonablygrounded request from the auditors to the com-petent tax office. However, there is no obliga-tion on the tax auditors to make use of thosedays on a continuous basis, hence an audit canin actual fact last for several months, sometimesyears, even though the company may not berequired to perform any specific activity, norprovide any document or answer, for long peri-ods of time.

12. What happens after an audit has beencompleted?An audit is deemed as formally completed atthe time the final audit report (Processo Verbaledi Constatazione – PVC) is handed over to thetaxpayer. From that moment onwards, the tax-payer has, substantially, the following options:• Accept the outcome of the audit and pay anyrelevant additional tax and penalty (this

option allows the taxpayer to benefit fromsubstantial reduction in the amount of thepenalty. Of course, it offers no advantage incase a penalty protection documentation wasprepared and accepted as valid by the audi-tors);

• Ask for starting a negotiation to reduce boththe taxable income’s reassessment and theapplicable penalties, before a tax assessmentnotice is issued with the final assessment;

• Wait for the issue of the tax assessment noticeand then ask to start a negotiation or file anappeal (within 60 days of the receipt) andstart a litigation. A new negotiation round canalso be activated during this phase and evenafter a first level tax court’s decision.However the amount of penalties to be paid isincreased. It must be noted that an appeal canbe filed also after a negotiation has failed.

• Alternatively to start a domestic litigation,taxpayers may apply for a mutual agreementprocedure under an applicable double taxtreaty and/or, as applicable, the EU MutualAgreement and Arbitration procedure, inorder to have the competent authorities ofthe countries involved discussing the case toseek a bilateral settlement.

13. Tips on negotiating with theauthorities?Flexibility is important, but a compromiseshould be possibly sought on one-shot issuesonly (perhaps not TP-related), not on princi-ples, in order not to potentially put at risk awhole transfer pricing model/policy for multi-ple years. In approaching the tax office,respect is paramount, yet taxpayers shouldshow themselves conscious of their good rea-sons and rights and never easily give up on anissue. Above all, a settlement should be pur-sued that allows to as much as possible to sta-bilise the relationship with the tax office in themedium and long term, avoiding short term(i.e. short sighted) solutions.

Italy



14. How can a company manage its auditrisk?First of all by avoiding whenever possible situ-ations (listed under Question 1) that increasesuch a risk. In addition, it is highly advisableto prepare a TP documentation package suit-able for obtaining a penalty protection. Alsohelpful is to design and implement proceduresfor the monitoring and adjusting of the inter-company transfer prices, to guarantee a con-sistent application of the TP methodology/

model regulated by the relevant intercompanyagreements and illustrated in the TP docu-mentation. In that respect, companies cannow more and more leverage from new oper-ational transfer pricing information technolo-gy tools expressly designed to help extract,elaborate and analyse huge amounts of data inreal time. This enables them to control and, ifnecessary, adjust their transfer prices in orderto keep the latter constantly aligned with thepolicies.

Italy


LEADING FIRMS

1 BonelliErede Maisto e Associati Studio Associato (KPMG) Studio Legale e Tributario (EY) Studio Tributario e Societario (Deloitte) Valente Associati GEB Partners

2 Belluzzo & Partners Bernoni Grant Thornton Fantozzi & Associati, Taxand Italy Hager & Partners

3 Allen & Overy Baker & McKenzie Chiomenti Studio Legale Di Tanno e Associati DLA Piper Fava & Partners Legance – Avvocati Associati McDermott Will & Emery NCTM Studio Legale Associato Studio Musselli Studio Uckmar Valdani Vicari & Associati WTS R&A Studio Tributario Associato

Like many countries worldwide, the conversationwithin Italy’s transfer pricing market in the past yearhas focussed almost entirely on the issue of BEPS,and its implications both in Italy and around the world.

One of the key issues that has come up in thejurisdiction is how taxpayers can manage the repu-tational damage, and potential court dispute, thatmay occur when their tax and transfer pricing struc-tures are revealed.

“The problem in Italy, as in some other jurisdictions,is that if your company ends up in the papers for taxplanning this could also result in criminal investiga-tions, even if in the end nothing is proven it can beseverely inconvenient. After all, everyone reads thepapers, even the public prosecutors.” saidFrancescho Bonichi, partner at Allen & Overy.

This public engagement with international tax mat-ters has prompted the tax authorities to engagemore thoroughly and firmly with taxpayers when itsuspects impropriety.

The approach that the authorities are increasinglytaking however, is said by advisers to be a positiveone. There are hopes that a change of culture is tak-ing place and the tax authorities are beginning tosee their role as to co-operate with taxpayers inorder to help business.

Italy has been a relatively rapid adopter of theBEPS proposals with a number of key reformsalready adopted into local legislation. Country-by-country reporting (CbCR) was introduced in the 2016Finance Bill and took effect on January 1 2016.

In the same Bill, the Italian government introduceda new advance ruling procedure for multinationalsand tax authorities covering a variety of tax issues,including transfer pricing, in line with BEPS Action 14on making dispute resolution mechanisms moreeffective. This process is available to all companieswith international activities and any rulings issuedwill bind both the tax authority and the company forfive years.

Tier 1 BonelliErede can advise clients on a broad range oftax and transfer pricing matters. The firm has assistedon more advance pricing agreements (APAs) applica-tions than any other firm in Italy and was the firstfirm to negotiate a multilateral APA under the newlegislation.

This year has seen the firm assist Telecom Italiawith issues arising from a tax assessment that chal-lenged the transfer pricing of a trademark free licenseand the withholding tax failure on interest on bondsissued by a Luxembourg controlled foreign company.This matter is significant because the allegationshave no precedent.

A key contact at the firm is Stefano Simontacchiwho is co-managing partner and leader of thefirm’s transfer pricing focus team. He also sits onthe board of RCS Media Group and Prada, demon-strating his reputation as one of Italy’s leading

Italy



legal experts, a reputation confirmed by his peersand clients.Maisto e Associati’s transfer pricing practice

employs three partners and seven other profession-als. This year saw them represent clients operating inthe financial services, manufacturing, fast-movingconsumer goods (FMCG), healthcare and pharma-ceuticals industries, and transport and aerospaceindustries on a range of transfer pricing issues.

One deal the team worked on involved assistingtheir client in the submission of an application for anAPA for new investments in Italy following changesto APA legislation in Italy. The ruling in effect clarifiedthat the company would not be considered as hav-ing a permanent establishment were it to takeadvantage of a tax exemption offered for job-creat-ing investment into Italy. It was one of the first dealsof this type to take place under the new legislation.

A key contact at the firm is Guglielmo Maisto, themanaging partner at Maisto e Associati and a profes-sor of international and comparative tax law atUniversità Cattolica di Piacenza as well as the presi-dent of the Italian branch of the International FiscalAssociation (IFA).

The firm was extremely well spoken of by clientsand peers.Studio Associato (KPMG)’s transfer pricing practice

is headed by Gianni De Robertis. The firm offers a fulltransfer pricing service and has 12 professionalsworking in TP disputes, 18 in TP compliance, 24 whodeal with APA and mutual agreement procedure(MAP) negotiations and five who cover other aspectsof transfer pricing.

This year the firm assisted, a company in analysingthe TP aspects of a business restructuring. The analy-sis resulted in an assessment of the compliance ofthe business restructuring to the principles stated inchapter 10 of the OECD transfer pricing guidelines.The assistance included advising the clients duringthe negotiation and implementation of an APA.Studio Legale e Tributario, EY’s key contact is

Davide Bergami, a tax partner at the firm in Milanwho has more than 25 years of experience advisingclients. He leads a team of 40 dedicated TP profes-

sionals making it one of the largest firms in Italy interms of transfer pricing. It offers the full suite of serv-ices, from documentation, APAs, assistance during lit-igation, and the design and restructuring of transferpricing policies.Studio Tributario e Societario Deloitte’s head of

transfer pricing in Italy is Aldo Castoldi. This year sawthe firm advise one of its clients in the use of com-parable uncontrolled price, to avoid a transfer pricingclaim arising from the revenue authority.

The firm advises clients in the manufacturing, tech-nology, media and telecommunications (TMT),healthcare and pharmaceuticals, FMCG, and energyand utilities industries. The services the firm offersinclude the design and implementation of transferpricing regimes, benchmarking and transfer pricingdatabases, as well as local documentation supportand dispute resolution. The firm also advises itsclients in negotiations with the relevant tax authori-ties on the setting up of APAs.

Through its international presence it can offer aconsistency of service across jurisdictions.Valente Associati GEB Partners has an extremely

strong tax and transfer pricing practice led by man-aging partner and international tax directorPiergiorgio Valente.

This year saw the firm advise a company on there-orientation of its transfer pricing policy in light ofthe recommendations in BEPS Actions 8-10, in orderto optimise the client’s position, but also shield themfrom possible risk and dispute proceedings from thetax authority.

The firm offers a full transfer pricing service, includ-ing functional analysis, dispute resolution, litigationdefence, preparation of transfer pricing documenta-tion and APA preparation and negotiation.

Tier 2The team at Belluzzo & Partners includes a numberof high-calibre tax and transfer pricing professionals.A key contact at the firm is Ettore de Pace, who hasworked in the past as a certified public accountantand auditor, as well as with a Big 4 firm. Pace spe-cialises in transfer pricing.

Italy


Italy



Corporate income tax 27.5% (a)Capital gains tax 1.375/27.5% (b)Branch tax rate 27.5% (a)

Withholding tax Dividends 0/1.375/26% (c)(d) Interest 0/12.5/26% (e)(f) Royalties 0/22.5/30% (f)(g)

Net operating losses (years) Carryback 0 Carryforward Unlimited (h)

a) The corporate income tax (imposta sul reddito delle

società, or IRES) rate is 27.5%. However, the 2016 Budget

Law provides that, except for banks and other financial

entities, the IRES rate will be reduced to 24%, effective

from the 2017 fiscal year (fiscal years beginning after 31

December 2016). A 6.5% surcharge (increasing the total

tax rate to 34%) had been imposed on oil, gas and

energy companies with revenues exceeding €3 million

and taxable income exceeding €300,000, with reference

to the preceding year (for 2011 to 2013, the surcharge

was 10.5%, increasing the total tax rate to 38%). During

2015, the Italian Constitutional Court declared such

surcharge unconstitutional and consequently repealed the

surcharge without retroactive effect. A local tax on

productive activities (imposta regionale sulle attività

produttive, or IRAP) is imposed on the net value of

production.

b) Withholding tax is not imposed on dividends paid to

resident companies. The 26% rate applies to dividends

paid to resident individuals with non-substantial

participations. The 26% rate applies to dividends paid to

nonresidents. Non-residents may be able to obtain a

refund of the withholding tax equal to the amount of

foreign tax paid on the dividends. However, the maximum

refund is 11/26 of the withholding tax paid. Tax treaties

may provide for a lower tax rate. Effective from January 1

2008, a 1.375% rate applies under certain circumstances.

If either the treaty or the 1.375% rate applies, the 11/26

tax refund cannot be claimed.

c) Under the European Union (EU) Parent-Subsidiary Directive,

dividends distributed by an Italian subsidiary to an EU

parent company are exempt from withholding tax, if among

other conditions, the recipient holds 10% or more of the

shares of the subsidiary for at least one year.

d) The 0% rate applies under certain circumstances to interest

derived by nonresidents on the white list from treasury

bonds, bonds issued by banks and “listed” companies,

“listed” bonds issued by “non-listed” companies, nonbank

current accounts and certain cash pooling arrangements

and in other specific cases. The term “listed” refers to a

listing on the Italian exchange or on an official exchange or

a multilateral system for exchange of an EU or European

Economic Area (EEA) country. Such exchanges are also

included in the Italian white list. The 26% rate applies to

interest derived by residents and nonresidents from

corporate bonds and similar instruments and from loans, in

general. The 26% rate also applies as a final tax to interest

paid to residents on bank accounts and deposit certificates.

The rate applicable to interest paid on treasury bonds

issued by the Italian government and by white-list

countries is reduced to 12.5%. For resident individuals

carrying on business activities in Italy and resident

companies, interest withholding taxes are advance

payments of tax. In all other cases, the withholding taxes

are final taxes.

e) No withholding tax is imposed on interest and royalties

paid between associated companies of different EU

member states if certain conditions are met.

f) The withholding tax rate of 30% applies to royalties paid to

nonresidents. However, in certain circumstances, the tax

applies to 75% of the gross amount, resulting in an

effective tax rate of 22.5%. These rates may be reduced

under tax treaties.

g) Loss carryforwards are allowed for corporate income tax

purposes only. Losses incurred in the first three tax years of

an activity may be carried forward indefinitely. Losses

incurred in the following years can also be carried forward

indefinitely but can only be used against a maximum

amount of 80% of taxable income. Anti-abuse rules may

limit loss carryforwards.



The firm is able to advise clients from a broadrange of industries on the full spectrum of tax and TPissues, including TP structure design, audit, economicand business analysis as well as assistance duringdispute resolution and litigation proceedings.Bernoni Grant Thornton offer a full range of tax

and transfer pricing services, these include audit sup-port, research and the use of TP databases, TP doc-umentation assistance, TP planning for growth andrestructuring and supply chain re-engineering.

Two key contacts at the firm are managing partnerGiuseppe Bernoni and Stefano Salvadeo, the firm’shead of advisory. Fantozzi & Associati, Taxand Italy represents

clients, including public and private companies,banks financial intermediaries and insurance compa-nies before the courts and to the tax authorities. Itoffers a service to clients to help them minimise theirtax costs, develop sustainable transfer pricing poli-cies, increase efficiency and manage risk.Hager & Partners has offices in Milan, Bolzano and

Rome. The transfer pricing practice is managed byGian Luca Nieddu alongside managing partner ofthe firm Heinz Peter Hager. The firm employs sixtransfer pricing professionals, comprising two part-ners, and four other fee earners in the area of trans-fer pricing.

This year saw the firm successfully defend theItalian subsidiary of a German manufacturing group,in a dispute that had arisen from when the companywas audited for the period 2010 through 2012.

The discussion held by Hager & Partners with thetax officers centred on the interrelation between thepurchase price for finished products, the marketingand advertising expenses borne locally and the func-tional and risk profile of the distribution company,and how this interacted with the legal as opposedto the beneficial ownership of the company. DietmarHuber, partner, and Gian Luca Nieddu, senior man-ager, headed this action.

Tier 3Allen & Overy in Italy undertook several innovativeand high value deals involving Italian and interna-

tional multinationals’ transfer pricing over the pastyear as well as advising several multinational clientson court proceedings around TP violations that hadcriminal implications.

The co-heads of the firm Francesco Bonechi andFrancesco Guelfi, two lawyers who were extremelywell spoken of by clients and peers, lead a team ofthree fee earners and two trainees. The firm is activelyinvolved in the implementation of new tax regulationsand has advised the Italian regulator and several Italianmarket actors on the implications of them, as well asrepresenting a number of extremely prestigious clients.

The firm offers a full-service tax practice, and overthe past year has been involved in complex transac-tions advising on the tax aspects and structures ofmajor cross-border deals in numerous industriesincluding banking and finance, TMT and real estate. Baker & McKenzie’s transfer pricing practice is led

by Massimo Giaconia, who has more than 30 yearsof experience as a lawyer.

The firm offers its Italian and international multina-tional clients a full range of tax and transfer pricingservices. Clients mainly come from the finance, phar-maceutical, IT, oil and gas and FMCG industries.

This year saw the firm help a client prepare TP doc-umentation for more than 24 countries, as well asthe development of new transfer pricing policies forindustrial and mobile business units.Chiomenti Studio Legale’s transfer pricing practice

represents its clients in the courts and the Italian taxauthorities, in order to help them with tax and trans-fer pricing disputes and assist them in the negotia-tion of APAs.

Professionals at the firm also advise clients, whoinclude Italian and international multinationals, onthe tax planning of M&A transactions, joint venturesand corporate restructuring.

They also have the ability to assist clients with TPanalysis, documentation and design.Di Tanno e Associati can provide clients with liti-

gation support and tax and transfer pricing planning.The firm specialises in the tax implications of privateequity and real estate funds, as well as M&A deals,banking and finance and corporate restructuring.

Italy


A key contact at DLA Piper is head of tax AntonioTomassini, who is well respected for his tax expert-ise by peers and clients.

This year saw Fabrizio Capponi, partner, andRoberta Moscaroli, lead tax advisor, defend GruppoVezza in a TP dispute involving multiple jurisdictions.The year also saw the firm advising an Italian multi-national specialised in the sale and export of frozenmeat on its transfer pricing, controlled foreign com-pany matters and in filing a preventive tax ruling ona leveraged buy-out transaction. Fava & Partners offers its clients transfer pricing

services related to the analysis and application oftransfer pricing principles, including functional andeconomic analysis. The firm also assists with clients’local documentation requirements, and the prepara-tion of benchmark analysis.

The firm also assists its clients during disputes withthe tax authorities and any litigation that may arisefrom their tax or transfer pricing issues, as well asoffering advice on the implication of EU and interna-tional double taxation treaties.Legance – Avvocati Associati assists clients in

transfer pricing and tax areas such as risk analysisand determination of policies, negotiation of rulingsand APAs, drafting of master and country files, adviceduring disputes with the tax authorities and wheninvolved in litigation.

The firm deals with clients in the public sector,planning and local developments, health and phar-maceuticals and public finance industries.McDermott Will & Emery offers transfer pricing

services to clients in the food and beverage, con-sumer products, fashion and apparel, automotive, lifesciences and medical devices, private equity, bank-ing and financial services sectors.

It covers aspects of transfer pricing including docu-mentation, structure advice and dispute resolution andlitigation, as well as advising its clients in APA negoti-ation. Carlo Paolella leads the Italian tax practice andfocuses on Italian and international tax issues relatingto M&A, corporate reorganisations, cross-border trans-actions, transfer pricing, capital markets, collectiveinvestment vehicles and tax controversy.

The firm has an excellent tax and transfer pricingpractice that was highly praised by peers.NCTM Studio Legale Associato offers services

relating to domestic and cross border transfer pric-ing issues. It assists clients in the design andimplementation of their transfer pricing policies, aswell as TP dispute resolution, the negotiation ofAPAs and local documentation requirements.Studio Musselli offers its clients focused and

effective tax and TP counsel covering a range of TPissues. The range of services offered are primarilyin TP structuring advice, documentation and audit.Clients come from the fields of financial services,TMT and manufacturing.Studio Uckmar offers advice on all aspects of tax

and transfer pricing including documentation,audits, structure design and implementation, thedefence of transfer pricing policies to the taxauthorities or courts, and the negotiation of APAs.Valdani Vicari & Associati is a business consul-

tancy that has been active in the TP advice indus-try since 2010. A suite of transfer pricing servicesare on offer, including the preparation and updat-ing of documentation, assessment of policies,planning of policies, integrated design and repre-sentation before the authorities on APAs, mutualagreement procedures (MAP), audits and litigation.The team also drafts valuations and plans corpo-rate and business model restructurings.WTS R&A Studio Tributario Associato offers

transfer pricing services which include the design,documentation and defence of TP policies. Thetransfer pricing practice is integrated with otherservices to include VAT, excise taxes and customsand performs due diligence work on transfer pric-ing risks related to target companies of M&A deals.Since the end of 2015, the practice is also activelyinvolved in the economic analysis of patent boxregime applications.

A key contact at the firm is Giovanni Rolle, whois the head of international tax and was engagedthis year in the supply chain design for a US sub-sidiary of an Italian multinational engaged in theproduction of chemicals.

Italy



ITALY Milan Via Bocchetto 6tel. +39 02 36569657, ItalyVerona Stradone San Fermo 14tel. +39 045 8005353, ItalyLondon 38 Craven Streettel. +44 20 7004 2660, UKSingapore 133, Cecil Street, #11-02,Keck Seng Tower, 069535tel. +65 6236 0930, Singapore

www.belluzzo.net

Contacts:Luigi Belluzzo Managing Partner,[email protected] De Pace / Transfer PricingSpecialist [email protected] Lenti / Transfer PricingSpecialist [email protected]

Studio Tributario eSocietario

Contact: Aldo Castoldi,Tax Partner – Head of Transfer PricingVia Tortona, 2520144 MilanTel: +39 02 8332 4036Email: [email protected]

Since a few years now, Sudio Tributario eSocietario (part of the Deloitte Network)has become the largest tax practice in

Italy in terms of number of full-time ded-icated transfer pricing professionals (bothtax specialists, analysts and economists),grouped in one national service line (setup 1999). The team, located in five dif-ferent geographical locations (to guaran-tee seamless delivery of services toclients) is led by Aldo Castoldi. StudioTributario e Societario (STS Deloitte) hascontinued to invest in client service,focusing on quality, value and innovation. Because of its size, organization and capa-bilities, STS-Deloitte’s transfer pricingservice line is able to form and activate ona short notice a working team of trulytransfer pricing specialists only, tailoredfor our customers’ needs and the specificprojects for which they engage us.Because of our experience and strong tieswith Deloitte worldwide network, weview boundaries as opportunities to deliv-er value cross-border, rather than asobstacles. STS-Deloitte transfer pricing has a “pas-sion” for innovation: we assisted in thenegotiation and conclusion of the firstItalian Advance Pricing Agreement(APA), in the first settlement of an Italiantransfer pricing case through theEuropean Union Mutual Agreement andArbitration Convention, as well as in thepreparation, filing and negotiation of thefirst Italian multilateral APA, gainingwidespread recognition from clients andtargets. Presently, having successfully completedthe test phase, we are actively pursuingopportunities for the implementation of aproprietary software for “analytics”,aimed at providing our customers with apowerful tool to plan, make informeddecisions about, monitor and controlintercompany transfer prices and reachthe goals as planned.

Italy


http://www.belluzzo.net





The introduced regulations on transferpricing documentation (September2010), giving taxpayers the possibility toavoid administrative penalties providedthat they prepare “appropriate” (i.e. com-plying with precise instructions issued bythe Italian Tax Agency) documentation,has eventually made the provision oftransfer pricing services one of the fastestgrowing segment of the present Italian taxmarket.The recently introduced Italian PatentBox regime for promoting ownership anddevelopment of intellectual property byItalian enterprises through a powerful taxexemption (up to 50%) of the incomeattributable to the exploitation of suchintellectual property, implying the needto perform arm’s length evaluations inorder to determine the amount of saidincome, has caused another formidableboost to TP services demand in Italy. In particular the following service areasand “products” are showing the greatestgrowth rates:• Assistance during tax audits and litiga-tions;

• Administrative negotiated settlements; • Bilateral Mutual AgreementProcedures – MAPs;

• Advance Pricing Agreements – APAs(including for Patent Box purposes);

• Transfer Pricing Analytics.

Hager & PartnersVia Borgogna 2 20122 Milan (Italy)Tel: + 39 02-7780711Fax: + 39 02-778071233Email: [email protected]: www.hager-partners.it

Contact:Heinz Peter Hager (Managing Partner)Email: [email protected] Luca Nieddu (Head of TransferPricing & Tax Value Chain)Email: [email protected]

Firm profile:Hager & Partners was founded in 1995and today has offices in Bolzano, Milanand Rome. The Firm is composed ofapproximately 100 staff members, ofwhich 60 professionals and is member ofNEXIA International network. Hager &Partners counts on a fully-dedicatedtransfer pricing & tax value chain depart-ment: team members positively couplestrong knowledge and widespread experi-ence on transfer pricing, business eco-nomics and international taxation. Thepractice assists large multinationals aswell as small-medium enterprises inindustries such as energy, oil&gas, con-structions, mechanics, automotive, aero-space, real estate, pharmaceutical,food&beverage, fashion, IT&ICT, houseappliances, banking, financial and invest-ment services. The department adviseson: design of TP policies; preparation ofTP documentation; benchmarking analy-ses (including any type of financial trans-actions); business (re)structuring; IP boxregime; enterprise internationalization;

Italy



http://www.hager-partners.it




tax controversy; MAPs, EU ArbitrationConvention, APAs.

Studio AssociatoConsulenza legale e tributariaHead office:Via Vittor Pisani, 2720124 Milan (MI) ItalyTel: +39 02 676441Fax: +39 02 67644758Email: [email protected]: www.kpmg.com/it

Contact: Gianni De RobertisEmail: [email protected]

Head Office:Viale Bianca Maria, 45 20122 MilanoTel: +39 02 7626131Fax: +39 02 76001091Email: [email protected]: www.gebpartners.it

Managing Partner: Piergiorgio ValenteEmail: [email protected]

Key Contacts:Piergiorgio ValenteIvo CaraccioliAlessandro CottoGianpaolo Valente

Salvatore MattiaAntonella della RovereFilipa Correia

Of Counsel:Raffaele RizzardiEmanuela Fusa

Areas of Practice• International & EU Tax• Corporate Tax• Criminal Tax• Litigation & Dispute Resolution• Transfer Pricing• Business Restructuring Operations• Tax Effective Supply ChainManagement (TESCM)

• Risk Management & CorporateGovernance

• International Commerce & Contracts• Regulated Markets & FinancialInstruments

• Industrial Relations & Labour• Industrial Property & IntellectualProperty

• Tax Check-up & Certifications

Italy



http://www.kpmg.com/it



http://www.gebpartners.it


WTS R&A Studio Tributario Associato

The Italian member firm of WTS(www.wts.com), specialises in cross-bor-der taxation, with a focus on transfer pric-ing, M&A and corporate reorganisations.

Key contacts (International Tax):Giovanni [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

Offices:Piazza Sant’Angelo 120121 MilanPhone +39 02 3675 1145

Corso Francia 3210143 TurinPhone +39 011 433 83 51

Vicolo Oratorio 5/A37121 VeronaPhone +39 045 8006905

Italy


http://www.wts.com








A s was widely expected, BEPS-related docu-mentation changes were enacted through

Japan’s 2016 tax reform package. The details ofthe changes were first announced in December2015 and were passed by the National Diet, theJapanese parliament, on March 29 2016.

The reform package introduced a three-tiered approach to documentation, of country-by-country reporting (CbCR), master file andlocal file, which is generally consistent withAction 13: Guidance on the Implementation ofTransfer Pricing Documentation and Country-by-Country Reporting, issued by the OECD aspart of the BEPS Project. The new rules applyfor fiscal years beginning on or after April 12016, for CbC reports and master files, and fis-cal years beginning on or after April 1 2017 forlocal files. The new rules broadly require thefollowing:• Country-by-country reporting: Japanese

companies that are the ultimate parents ofmultinational groups and meet the filingthreshold of group revenue of ¥100 billion($997 million) in the previous year must filea CbC report. The report must be filed elec-tronically within one year after the end of thegroup’s fiscal year. In certain cases, aJapanese subsidiary of a multinational groupor a Japanese permanent establishment of anon-Japanese group company in which theultimate parent is not a Japanese company is

required to file the CbC report if the reporthas not been received by the Japaneseauthorities from the applicable government.

• Master file: Japanese companies, or perma-nent establishments that are members of amultinational group, that meet the filingthreshold of group revenue of ¥100 billion inthe previous year, must file a master file. Themaster file must be filed electronically withthe Japanese tax authorities and is due withinone year after the year end of the ultimateparent company.

• Local file: All Japanese companies with relat-ed-party cross border transactions must pre-pare a local file. The existing Japanese legisla-tion prescribed the information and docu-ments required to demonstrate the arm’s-length nature of related party transactions.However, the legislation was revised to makeit more consistent with Action 13 but somedifferences remain. Based on the revisedJapanese legislation, the local file should beprepared by the time the entity’s income taxreturn is filed (subject to certain thresholds). In practice, the local file must be readily avail-

able to the tax authorities if requested (forexample, under audit) and while there arethreshold requirements for contemporaneousdocumentation, all companies with foreign relat-ed-party transactions should be prepared to sub-mit documents consistent with the local file


An overview of the Japanese transfer pricing environment by Michael Tabart,Timothy O’Brien and Luke Tanner of Deloitte Tohmatsu Tax.

Japan

Tax authorities National Tax Agency (Japan)Tokyo Regional Taxation Bureau5 Chome-3-1 Tsukiji, Chuo, Tokyo 104-8449Tel: +81 3-3542-2111Website: www.nta.go.jp

http://www.nta.go.jp

rules at the time of audit. Failure to provide thelocal file to the tax authorities when requestedmay lead the authorities to apply presumptivetaxation, which could include audits of thirdparties whose business operations are deemed tobe comparable to that of the taxpayer. The peri-od in which the requested files must be submit-ted is determined by the auditor but cannotexceed 45 days or 60 days, depending on thetransactions size thresholds and the nature ofthe questions (e.g. primary documentation oradditional supporting information).

One additional document, the Notificationfor Ultimate Parent Entity, must also be sub-mitted under the revised Japanese rules. Thisnotification is required for fiscal years begin-ning on or after April 1 2016 and will containbasic information including: the name of theultimate or surrogate parent entity; the loca-tion of its head or principal office; its corpo-rate number; and the name of its representa-tive. It is important to note that the notifica-tion must be submitted by the last day of theultimate parent entity’s fiscal year, which isearlier than the deadlines for the CbC reportand the master file. Similar to the master file,this notification is to be filed electronically viathe e-tax system.

In addition to ordinary corporate tax penal-ties, a ¥300,000 penalty may be imposed on acompany for failure to disclose a CbC report ora master file. A company’s officer or employeemay also be subject to a similar penalty for fail-ure to disclose the CbC report, the master fileor the local file.

While the CbC and master file rules arenew additions to Japan’s law, the local filerules have been enacted through an amend-ment to the existing documentation rule con-tained in Article 22-10(1) of the SpecialTaxation Measures Law Enforcement Order.As a result of this, while Japan’s local file rulesare generally in line with the OECD’s localfile described in Annex II of revised Chapter

V of the OECD guidelines, there are somedifferences, for example, the requirement in22-10(1)(i)(f) to provide financial data forforeign related parties.

In late June, the Japanese authorities issueddocuments clarifying the new rules and provid-ing sample reports (e.g. local file, CbC reports).The guidance is available to view on the NationalTax Agency website at http://bit.ly/nta-jp. Amongthis guidance, we further discuss the followingbelow: 1. The “Outline of the Revision of theTransfer Pricing Documentation”, which wasissued in Japanese and English; and 2. The“Documents Recognised as Necessary forCalculating Arm’s Length Prices” which wasissued only in Japanese.

Outline of the revision of the transferpricing documentation The official outline is in Japanese, however theJapanese authorities also released an unofficialEnglish translation as a reference. The outlineexplains at a high level the different documentswhich need to be prepared or submitted underthe new rules including: content of each docu-ment, under what circumstances preparation orsubmission is required, formats, timing anddeadlines, exceptions, language and penaltyinformation. The outline also provides severalexamples showing the circumstances underwhich the various documents are required, anddisplays the additional requirements under thenew local file rules, in comparison to the exist-ing documentation rules.

Documents recognised as necessary forcalculating arm’s-length prices The Japanese authorities also released an addi-tional paper containing a collection of illustra-tive examples of the kind of documents that thetax authorities consider relevant when prepar-ing local files. The document reproduces eachof the requirements of the revised Article 22-10(1) of the Special Taxation Measures Law

Japan


http://bit.ly/nta-jp


Enforcement Order, and provides an explana-tion of the requirement followed by examplesof information and documents that, from thetax authorities’ view, could satisfy the require-ment of each item.

The local file guidance is useful for taxpayersas it clarifies the tax authorities’ view of whatsome of the more vaguely worded items ofArticle 22-10(1) require, as well as providing anunderstanding of what the Japanese authoritiesmay expect from taxpayers’ local file documen-tation. Based on the local file guidance, it

appears the Japanese authorities expect taxpay-ers to prepare and maintain highly detailedinformation for each item of Article 22-10(1).It is worth noting that the guidance representsthe tax authorities’ interpretation of Article 22-10(1), and a taxpayer may take a different viewof what satisfies each item. Whether or not it isnecessary to closely follow the guidance inpreparing an adequate local file, it can beexpected that the tax authorities may requestinformation consistent with this guidance dur-ing an audit.

Japan


LEADING FIRMS

1 Baker & McKenzie Deloitte Tohmatsu Tax EY Shinnihon Tax KPMG PwC Tax Japan

2 Nagashima Ohno & Tsunematsu

3 DLA Piper Grant Thornton Tokyo Kyodo Accounting Office

4 Kojima Law, Taxand Japan

BEPS is an ongoing issue in Japan and to managethis new environment taxpayers are focusing ontheir transfer pricing documentation, namely country-by-country reporting (CbCR), and also their generaltax governance, including maintaining a good under-standing of the compliance process, being up-to-date with new laws, and being aware of audit risk. The revised TP documentation rule is having a

huge impact on the Japanese tax market. The CbCRlegislation, which also requires master file and localfile, came into effect in March 2016. Practitionershave described the advanced TP documentation as“very cumbersome”. “Administrative burdens for bigmultinationals have increased significantly,” saidMakiko Kawamura, head of tax at DLA Piper. Advance pricing agreements (APAs) are also an

important issue in Japan. Japanese corporations areincreasingly utilising APAs to provide certainty over theirtransfer pricing policy, with the government encourag-ing them to apply to the scheme. “It is relatively easyto reach agreement with US and European countriesbut difficult with emerging countries,” said head of taxat Grant Thornton, Yoichi Ishizuka. Tax planning activities are gaining more media

attention in light of BEPS which, combined with morecomplicated rules, makes some corporations reluc-tant to do aggressive tax planning. Although taxplanning is still important for multinationals to

achieve their competitiveness, the transfer pricingadvisers see that the tax liability gap is becomingwider in Japan. Tax authorities have increased the number of tax

audits for transfer pricing but the taxable amount hasdecreased meaning that the related case is becom-ing smaller. This comes from the tax authoritieschanging their focus to smaller companies. “Large corporates already have APA arrangements,

together with documentation protection which consid-erably lessen challenges by tax authorities.Furthermore, traditionally, only tax auditors in regionaltax bureau were involved in transfer pricing audits butnow local tax offices are also involved in transfer pric-ing audits focusing on small taxpayers,” said Ishizuka. Advisers predict this trend of increased transfer

pricing focus will continue for a while for both theauthorities and the taxpayers. “Japanese corporateshave a lot of experience in transfer pricing and BEPSis a continuation of that. They are just trying to followthe new rules introduced by BEPS,” said YuichiKomakine, head of tax at KPMG.

Tier 1Ken Okawara is the head of Baker & McKenzie’stransfer pricing and economic analysis practice inJapan. He is recognised for his wealth of experiencein transfer pricing issues, resolving TP disputes, sup-ply chain tax planning and designing global TP poli-cy. The transfer pricing team comprises six partnersand six professionals focusing on all areas of transferpricing advisory work. The firm’s TP services are integrated within its tax

practice, to provide all-inclusive tax and transfer pric-ing advice and economic practices for multinationalsseeking tax advice in Japan and internationally. Theservices offered include TP planning, documentationand defence, economic analysis of transfer pricing,valuation of intangibles and other assets, and repre-sentation in audits, administrative appeals, domesticlitigation and competent authority proceedings. The team has vast government experience with

several practice members previously holding keypositions within Japan’s tax authority.

Japan



The team, including Okawara and Edwin Whatley,leader of the tax practice, advised an American glob-al diagnostic device and healthcare service provideron various issues related to corporate tax, transferpricing, Japanese consumption tax, VAT and customs,including utilising an Irish principal company. Thematter also involved medical regulatory advice,including medical regulatory requirements for exportof healthcare products. The tax team closely workedwith its healthcare group specialists. Deloitte Tohmatsu Tax has one of the largest

transfer pricing teams in Japan with more than 130professionals including 16 partners working from

Tokyo, Osaka and Nagoya. The team is headed byMichael Tabart, an Australian who has worked inJapan for decades, advising on transfer pricing issuesto Japanese multinationals including providing APAassistance, negotiation with authorities and alsotransfer pricing audit defence. The firm expanded in the past year with the addi-

tion of two directors, Hisashi Kosawada and KojiroYoneoka. Every team member has competent knowl-edge and skills in dealing with an extensive array oftransfer pricing issues including TP risk analysis, TPdocumentation, APAs, TP audit defence and mutualagreement procedure (MAP) as well as transfer pric-

Japan



Corporate income tax rate 23.9% (a)Capital gains tax rate 23.9% (a)Branch tax rate 23.9% (a)

Withholding tax (b) Dividends 20% (c) Interest 15/20% (c)(d) Royalties from patents, know-how, etc. 20% (c) Branch remittance tax n.a.

Net operating losses (years) Carryback 1 (e) Carryforward 9 (f)

a) Local income taxes are also imposed. Theresulting effective corporate income tax rate isapproximately 33% (35% for corporations withstated capital of JPY100 million or less).

b) Except for the withholding taxes on royaltiesand certain interest, these withholding taxesare imposed on both residents and non-residents. For non-residents, these are finaltaxes, unless the income is effectivelyconnected with a permanent establishment inJapan. Royalties paid to residents are notsubject to withholding tax.

c) Under the special law to secure funds forreconstruction related to the March 11 2011

disasters, a special additional income tax (2.1%of the normal withholding tax due) is imposedfor a 25-year period running from January 12013 through December 31 2037. As a result,the 20% withholding tax rate is increased to20.42%, and the 15% rate is increased to15.315%. However, this special additionalincome tax does not affect reduced withholdingtaxes under existing income tax treaties.

d) Interest paid to residents on bonds, debenturesor bank deposits is subject to a 20%withholding tax, which consists of a nationaltax of 15% and a local tax of 5%. Other interestpaid to residents is not subject to a withholdingtax. Interest paid to non-residents on bonds,debentures or bank deposits is subject to a15% withholding tax. Interest paid tononresidents on national and local governmentbonds under the Book-Entry Transfer System isexempt from withholding tax if certainrequirements are met.

e) The loss carryback is temporarily suspended.f) The carryforward period of losses arising in

fiscal years beginning on or after April 1 2017will be extended to 10 years.


ing services specifically for the financial serviceindustry. The firm’s transfer pricing specialists areable to provide services in various languages toensure efficient cross border project management. Deloitte Japan’s TP team is well prepared to serve

the demands of Japanese and foreign multinationalsin directing the intricate global transfer pricing envi-ronment in the post-BEPS era.Led by Ichiro Suto, EY Shinnihon Tax’s transfer

pricing network, consisting of more than 100 profes-sionals is dedicated to assisting Japanese and for-eign enterprises with their TP management withrespect to both inbound and outbound investments.Its transfer pricing specialists work as part of a mul-tidisciplinary team of accounting, tax, customs,human resources, information systems, legal andother specialists to support companies in planningand executing solutions that meet both businessstrategies and tax objectives. Numerous developments to transfer pricing rules

and regulations are accelerating the volume andcomplexity of transfer pricing issues in Japan and thefirm is further supporting clients with various medi-ums including tax alerts, podcasts, and webcasts toensure they are kept up to speed on the rapidly shift-ing issues both nationally and globally. EY Japan has launched Transfer Pricing University

(TPU), a training program offered by the firm twice ayear to help companies grow their own in-house TPexpertise and build a technical understanding of TPprinciples and skills needed in daily operations aswell as to help them achieve full potential and max-imise cost efficiencies. KPMG’s transfer pricing practice has nine partners

and 92 professionals across Japan in offices in Tokyo,Osaka, and Nagoya, directed by Jun Tanaka. The TP team offers a broad range of advisory serv-

ices including bilateral and unilateral APA negotiation,TP documentation including the new requirementsprompted by BEPS, TP audit defence, MAP procedure,domestic appeal and litigation procedures, andtransfer pricing policy planning. The firm advises on a wide variety of industries

including manufacturing, pharmaceuticals, software,

trading, finance, and natural resources. KPMG offerssolutions to mitigate transfer pricing risks in additionto formulate and maintain strategies for global taxplanning. A notable contact in the practice is Nobuhiro

Tsunoda, the former director of the internationaloperations division at the National Tax Agency (NTA),who joined the team in 2013. The transfer pricing practice of PwC Tax Japan is

led by Daisuke Miyajima who has been with thePwC network for more than 25 years and specialis-es in preparing TP studies and policies for presen-tation to the tax authorities, negotiating APAs anddefending Japanese and foreign multinationals inTP audits. He focuses on the spheres of high-tech,automotive, entertainment, IT and luxury goodsindustries. Over the last year the firm expanded to 11 partners

and 70 other professionals by adding two new trans-fer pricing partners: Takeki Nagafuji and KenjiNakamuta. The transfer pricing advisory services team help

clients to manage various TP issues, to limit auditexposure while managing their global effective taxrate. The services include classic transfer pricingmanagement from analysis of risk and preparation ofdocumentation and APA support, to transfer pricingaudit defence, assistance to relieve double taxationand global tax cost management. The industries that the firm mainly covers are finan-

cial services, banking and capital markets, assetmanagement, chemicals, forest, paper and packag-ing, and industrial manufacturing.

Tier 2Yuko Miyazaki oversees Nagashima Ohno &Tsunematsu’s tax and transfer pricing practice.Miyazaki was highly praised for skills in solving taxdisputes. Another significant partner is Yushi Hegawawho specialises in tax planning and disputes. The firm has almost 50 years of experience in han-

dling tax matters and has five dedicated partnersmost of whom are lawyers with experience in high-profile tax litigation matters.

Japan



Last year, a team, led by partner Atsushi Fujiedaand comprising other professionals includingMiyazaki and Hegawa, supported Honda MotorCompany, representing them in a TP litigation caseand securing a full victory in favour of the client. Thiscase was significant in that it was the very first casewhere transfer pricing taxation based upon the resid-ual profit split method was disputed.

Tier 3DLA Piper’s tax practice also works on transfer pricingmatters under the leadership of Makiko Kawamurawho has extensive experience in dealing with trans-fer pricing projects including discussing APAs and MAPwith tax officials. In May 2015, Masahide Hayuka, a former tax offi-

cer, joined as senior tax executive. Hayuka has morethan 30 years of experience in international tax andtransfer pricing. The team works closely with the international tax

group, serving clients in relation to transfer pricing,international and domestic tax restructuring and sup-ply chain remodelling, M&A, as well as having expe-rience with disputes over the customs duties andconsumption tax for multinational clients.The firm supports clients from a wide range of sec-

tors including energy, financial services, governmentcontracting, hospitality and leisure, insurance, life sci-ences, mining, real estate and technology. Grant Thornton houses one partner and five profes-

sionals in its transfer pricing practice. Yoichi Ishizukaheads the tax and the transfer pricing team at the firm. The transfer pricing team offers services including

risk assessment, TP documentation, benchmarking,audit support, APAs and MAP application. The key industries that the TP team work with

include manufacturing, digital and software and edu-cation.

This year in April the firm, led by Ishizuka andtwo other tax associates, completed a projectadvising on the global documentation for a largeprivately held Japanese company, utilising GrantThornton’s global network to prepare thedocuments. The tax practice of Tokyo Kyodo Accounting

Office consists of three partners and three profes-sionals. Ryutaro Uchiyama is head of the tax prac-tice. The firm offers a wide range of services including

the assessment of risks concerning transfer pricing,assistance with documentation, support develop-ing a global pricing policy and with taking transferpricing into account in corporate reorganisation,help in managing a TP investigation, filing anobjection or an administrative appeal, and helpwith MAP and bilateral APAs.Tokyo Kyodo Accounting Office saw continuous

increase in APA advisory work as well as mitigationbetween corporates and relevant tax authorities inthe past year.

Tier 4Eiki Kawakami, as the only partner, leads KojimaLaw, Taxand Japan’s transfer pricing group withassistance from three other professionals. Theteam advises on TP documentation and audits andrelief of double taxation and APAs. Kawakami has a strong reputation, and was

praised by clients for his expertise. One client said:“Kawakami is great!” Kawakami and others were involved in a

business reorganisation work of a Japanesesubsidiary of a French consumer productscompany in the past year. The firm provided advicefrom planning until completion as well as throughtax audits after the completion.

Japan


Contacts:

Michael TabartNational Leader – Deloitte Tax Co.,Transfer Pricing Group.Phone: +81 (3) 6213 3914 Email: [email protected]

Timothy O’BrienPartner - Deloitte Tax Co., TransferPricing Group.Phone: +81 (3) 6213 3923 Email: [email protected]

Firm profile:

Deloitte’s Japan transfer pricing team isled by Michael Tabart.

The Japanese practice features 12 part-ners, 9 directors and 95 professional staffacross offices in Tokyo (81), Osaka (25)and Nagoya (10).

The Japan team includes partners HirokiYamakawa, who joined Deloitte aftermore than three decades of service at theNTA where he was the director of largebusiness examinations, and AkiraAkamatsu, who also spent 15 years withthe Tokyo Regional Tax Bureau and then alaw firm prior to joining Deloitte.

Senior advisors Gary Thomas and AlanShapiro also bring a wealth of experi-ence to the Japan team. Alan Shapiro isone of Deloitte’s leading experts on costsharing arrangements and the cross-bor-der taxation of intangible property. Gary

Thomas has practiced tax in Japan forover 30 years, has published widely withregard to Japan transfer pricing matters,and is also registered as a Japanesezeirishi.

Deloitte’s Japan transfer pricing team wasawarded the “Japan Transfer Pricing Firmof the Year” on May 5th at theInternational Tax Review’s Asia TaxAwards 2016.

Grant Thornton Taiyo Tax CorporationContact: Yoichi Ishizuka (Partner)Email: [email protected]: +81(3)5770 8870

Aoyama Bldg. 9F1-2-3 Kitaaoyama, Minato-kuTokyo 107-0061 Japan

Grant Thornton Japan’s transfer pricingadvisory team can assist dynamic organi-zations conducting business globally withall aspects of implementing and managinga Japan-compliant transfer pricing policy,including:• Documentation – prepare transfer

pricing documentation or review exist-ing documentation to ensure Japancompliance;

• Risk analysis – identify transfer pricingrisks through an economic analysis ofyour business;

• Benchmarking – provide industry-spe-cific benchmark analysis;

• Audit support – plan or review auditcounter-measures, attend on-site

Japan






audits, and assist in negotiations withNTA examiners;

• APA applications – facilitate and assistthe APA application process from ini-tial planning and document preparationthrough final settlement;

• MAP applications – facilitate the MAPapplication process from preliminarymeetings through mutual consultationrequests, negotiation, and settlement.

Kokusai Bldg. 9F 1-1 Marunouchi3-chome, Chiyoda-kuTokyo Japan 100-0005Tel: +81 (0)3-5219-8777Fax: +81 (0)3-5219-8778Email: [email protected] in English: www.tkao.com/e/

Tokyo Kyodo Accounting Office (TKAO)provides customized professionalaccounting and taxation services to indi-vidual and corporate clients. Our highlytrained certified accountants, licensed taxaccountants and expert consultants havebeen at the forefront of international taxmatters since 1993.

To this day, TKAO continues to matchincreases in demand for international tax-ation and transfer pricing services withthe highest quality professional servicesavailable.

Whether you require international taxplanning or accounting and taxationadvice for international trade, TKAO canassist you with a wide range of relevantservices. From specialized APA servicesand assistance with transfer pricing docu-mentation to indirect tax planning andcompliance services including EPA andFTAs, TKAO can help you.

Japan



http://www.tkao.com/e/

E ven though the trend began years ago,Luxembourg tax authorities have again

increased their focus on transfer pricing. Thisfield, which combines economics and tax, hasbecome the cornerstone on which the authori-ties perform tax audits.

Indeed, since the enactment in 2011 ofLuxembourg Circulars LIR N164/2 and164/2bis relating to financial intermediaryactivities, the Luxembourg tax authorities haveincreased their investment in a dedicated teamof transfer pricing specialists.

Following the addition of Paragraph 171, 3 ofthe General Law of Income (Abgabenordnung),applicable since January 1 2015, we have seen anincrease in the level of transfer pricing docu-mentation. This new article of law allows theLuxembourg tax authorities to shift the burdenof proof to the taxpayer in cases where there isan absence of sufficient documentation. Beforegoing to that step, the Luxembourg tax authori-ties have to assess the taxable result of theLuxembourg corporation or permanent estab-lishment, based on the information at their dis-posal. In practice, they are using common publicdatabases (e.g. Bloomberg and Amadeus) inorder to determine what the arm’s-length com-pensation is for a transaction between relatedparties. They may also use internal key perform-ance indicators (KPIs) in order to determinewhether a tax audit must be initiated or not.

During 2015, taxpayers generally had time toprepare the transfer pricing documentationneeded to comply with the new rules. It isexpected that, in 2017, the Luxembourg taxauthorities will actively audit taxpayers byrequesting a copy of their transfer pricing docu-mentation, in order to compare it with the taxreturns filed and other relevant documentation,like the group transfer pricing policy.

Before 2015 the focus for transfer pricingdocumentation was more on the financing ofrelated intercompany transactions, whereasnow it has been broadened to any type of inter-company transactions. We, however, have toadmit that today the Luxembourg tax authori-ty’s main area of expertise remains with the for-mer transaction.

We anticipate that in the future the taxauthorities will also focus on the banking andasset management sectors, and will likely con-tribute to the wave of scrutiny that has hit relat-ed party transactions of big corporate multina-tionals. Insurance and reinsurance will certainlybe another area to draw the authorities’ focus,requiring additional expertise.

The Luxembourg tax authorities are enti-tled to perform an audit during the statute oflimitations period until the final income taxassessments are issued. The general rule is afive-year period unless the corporate taxreturns are incomplete, not filed, or suspected


Transfer pricing dispute and resolution in Luxembourg: an overview from Philippe Neefs,Heike Weber and Sophie Boulanger of KPMG.

Luxembourg

Tax authorities Administration des Contributions Directes45, Boulevard Roosevelt, L-2982, LuxembourgTel: +352 40 800 1Fax: +352 40 800 2022Website: www.impotsdirects.public.lu

http://www.impotsdirects.public.lu


of fraud, in these cases the period is extendedto 10 years.

In the absence of specific penalties for non-compliance with sufficient transfer pricing doc-umentation, the general tax penalties (10% ofthe re-assessed taxable basis) and late interest(0.6% monthly) are applied.

To exemplify the surge in tax audits focusingon transfer pricing, we highlight below twoLuxembourg court cases.

On July 12 2016, the LuxembourgAdministrative Court confirmed a previousjudgment of the Luxembourg AdministrativeTribunal from December 16 2015. The casecentred on the 2013 advance tax agreementgranted by the Luxembourg tax authorities to aLux limited liability company (LLC) benefitingfrom a non-taxable hidden capital contributionof a so-called “goodwill”.

The tax advance agreement requestacknowledged the difficulty of measuring afixed value for the goodwill, due to the contri-bution of business consultancy knowledge. Theremuneration for the use of the knowledge hadto be linked to the yearly profits of the LuxLLC.

When assessing tax returns, the Luxembourgtax authorities required the submission of a val-uation report for the knowledge which neededto be prepared by an independent third party.This shows that the Luxembourg tax authori-ties tried to use the arm’s-length principle inorder to re-assess their initial agreement givenin the relevant tax advance agreement.

In addition to the above, the AdministrativeCourt confirmed that a tax advance agreementissued in 2013 was binding for the tax authori-ties, based on the general principle of protec-tion of legitimate expectations and of legal cer-tainty, and on the fact that the tax authoritiescannot afterwards refer to the principle ofabuse of law for a structure which they previ-ously approved, without any specific reserva-tion, in a tax advance agreement.

On July 1 2013 there was already aLuxembourg court case stipulating that in theabsence of proper transfer pricing documenta-tion for the interest rate level applied to loans,the burden of proof would be shifted to the tax-payer. This court case involved, and thusaddressed, both a domestic and a cross-bordersituation. Whereas the cross-border situationwas documented for foreign tax reasons, thedomestic transaction was not, and an interestrate, according to past assessments that was notarm’s-length, for the relevant tax years wasapplied.

This latter case shows that the absence ofcharging any royalty or interest means that theLuxembourg tax authorities must re-assess thetaxable basis in the event of any related partytransactions.

More and more cross-border service pay-ments are being analysed.

Further changes to Luxembourg’s transferpricing market are on the horizon. One mayanticipate a change to the aforementionedLuxembourg Circulars LIR N164/2 and164/2bis relating to financial intermediary activ-ities further to the EU state aid investigations.

Despite the Ministry of Finance announcingthat Luxembourg will require the country-by-country report from 2016 in order to be com-pliant with the OECD’s BEPS Action 13, wehope that the government will take this as anopportunity to comply with the multi-tiertransfer pricing documentation, including mas-ter file and local file, with precise guidelines.

As a final remark, producing sufficient trans-fer pricing documentation is critical in order toreduce potential tax risks and, hence, tax penal-ties. This will also help to keep good relationswith the tax authorities.

We advise Luxembourg taxpayers to build arisk-based approach allowing them to betterallocate their resources and to better map thecritical related party transactions, those beingthe main value drivers that will need to be part

Luxembourg


of the master file. We do anticipate more andmore disputes and resolutions in the future, andit is in anticipation of the same thatLuxembourg has committed parties to the final

BEPS Action 14 package, which providesmandatory binding arbitration in mutual agree-ment procedures. Luxembourg also follows theEU arbitration convention.

Luxembourg



LEADING FIRMS

1 Deloitte Luxembourg KPMG PwC

2 Arendt & Medernach ATOZ Tax Advisers, Taxand Luxembourg Baker & McKenzie EY Loyens & Loeff

3 NautaDutilh

Over the past few years, transfer pricing has becomeone of the hottest topics for taxpayers and advisersin Luxembourg. Although the jurisdiction was relatively late in

requiring transfer pricing documentation, it is nowincreasing its interest in transfer pricing in responseto the international focus. “The international environment is placing so much

emphasis on transfer pricing. Obviously the OECD, EUcommission and individual countries, and thereforealso Luxembourg, are reacting to all these interna-tional developments. The Luxembourg tax authoritiesare not shy in asking for transfer pricing substantia-tion when reviewing tax returns,” said Peter Moons,head of transfer pricing at Loyens & Loeff. Although the market has somewhat recovered

from LuxLeaks, taxpayers are more cautious in termsof advance pricing agreements (APAs) fromLuxembourg. “LuxLeaks had created a lot of noise.Often it happened that journalists have given awrong analysis to the advance agreements whichcan be found on the internet, for example by confus-ing gross turnover with net profit,” said André Pesch,co-head of tax and transfer pricing at Baker &McKenzie. “It is mainly the bad image which someadvance agreements have wrongfully received in themedia which makes taxpayers now hesitant in seek-ing to obtain legal certainty and hence we notice adecrease of requests for advance tax agreementsand advance pricing agreements.”

One major result of the international emphasis hasbeen increasingly aggressive revenue authoritiesaround the world. This has also become apparent inLuxembourg, where the tax authorities haveincreased their staff resources and have been morereactive. The authorities remain quite cooperativehowever with tax advisers reporting the authorities inLuxembourg to not be aggressive, but simply doingtheir job in the interest of the country. There has been a steady increase in TP litigation,

while the environment relies increasingly less on taxrulings following the new rulings process. This, andBEPS, has resulted in clients seeking advice, particu-

Luxembourg



Corporate income tax 21% (a)Capital gains rate 21% (a)Branch tax rate 21% (a)

Withholding tax Dividends 0/15% (b) Interest 0%/10% Royalties 0%


a) This is the maximum rate. A municipalbusiness tax and an additional employmentfund contribution (employment fund surcharge)are also levied on income. A new minimumtax regime is effective from January 1 2013.

b) A 15% dividend withholding tax is imposed onpayments to resident and non-residents. UnderLuxembourg domestic law, a full withholdingtax exemption applies to dividends if they arepaid to qualifying entities established inEU/EEA member states, Switzerland or acountry with which Luxembourg has enteredinto a double tax treaty and if certainconditions are met.


larly in regards to reviewing structures. Until recently,transfer pricing was high on clients’ agendas, where-as this year, most taxpayers are careful to have com-pliant structures. “We see a lot more complexity inthe question and in the discussion that we havewith the client,” said Raymond Krawczykowski,Deloitte’s head of transfer pricing and tax.As the focus on transfer pricing is growing, and

expected to keep growing over the next years, doc-umentation has become a key element in risk man-agement. “Its role will only increase in coming years.In the current international tax environment ofheightened transparency and scrutiny, companieswould be wise to take it one step further and inte-grate the documentation of transfer prices in theirwider tax strategy, using it as a means to reflect thebusiness rationale behind their corporate structureand intra-group transactions,” said Oliver R. Hoor,head of transfer pricing of ATOZ, Taxand Luxembourg.As a result of the BEPS action plan, taxpayers need

to develop a solid strategy in terms of transfer pricingand related documentation in order to mitigate taxrisks, professionals reported. “The biggest lesson isthat in transfer pricing reports, no shortcuts should betaken, but every assumption that is being made, everycomparison that is suggested and every OECD methodthat is being applied, should simply be justified andthe justification should be plausible,” said Moons.Luxembourg has already signalled the intention to

implement country-by-country reporting (CbCR) in thenear future, as the authorities are now relying moreheavily on TP documentation to verify the arm’s-length character of intragroup transactions. “What you see is more a wait and see position, but

with people thinking about plan B,” said Pesch.

Tier 1Deloitte Luxembourg’s transfer pricing team inLuxembourg is led by Stephan Tilquin, who is alsothe head of tax. The practice, consisting of three part-ners and 16 professionals, comprises economistsand tax and industry specialists with years of expe-rience in international tax. It houses a full suite ofservices including risk assessment, review of existing

transactions and structures, design of TP structures,documentation and audit defence. The dedicatedteam provides innovative and practical solutions toits clients as well as producing leading technologies,methods and tools. The team holds a wealth of knowledge and focus-

es on identifying new business opportunities for itsclients and adopting a proactive approach in a fastchanging environment. The team worked on a rangeof projects this year including TP support on pricesetting on a complex debt instrument, group financ-ing wrap-up documentation and strategy, and con-tingent loans analysis and TP documentation. The firm comes recommended by clients, one

praised its innovative approach as well as the team’sproactivity and fast reactions.

Phillippe Neefs leads the transfer pricing team of21 professionals at KPMG. The practice has expand-ed significantly this year with the addition of ninenew assistants, one new senior, and two new man-agers. It offers the full scope of services with expert-ise extending into the financial services industry withparticular focus on transfer pricing for the bankingand asset management industries. The team puts alot of effort into BEPS matters particularly the estab-lishment of CbCR, which has kept the firm busy. This year, the department worked on various excit-

ing deals which included determining the mostappropriate transfer pricing methodology for theoverall remuneration of a Luxembourg managementcompany and drafting TP documentation for variousintragroup transactions carried out by a high techgroup. With more than 23 dedicated specialists, PwC’s

transfer pricing team is one of the largest inLuxembourg. It is overseen by Loek de Preter who isa fiscal economist with more than 27 years’ experi-ence in international tax and transfer pricing, andhas previously worked in the Dutch Ministry ofFinance and PwC in the Netherlands. He worksclosely with Caroline Goemaere, PwC tax partner andBEPS leader, who has 14 years of experience advis-ing multinational groups on transfer pricing and inter-national tax. Another significant partner is Marc

Luxembourg



Rasch who has more than 15 years of experience ininternational corporate taxation and transfer pricingwith focus on financial services, consumer goods,pharmaceutical, chemical, entertainment, apparel,automotive, and food and beverages sectors. The team offers a wide range of services within

various industries. The standard services includedocumentation and compliance, financial servicestransfer pricing, asset management and financialtransaction transfer pricing.

Tier 2Arendt & Medernach’s transfer pricing department isled by partner Alain Goebel and is supplemented bya further four fee earners including BenjaminTempleare, who joined the firm in August 2015.The firm’s transfer pricing practice was launched in

2011, initially focusing on compliance. The practicehas since expanded to cover a wide range of TPissues in industries such as energy and utilities, dig-ital and online, manufacturing, transport, technology,media and telecommunications, food and fast-mov-ing consumer goods, agriculture and healthcare. Thefirm’s strongest area is financial services, where itspecialises in investment funds, asset management,banking and insurance.In one deal, a team including Goebel and Mehdi

Fernane-Jallier advised a major private bank on thedetermination of the pricing for an intra-group loantransaction in the acquisition of real estate in Londonfor $2.3 billion.Newly appointed partner Oliver R. Hoor leads the

ATOZ Tax Advisers, Taxand Luxembourg’s transferpricing team comprising one other partner and 10dedicated fee earners. The firm specialises in transferpricing matters within the financial services sector andrecognises the room for innovation and has pioneeredmethodology for determining intragroup pricing. Hoor works closely with head of tax, Keith

O’Donnell, who also leads Taxand’s global real estateteam and has more than 20 years of experience. Asa member of the global Taxand network, the practicehas a structured approach to ensure transfer pricingpolicies are efficient and reduce tax rates. The firm’s

emphasis is on adapting transfer pricing to real-worldbusiness constraints and prides itself on maintainingstrong relationships with local tax authorities. Baker & McKenzie’s transfer pricing practice is co-

headed by Antonio Weffer and André Pesch. Theteam has a wealth of knowledge and combinesinnovative tax and economic analysis with legalimplementation as part of the complete spectrum oftransfer pricing services on offer. The services includevaluation documentation, benchmarking analysisand other economic compliance services. This year, the team assisted a large investment

fund manager in the coordination of tax audits bythe French tax authorities which were havingimpacts on the fund’s Luxembourg tax aspects aswell as transfer pricing policies. Weffer joined the firm last year and has more than

18 years of international tax experience, dealing withprivate equity and infrastructure, real estate, banking,venture capital, hedge funds, capital markets andfinancial services. The transfer pricing team was praised by clients.

One said: “Antonio Weffer is the most knowledge-able person in Luxembourg and he is highly regard-ed by the Luxembourg tax authorities.” EY’s transfer pricing team in Luxembourg compris-

es a full house of services including documentation,financial services related transfer pricing, APAs, TPpolicy design, and implementation of tax effectivesupply chain management projects. The practice isoverseen by Nicolas Gillet who has more than 20years of experience in financial transactions and cor-porate finance. He works closely with FernandoLongares who is a transfer pricing director. The team works closely with other EY transfer pric-

ing practices around the globe providing clients witha thorough international reach and expertise. Theteam specialises in assisting clients who aim to cen-tralise their financial operations through the countryas well as advising on solutions to meet OECD andlocal transfer pricing requirements. The firm was praised for its knowledge of transfer

pricing policy and quality reporting, as well as itshands-on approach.

Luxembourg


The transfer pricing practice at Loyens & Loeff isheaded by Peter Moons, who works closely withhead of tax Pieter Stalman. The firm believes that taxand transfer pricing go hand-in-hand, and thereforefully integrate transfer pricing expertise with the var-ious tax and legal practices. The TP service includesplanning, documentation and interactions with taxand legal issues, as well as negotiations with inter-national tax administrations and dispute resolution.The firm provides integrated solutions on all relevanttransfer pricing issues, with major services includingadvice, dispute resolution and documentation. The team works closely with the tax authorities,

determining and assessing structures and agreeingon APAs. It has a wealth of expertise in various areas,

including the fund management industry. The projects the team worked on this year include

assisting multinationals with their transfer pricingdocumentation and analysis for an intragroup lique-fied natural gas trading company.

Tier 3Christophe Joosen heads the tax and transfer pric-ing practice at NautaDutilh. He specialises in inter-national tax law and assists and represents manymultinational groups across all industries with theirplanning, and advises them on cross-border issues.The independent firm offers a full range of TP serv-ices with a range of clientele drawn from largemultinationals and financial institutions.

Luxembourg



ATOZ Tax Advisers is a high-end inde-pendent advisory firm offering a compre-hensive range of tax, transfer pricing andfinancial advisory services. The TransferPricing practice at ATOZ is led by OliverR. Hoor who is also an experienced inter-national tax partner. This means that alltransfer pricing services are carefully con-sidered from a tax perspective.

ATOZ has in-depth expertise in regard toa large range of financial transactions(financing activities, interest rates on awide range of debt instruments, etc.),fund management services, intra-groupservices, valuation of assets as well as thepreparation of Master Files.

Contact:Oliver R. HoorPartner, International and Corporate TaxTel: +352 26 940 646 Email: [email protected]

www.atoz.lu

Raymond Krawczykowski leads the taxpractice of Deloitte Luxembourg, togeth-er with a full service Transfer Pricing (TP)team–the first ever created inLuxembourg–directed by StephanTilquin. The team of three partners andnineteen practioners is diversified in itsnature, with its prime amalgam of econo-mists, tax and industry specialists, andprofessionals in international tax andbusiness. As part of a dynamic, integratedapproach, the team oversees several TPprojects, where internal corporate financeexperts assist in the design of the pricingstrategy. The same approach is employedin TP projects for Luxembourg manage-ment companies of collective investmentvehicles, relying on the industry expertiseprovided by their consultant and directtax practice. Due to the growing focus oftax authorities on transfer pricing, theteam is engaged in advising clients on test-ing and documenting their high-profiletransactions from a Luxembourg TPstandpoint.

Contacts

Stephan TilquinPartnerCross-Border Tax and Transfer PricingTel/Direct: +352 45145 [email protected] | www.deloitte.lu

Balazs MajorosPartnerCross-Border Tax and Transfer PricingTel/Direct: +352 45145 [email protected] | www.deloitte.lu

Quality tax advice,

globally

Luxembourg



http://www.atoz.lu


http://www.deloitte.lu


http://www.deloitte.lu

KPMG Luxembourg39 avenue John F. KennedyL-1855 LuxembourgTel: +352 22 51 51 1Email: [email protected]: www.kpmg.lu

Contact:Philippe NEEFSPartner, Transfer Pricing LeaderTel: +352 22 51 51 – 5531Email: [email protected]

Heike WEBERAssociate Partner, Financial ServicesTel: +352 22 51 51 – 5418Email: [email protected]

Sophie BOULANGERSenior ManagerTel: +352 22 51 51 – 5423Email: [email protected]

Laureen TARDYManagerTel: +352 22 51 51 – 5593Email: [email protected]

18-20, rue Edward SteichenL-2540 LuxembourgLuxembourgT: +352 46 62 30F: +352 46 62 34

Contact: Pieter [email protected] [email protected]

Luxembourg



http://www.kpmg.lu








LEADING FIRMS


2 Lee Hishammuddin Allen & Gledhill Shearn Delamore & Co Taxand Malaysia Wong & Partners

3 Raja, Darryl & Loh

There have been several updates to the Malaysiantransfer pricing rules since their introduction in 2003as the authorities’ focus on the area has intensified.This includes the introduction of formal legislation in2009 and its subsequent revision in 2012. The 2015Budget introduced a further change with the exten-sion of the statute of limitations to seven years fromfive years for transfer pricing audits specifically.

Malaysia, in its role as an OECD observer to theBEPS Project, has participated in the discussionsaround many of the topics in an effort to come to aglobal standard for BEPS implementation. Followingthe release of final reports in October 2015, Malaysiahas been considering whether to include the mini-mum standards of the initiative in its domestic legis-lation, particularly Action 13 on country-by-countryreporting (CbCR).

The government set up a special committee to studythe recommendations and its first step was to sign theagreement on the automatic exchange of CbCR inJanuary 2016. On March 24 2016, the governmentannounced plans to update the existing local TP doc-umentation requirements to include the master file andlocal file concepts and introduce the CbCR requirement,expected to be effective from January 2017.

Moreover, Malaysia has also indicated its interestin engaging the multilateral instrument under Action15 to streamline the implementation of global taxtreaties.

“Malaysian multinationals with international taxstructures will need to begin assessing the impact totheir business operations now,” said Jagdev Singh,head of tax and transfer pricing at PwC.

These proposed updates will not be the only reg-ulation changes to impact taxpayers in the comingyear. New thin capitalisation rules are expected to beeffective from January 1 2018 and some BEPS recom-mendations such as anti-avoidance provisions, maybe adopted under the existing framework and notrequire separate legislation.

The Malaysian authorities are scrutinising transferpricing policies more closely, but are also lookingtowards effective dispute resolution. Penalties arereduced for voluntary disclosure and the advancepricing agreement (APA) process is proving popularwith taxpayers.

“I think APA will become more important and I’dexpect more taxpayers to come on board to deal


MalaysiaTax authorities Royal Malaysian Customs DepartmentJabatan Kastam Diraja Malaysia, Kompleks Kementerian Kewangan No 3, PersiaranPerdana, Presint 2, 62596, PutrajayaTel: +60 3 8882 2100/2300 Email: [email protected]: www.customs.gov.my

Department of International TaxationHeadquarters Inland Revenue Board of Malaysia12th Floor Menara Hasil, Persiaran Rimba Permai,Cyber 8, 63000 Cyberjaya SelangorTel: +60 3 8313 8888Fax: +60 3 8313 7848 / +60 3 8313 7849Email: [email protected]: www.hasil.gov.my


http://www.customs.gov.my


http://www.hasil.gov.my

with all uncertainties rather than waiting for audits tohappen,” said Singh.

Tier 1Deloitte’s transfer pricing team provides global andpractical transfer pricing solutions supported byexperienced team members specialising in transferpricing compliance, audit defence, tax-aligned supplychain planning and business model optimisation.The three-partner, 50-member team, led by TheresaGoh, has an ideal mix of people from tax, legal andeconomics backgrounds.

Goh is the national transfer pricing leader and has awealth of experience in transfer pricing, tax audits andinvestigations as well as tax planning; serving clientsin a broad range of industries including manufacturing,distribution and services, technology and oil and gas.

To date, three APAs have been signed underMalaysia’s APA regime. Deloitte advised on all three.

One senior manager, Anil Kumar Gupta from EYIndia, and three managers from EY, Deloitte and BMRIndia have joined the team over the past year.

“Their consideration for clients is worthy of specialmention” said one client. EY in Malaysia’s transfer pricing practice is led by

Sockalingam Murugesan. He has more than 16 yearsof experience in taxation and his transfer pricing expe-rience includes transfer pricing documentation, advis-ing on various transactions, transfer pricing audits andinvestigation as well as dealing with mutual agree-ment process (MAP).

The practice’s key clients are from oil and gas, phar-maceutical, automotive, fast-moving consumer goods(FMCG) and electronic industries. Chang Mei Seen is the leader of global transfer pric-

ing services at KPMG in Malaysia. She has been withthe firm since 1997, specialising in advising multina-tionals on TP issues such as documentation, planningand risk management, dispute resolution and supplychain business restructuring. She was also involved inthe first application for a bilateral APA with theMalaysian government.

The transfer pricing team comprises two partnersand 34 other specialists experienced in various indus-

tries. It draws on in-depth economic knowledge toserve local and international companies dealing withTP issues. TP litigation and audit support are key serv-ices it provides in addition to the advisory and com-pliance services, particularly to companies in the plan-tation, automotive, and pharmaceutical industries.

The team has been assisting a client to apply for anAPA and engaging in follow-up discussions with theInland Revenue Board (IRB). Strategically, this was animportant engagement for KPMG Malaysia, workingwith KPMG Japan, as this was the first bilateral APAengagement between the two competent authoritiesthat has gone through several rounds of discussionswith the IRB. Jagdev Singh leads the Malaysian tax group at PwC

which includes the transfer pricing team. The transferpricing team consists of five partners and 37 full-timeprofessionals experienced in different aspects of trans-fer pricing.

The team is working with companies assessingwhat is required in complying with the CbCR require-ments. They are in discussions on how to prepare themaster file and advanced transfer pricing documents.

Members of the team often contribute to variouspublications regarding the latest transfer pricing issuesand also speak at tax budget seminars, global TP con-ferences and International Bureau of FiscalDocumentation (IBFD) events.

At the end of last year, the team advised a corpora-tion in one of Malaysia’s priority industries on the opti-mum transfer prices for a new project. The entities inthe value chain were involved in the designing andbuilding of an essential product, the construction andlease of the high technology assembly plant, themanagement of the facilities, the acquisition and sup-ply of equipment and tooling and the training of engi-neers. The project was estimated to generate rev-enues in the region of $200 million per annum over a25-year period.

Tier 2Senior partner DP Naban leads the tax, GST and pri-vate clients practice of Lee Hishammuddin Allen &Gledhill. He is recognised particularly for tax litigation

Malaysia



in various publications and has in-depth knowledgein an extensive array of tax and customs mattersincluding transfer pricing. S Saravana Kumar, another partner at Lee

Hishammuddin Allen & Gledhill, concentrates onGST, customs and general tax advice, providing tech-nical knowledge and integrated services to clients inneed. His expertise includes tax planning and litiga-tion alongside transfer pricing. Shearn Delamore & Co’s tax department includes

transfer pricing services where five dedicated partnersand two other professionals work on TP disputes. GohKa Im is the leader of transfer pricing services.

The team helps clients with preparation andresponse to transfer pricing audits. It is experiencedin handling TP disputes, including representingclients in their tax appeals and judicial review appli-cations to the courts.

In the first quarter of 2015, the team representedthe Boston Consulting Group in a case before thehigh court appealing TP adjustments made by therevenue purportedly under section 140 of theincome tax act and the 2003 transfer pricing guide-lines. This was a milestone where the court held thatthe transfer pricing adjustments made by the rev-enue are not valid for the years prior to 2009. Leow Mui Lee, an executive director, leads TaxandMalaysia’s transfer pricing practice. She specialisesin M&A, outbound and inbound investments, andtax risk management, including document reviews.

The practice advises multinationals and manufac-turing companies on transfer pricing issues, such asdocumentation, risk reviews and dispute resolution. Adeline Wong leads the tax and transfer pricing

practice at Wong & Partners in Malaysia. The transfer

pricing team consists of three partners and 16 taxprofessionals, including economists, lawyers andsupply chain experts. The team is regularly support-ed by a team of four other tax lawyers and adviserslocated in Singapore, Malaysia and Indonesia.Jasmine Chan joined the transfer pricing practice inthe past year.

The transfer pricing team has the ability to under-take TP matters from benchmarking, economicanalysis and documentation to defending the TPmethodology and structure.

Key clients for the practice come from the indus-tries of healthcare, computer related software, onlineand digital services, technology, media and telecom-munications, energy and utilities and financial servic-es.

The team has been advising a global Fortune 500diversified industrial company in the defence of its TPremuneration model in Malaysia. The queries wereraised by the Malaysian tax authority in specific rela-tion to technical transfer pricing matters, with theaudit covering a period of five tax-years.

One client commented: “Wong & Partners is a high-ly professional and effective organisation that did asplendid job with the transfer pricing analysis andother cross functional legal and tax projects.”

Tier 3Transfer pricing services of Raja, Darryl & Loh aremanaged by Vijey Mohana Krishnan, the head of theoverall tax practice. He has been part of the firmsince 2005.

The transfer pricing practice reviews clients’ TPstructures and gives advice on the necessary stepsand procedures to prepare for any possible disputes.

Malaysia


Malaysia



Corporate income tax rate 24% (a)Real property gains tax rate 30% (b)Branch tax rate 25% (a)

Withholding tax Dividends 0% Interest 15% (c)(d) Royalties from patents, know-how, etc. 10% (c) Distributions by real estate

Investment trusts and property Trust funds 10/25% (e)

Payments to non-resident contractors 13% (f) Payments for specified services and

Use of movable property 10% (g) Other income 10% (h) Branch remittance tax 0%


a) Effective from the 2016 year of assessment, themain rate of corporate tax decreases by 1% from25% to 24%, while the rates for residentcompanies that have paid-up capital in respect ofordinary shares of MYR2,500,000 or less and thatsatisfy specified conditions are also reduced byone percentage point; that is, the rates are 19%on the first MYR500,000 of chargeable incomeand 24% on the remaining chargeable income.The above rates do not apply to petroleumcompanies, which are taxed at a rate of 38%.

b) Real property gains tax is imposed on gainsderived from disposals of real property orshares in real property companies. The

maximum rate is 30%.c) This is a final tax applicable only to payments

to non-residents.d) Interest on approved loans is exempt from tax.

Bank interest paid to non-residents without aplace of business in Malaysia is exempt fromtax. Interest paid to non-resident companies ongovernment securities and on Islamic securitiesis exempt from tax.

e) The 25% withholding tax is imposed ondistributions to non-resident corporate unitholders by Real Estate Investment Trusts (REITs)and Property Trust Funds (PTFs) that have beenexempted from Malaysian income tax as aresult of meeting certain distribution conditions.Distributions by such REITs and PTFs toindividuals, trust bodies and other non-corporate unit holders are subject towithholding tax at a rate of 10%.

f) This withholding tax is treated as a prepaymentof tax on account of the final tax liability.

g) This is a final tax applicable to payments tononresidents for specified services rendered inMalaysia and to payments for the use ofmovable property excluding payments made byMalaysian shipping companies for the use ofships under voyage charter, time charter orbare-boat charter. The rate is reduced undercertain tax treaties.

h) Withholding tax is imposed on “other income,”which includes, among other payments,commissions and guarantee fees.



LEADING FIRMS

1 Baker & McKenzie Basham, Ringe y Correa Deloitte Mancera (EY) PwC

2 BaseFirma Chevez Ruiz Zamarripa KPMG Salles, Sainz – Grant Thornton SKATT International Tax Firm

Firm to watch Natera

It has been an active year for the Mexican transferpricing market, and the OECD BEPS project has beenthe favourite topic of most TP professionals for thepast couple of years. “Mexico has been very enthusiastic about theimplementation of BEPS into our law, and the gov-ernment has been very proactive in these matters,”said Rodrigo Covarrubias, partner at Skatt.“Unfortunately… considering the broad scope ofthese aspects, from both an international and localperspective, and the possible legal and formalaspects, the way the provisions are worded anddrafted has led to some controversy and some ofthem may not be fully regulated the way they shouldbe,” he added.The tax authorities, in anticipation of new BEPS-inspired legislation, have been very active in their

auditing of multinationals in the past few years. Theyare carefully checking that there is substance behindtransfer pricing structures, and it is therefore impor-tant for taxpayers to have the documentation toback this up.“As of two or three years ago, everything has beenabout BEPS, and what is happening now is that weare moving into assessments by the tax authorities,”said Alejandro Barrera, partner at Basham, Ringe yCorrea. “Transfer pricing auditing has grown dramati-cally and consistently during the last few years. Thisarea will without a doubt be the one which will beassessing and collecting more taxes from taxpayers.”Mexico’s existing transfer pricing rules generallycomply with the OECD guidelines, and the Mexicangovernment has strong ties with the OECD. Barrerasaid that Mexico had actively participated to enactsome of the BEPS actions, and that for examplewhen Mexico enacted a new income tax law in2014, some of the most important changes werethe incorporation of certain BEPS actions, such ascountry-by-country reporting (CbCR). In addition toCbCR, the tax reform also included master file andlocal file requirements. This means that Mexicancompanies must submit the required document bythe end of 2016.

Tier 1Baker & McKenzie’s transfer pricing department isheaded by Carlos Linares García. The firm’s combi-nation of attorneys, accountants, economists andforeign trade experts, each with their diverse tax spe-cialisations, in coordination with other members ofthe firm’s global tax group, enables it to cover the


MexicoTax authorities Servicio de Administración Tributaria Av. Hidalgo 77, col. Guerrerocp 06300 Mexico, DFTel: +52 1 800 4636 728; (+1 877 4488 728 from US and Canada)Website: www.sat.gob.mx

http://www.sat.gob.mx

needs of multinational companies in the LatinAmerican region. The firm offers comprehensive,sophisticated tax planning, advice and compliance,tax litigation, foreign trade and transfer pricing adviceat a local, regional and global level. The team, which consists of four partners and 20other TP professionals, specialises in advising com-panies in the energy, education, hospitality, mining,infrastructure, automobile, manufacturing, petro-chemical and pharmaceutical industries. The firm is working on preparing a global TP doc-umentation report for a Mexico-based multinationalgroup of companies in the automotive industry. Theproject includes TP documentation for more than 15countries and will be based upon the new TP guide-lines and concepts of the OECD BEPS Project. García’s professional experience includes morethan 13 years in consulting and three years in thepublic sector. He is a former deputy director withthe International Tax Department of the Mexican

Ministry of Finance. He is knowledgeable in thefields of transfer pricing, financial valuation andantitrust. Basham, Ringe y Correa’s full-service transfer pric-ing department comprises six partners and 24 otherprofessionals and is highly regarded across LatinAmerica. The firm’s clients include Fortune 500 com-panies as well as medium-sized companies, finan-cial institutions and individuals. Many of its clientswork in the manufacturing, healthcare, food, fast-moving consumer goods (FMCG) and agriculture, andcomputers, digital, software and online industries.One of the key partners at the firm is Alejandro

Barrera. His specialities are taxation and tax plan-ning, both domestic and international.The firm is assisting a multinational corporationthat sells nutrition supplements to assess its busi-ness model. The tax authorities are questioning thisbusiness model and repealing all deductions relatedto it. The outcome of this case could therefore have

Mexico



Corporate income tax rate 30% (a)Capital gains tax rate 30% (b) Branch tax rate 30%

Withholding tax Dividends 10% (c) Interest paid on negotiable

instruments 10% (d)(e) Paid to banks 10% (d)(f) Paid to reinsurance companies 15% (d) Paid to machinery suppliers 21% (e) Paid to others 35% (d) Royalties from patents and trademarks 35% (d) From know-how and

technical assistance 25% (d) From railroad cars 5% (d) Branch remittance tax 10% (c)


a) A 10% tax is imposed for employee profitsharing.

b) The capital tax rate for foreign residents may be25% or 35%.

c) This tax applies to dividends paid out of profitsgenerated after 2013.

d) This is a final tax applicable to non-residents.Payments to tax havens are generally subject toa 40% withholding tax.

e) This rate can be reduced to 4.9% if certainrequirements are met.

f) A reduced rate of 4.9% is granted each year tobanks resident in treaty countries.



implications for many other companies with thesame business model.Deloitte’s Mexican transfer pricing department has13 partners and 152 other professionals. It is the old-est, and one of the largest, TP specialist groups inLatin America. The firm is full service. The team has led a wide variety of projects both inthe fields of transfer pricing and business modeloptimisation, and also has specialised knowledgeand extensive experience in the area of APAs andmutual agreement procedures (MAPs) as well asinnovative controversy solutions in highly complexcases.“I see them as a group of very reliable profession-als that are always willing to provide efficient andaccurate solutions to difficult situations. In particularI would like to bring your attention to RicardoGonzález Orta and David Cárdenas,” a client said. “Iwill be glad to recommend Deloitte because of theirtechnical capabilities, professionalism, years of expe-rience in tax matters and their networking with taxauthorities,” another client said.The team has experience in various industries, andparticularly in oil and gas, mining, financial services,manufacturing, infrastructure, real estate, retail andconsumer products and TMT. Simón Somohanoleads the group, and has more than 24 years ofexperience in the application of tax, economic, andfinancial criteria in transfer pricing, valuation analysisof intangibles, double tax treaty issues, planning,business model optimisation, structuring and eco-nomic consulting.EY’s Mexican arm, Mancera, is a full-service firm ofabout 80 professionals. The team works with com-panies to build, manage, document, review anddefend their TP policies and processes. JorgeCastellón is the leader of the group. His transfer pric-ing experience includes policy design and imple-mentation, cross-border structuring, supply chainrestructuring, and intellectual property management.On the controversy front, he has extensive experi-ence in TP audit management, negotiation of APAs,competent authority proceedings and resolution oftransfer pricing controversy.

PwC has more than 60 specialists working across21 offices, making the firm’s TP practice one of thelargest in the country. Its services include TP studiesand documentation, audit defence, valuations,value-chain management, APAs and MAP. Fred Barrett leads the team. He has more than 30years of experience including transfer pricing, Mexicanincome tax, structuring, VAT and customs and with-holding taxes. Sergio Luis Perez Cruz was recognisedby his peers for his skills in APA negotiation.

Tier 2Juan Carlos Becerril leads the team of three partnersand six other professionals at BaseFirma. The firm ispart of an international group that provides high-level expertise in transfer pricing and valuation serv-ices and strategies for multinational corporations. BaseFirma advises clients in legal and transfer pric-ing areas, helping to update contracts and agree-ments for different transactions like services, royaltiesand loans. In addition, BaseFirma Mexico providesadvice around the APA process in Mexico, offering itsclients an efficient strategy to navigate the process,evaluating the benefits for the company, advising onthe strategy to develop the APA and, finally, present-ing the APA to the authorities. The firm assists its clients in producing TP documen-tation and consults on international tax, BEPS assess-ments and implementation, withholdings implicationsand strategies for defending fiscal controversies.The firm is experienced in advising companiesfrom sectors such as hospitality, manufacturing, tech-nology, media and telecommunications (TMT), foodand financial services. “Working with BaseFirma has been a great experi-ence. Excellent service, innovative, we are satisfiedwith its job,” a client said. The transfer pricing practice at Chevez Ruiz

Zamarripa offers TP analysis, APA negotiation, valua-tion, restructuring, audit support and litigation servic-es. Oscar Campero leads the team, which has threepartners and 27 other professionals, 10 of who havejoined the firm since June 2015. The firm’s clientsmainly come from sectors such as financial services,

Mexico


manufacturing, TMT, transport, hospitality and energyand utilities. KPMG’s TP practice in Mexico is led by María

Teresa Quiñones. The firm assists its clients with var-ious TP issues including compliance, TP studies anddocumentation, planning, APAs, audit support anddispute resolution. Antonio Ramirez is a partner inthe firm. He was recognised for his skills in TP dis-putes by a competing firm.Ricardo Suarez leads the transfer pricing practice at

Salles, Sainz – Grant Thornton. The firm has threepartners and 30 other TP professionals. In the pastyear, Fernando Pliego and Beatriz Guerra were pro-moted to the firm’s partnership. The firm offers serv-ices including corporate restructurings, advice ontransfer pricing, APAs, TP studies and companies orintangible valuations.The firm’s clients can be found in the financialservices, food, FMCG, agriculture, healthcare, manu-facturing, transport, TMT, energy and utilities sectors,to name a few.In 2016, the firm was involved in the restructuringof several companies in Mexico.Emilio Angeles is in charge of SKATT International

Tax Firm’s transfer pricing department. The team of

one partner and three other professionals providesclients with consulting, planning, valuation of intangi-bles and tax defence services in transfer pricing.SKATT’s clients work in manufacturing, food, TMT, finan-cial services and energy and utilities, to name a few.In 2016, the firm assisted a client on a value esti-mation of a contract involving a sublicense of con-tent that would later be transferred or sold. The firmalso assisted a client with a tax opinion on sale offinished goods and imported services to demon-strate that it was not selling below the costs andexpenses incurred in the trading operation.The team is described as “very reliable and highlycompetent” by clients, with one client saying: “SKATTis the best firm because they have a team that thinksoutside of the box, they always find a tailor-madesolution.”

Firm to watchNatera advises its clients in transfer pricing matters,including planning, design and implementation ofpolicies and strategies, TP analysis and TP documen-tation. The firm can also assist with bilateral andmultilateral APAs as well as MAPs, and the teamcounsels and represents clients in TP audits.

Mexico



LEADING FIRMS

1 Baker & McKenzie Deloitte EY KPMG Meijburg Loyens & Loeff PwC

2 DLA Piper Ryan

3 BDO TPA Global Taxand Netherlands

4 Quantera Global

Transfer pricing has been at the top of the Dutch taxauthorities’ agenda this year. As a result of the chang-ing tax and TP climate and the OECD’s BEPS project,the authorities have expanded their resources.

Unlike many of its neighbouring countries, theDutch authorities have not become more aggressiveand remain investor friendly. Although the authoritiesare hiring new professionals to collect more taxesand are reported to audit more, Friggo Kraaijeveld,head of tax at Kraaijeveld Coppus said: “You’ve gotmutual understanding with each other. You’re notbest friends but you always have an open commu-nication”. Overall, the tax authorities are described asvery friendly and very transparent and differ greatlyfrom the aggressive authorities around the world.

Advisers report that the authorities have focusedmore on transfer pricing, which is increasing the bur-den on taxpayers when defending tax positions inaudit or negotiating a tax ruling, resulting in morecompliance work. Despite this, the authorities remainengaged and informed when addressing TP matters.“The reality is that the market is changing and thereis a lot of tax litigation going on and everybody is


NetherlandsTax authorities Ministerie van Financiën Korte Voorhout 7 Postbus 20201 2500 EE Den HaagTel: +31 70 342 80 00Website: www.minfin.nl


Corporate income tax 20/25% (a)Capital gains 0%Branch tax 20/25%

Withholding tax (b) Dividends 15% Interest 0% Royalties from patents and licenses 0%

Net operating losses (years) Carryback 1 Carryforwards 9

a) If taxable profits are less than €200,000($258,000), the lower 20% rate applies

b) The 15% domestic dividend withholding taxrate may be decreased under application ofbilateral tax treaties and the EU ParentSubsidiary Directive

Source: Taxand Netherlands

http://www.minfin.nl

preparing the structures they have and making themmore robust,” said Paulus Merks, of DLA Piper.

BEPS has also been a major topic in theNetherlands, as in most countries around theworld. Taxpayers have actively been seeking gen-eral transfer pricing support including with docu-mentation, country-by-country reporting (CbCR) andsustainability analysis assistance.

“A lot of clients are just waiting to see wherethings will go, but after the publication of the BEPSreports last October, depending whether or notEurope and the BEPS directive is going to beaccepted and then implemented, you will see thatcompanies are slowly starting to move on to thepost-BEPS world,” said Bartjan Zoetmulder, partnerof Loyens & Loeff.

While changes are on the way, including BEPS rec-ommendations and domestic legislation, the countryonly saw a few changes to its tax laws this year.

“It has been a stable year, of course we are alsopart of all the tax changes in the world. But theDutch government has a good approach that weco-operate with everything and so on, but that wefind it very important that the rules apply to everycountry in the world and not only to a few ofthem,” said Michel Bilars, of AKD Netherlands.

The Netherlands was one of the first jurisdictionsto commit to CbCR and the exchange of informa-tion rules. As of January 1 2016, CbCR rules becameeffective, requiring multinationals to comply withthe transfer pricing documentation, including mas-ter and local files.

In regards to anti-avoidance, the overall view isthat the Netherlands is committed to combat taxavoidance and improve tax transparency, however,it does not want the anti-avoidance measures toimpact the Dutch business climate.

“Basically what we are seeing in the Netherlandsis that the OECD has now embraced the approachthat the Dutch authorities already took for a longtime. The trend is not new to us, but what is newis that other countries agree with the Dutchapproach,” said Harmen van Dam, head of transferpricing at Loyens & Loeff.

Tier 1Baker & McKenzie’s transfer pricing team is led byAntonio Russo who specialises in design, implemen-tation and valuation of companies and intangibleassets. He has a wealth of knowledge in tax plan-ning and restructuring and has performed TP studiesfor clients across various industries. He is supportedby Margreet Nijhof, an experienced partner withfocus on domestic and international tax planning.

The team comprises two partners and 14 profes-sionals, from more than eight nationalities. It consistsof lawyers, economists, and analysts, who workclosely with the corporate tax, VAT and customslawyers, and those with intellectual property (IP) andIT expertise, to offer integrated advice and innovativebusiness solutions.

The full service provider comes highly recommend-ed by its clients and is praised for its flexibility andpractical advice. One client said: “I was particularlyimpressed by their knowledge of the most recentdevelopments in transfer pricing and their ability toadapt the theoretical knowledge to our specific case.I would also recommend them to others.”

The team has taken an active role in the OECD dis-cussions and Russo frequently speaks at public hear-ings on BEPS and is also involved in the EU tax poli-cies. Aart Nolten is head of transfer pricing at Deloitte in

the Netherlands. He has years of advisory experience,particularly in the international tax aspects of financ-ing, IP migration, acquisition structures and holdingstructures for multinationals. The team’s four partnerswork closely with the 52 other fee earners offering afull range of services across all industries, with partic-ular strength in manufacturing, telecommunications,media and technology (TMT), financial services, ener-gy and resources, and consumer businesses. Thegroup has engaged in a wide variety of projects in thefield of transfer pricing and business model optimisa-tion and are specialised in APAs and mutual agree-ment procedures (MAP), among other areas.

This year, the team’s projects included obtaining amultilateral APA between various European countriesas well as assisting one of the largest telecommuni-

Netherlands



cations equipment manufacturing companies withits global presence by redesigning its global TPmodel.

The transfer pricing team at EY provides a com-plete range of services including strategy and policydevelopment, governance optimisation support, doc-umentation, transfer pricing controversy and riskmanagement. Danny Oosterhoff leads the team andfocuses on business and tax aligned planning, trans-fer pricing implementation, risk management andAPA negotiations. Jeroen Dijkman specialises in transfer pricing and

oversees the department at KPMG Meijburg. Theteam, which consists of three partners and 35 otherprofessionals, assists clients with a variety of transferpricing matters. It specialises in the pharmaceuticals,shipping and logistics, chemicals, retail and financialservices industries. The team offers a full range ofservices including design, implementation, docu-mentation, compliance, APAs and litigation. It alsoperforms benchmark studies and provides supportduring audits and discussions with the Dutch rev-enue.

Loyens & Loeff’s transfer pricing team is headedby Harmen van Dam, who is supported by Patrickvan Oppen and Rogier Sterk. The departmenthouses a full suite of services including advice, dis-pute resolution and documentation. Its clienteleincludes Fortune 100 companies as well as medi-um sized companies from across the globe. BeatBaumgartner joined the team this year from aleading Swiss law firm in Zurich, along with FabianSutter, who also worked at a law firm inSwitzerland.

The team consists of two partners and 19 associ-ates in the Netherlands, while the whole teamacross the Netherlands, Belgium, Luxembourg andSwitzerland comprises five partners and 30 profes-sionals in total. All members work closely together toprovide clients with the best solutions. The firmmaintains a strong clientele and grasp on tax lawsand regulatory regimes in the regions. Michel van der Breggen is a transfer pricing partner

at PwC and has been fully dedicated to transfer pric-

ing for more than 14 years. He is one of the key part-ners of the TP practice and has years of experiencein international tax, APA, MAP and financial structur-ing. The team provides support to multinational busi-nesses through a wide range of services includingdocumentation, planning, value chain transforma-tion, financial transactions, dispute resolution andtransfer pricing implementation.

Tier 2Jian-Cheng Ku is the transfer pricing specialist at DLAPiper in the Netherlands. He has extensive experi-ence in advising multinational companies on transferpricing and international tax.

He has 10 years of experience in the field, includ-ing design and implementation of TP systems, deter-mining appropriate pricing, valuing IP and developingglobal and local documentation. His industry knowl-edge includes banking, consumer products, enter-tainment, medical products and software. Among theclients of the firm are many Fortune 500 companiessuch as The Walt Disney Company.

Ku works closely with DLA Piper’s internationaltransfer pricing group co-headed by London-basedJoel Cooper and Randall Fox. The team is a globaloperation with professionals, including lawyers,economists and tax advisers, with experience ofinternational tax and transfer pricing.

Under the management of principal MichelSijmonsbergen, the transfer pricing team at Ryansupports clients with legal, tax and economic mat-ters related to transfer pricing. It specialises in indirecttax and has a wealth of experience advising clientsfrom the financial, chemical, automotive and phar-maceutical industries.

The firm offers a variety of services which includetransfer pricing design and compliance, tax valuationand financial modelling. It addresses the businessimpact of cross-border transactions and providessolutions to improve client profitability by optimisingintercompany pricing even while reducing global taxliabilities. Sijmonsbergen previously worked for EY’stransfer pricing and tax efficient chain managementgroup as well as Deloitte.

Netherlands


Tier 3BDO’s transfer pricing practice is overseen by SjoerdHaringman who has extensive experience in consul-tancy, including tax and transfer pricing. His spe-cialisms include M&A, structuring and documenta-tion. The firm assists clients from a range of sectorsincluding logistics, finance and IT.

Haringman has experience from Big 4 firms and is aboard member of BDO’s global transfer pricing centreof excellence. The team offers various services such asTP planning, conversions and implementation, M&Adue diligences and post-merger integrations. Raymund Gerardu leads the transfer pricing team

at TPA Global, which offers support in tax and trans-fer pricing governance, risk quantification, corporateincome tax, VAT, compliance, evaluation and auto-mated reporting. The firm assists multinationalsacross all industries.

The team is a part of TPA Global’s network whichcovers more than 50 countries throughout Europe,Asia Pacific and the Americas. It has a thorough

understanding of BEPS and aims to design TP poli-cies that are BEPS compliant.

The transfer pricing team at Taxand Netherlands isled by Jimmie van der Zwaan who is also the globalleader of Taxand’s energy tax service line. He spe-cialises in the fields of energy, including all aspectsrelating to oil and gas, electricity, alternativeresources and suppliers and contractors. Corporatetax is also among his key focus areas.

TP advisers at the firm assist clients in transfer pric-ing documentation and have various experience inthe management of strategic supply chain projectsand business restructuring.

Tier 4Quantera Global has a strong reputation in transferpricing among peers. The firm provides special TPservices, including planning, support, benchmarkingand preparation of master and local files. The teamconsists of experienced specialists able to provideindustry, technical and planning advice.

Netherlands



ContactJeroen DijkmanEmail: [email protected]: +31 (0)88 909 2543

Meijburg & Co is KPMG’s tax memberfirm in the Netherlands. For more than75 years, Meijburg & Co has provided taxlegal and tax advisory services to nationaland international businesses, organiza-tions and individuals. As part of KPMG’sGlobal Transfer Pricing Services (GTPS),Meijburg & Co’s transfer pricing expertsoffer a full range of transfer pricing serv-ices, including value chain managementreviews, transfer pricing documentation,benchmarking, operational transfer pric-ing and implementation, valuation analy-ses and other economic tax advisory serv-ices, assistance in obtaining bilateral andunilateral advance pricing agreements,competent authority matters, tax auditsand litigation. Meijburg & Co’s transferpricing experts have a wide range ofindustry experience and are recognizedfor their robust technical expertise andexperience.

Blaak 313011 GA RotterdamThe NetherlandsT: +31 10 224 62 24F: +31 10 412 58 39

Contact: Harmen van [email protected]

WTS World Tax Service B.V.P.O. Box 19201Conradstraat 18Unit 6e.1783001 BE Rotterdam The Netherlandswww.wtsnl.com

Key contact:Jan [email protected] +31 102 179 172

Netherlands




http://www.wtsnl.com


LEADING FIRMS

1 Bell Gully Deloitte EY KPMG PwC TP Equilibrium

2 Grant Thornton Russell McVeagh

3 Chapman Tripp

As is in many jurisdictions around the world, there iskeen interest in New Zealand around the BEPSProject. The government’s approach to BEPS imple-mentation, however, is less intense.“The government and Inland Revenue Department

(IRD) have generally taken a wait and see approachto the evolving global transfer pricing landscape,choosing to continue with annual areas of transferpricing focus, whilst the OECD and other jurisdictionshave introduced more substantial changes,” saidLeslie Prescott-Haar of TP Equilibrium.The IRD has introduced country-by-country report-

ing (CbCR) requirements however and in the 2016budget, the government has provided new capitalfunding for IRD’s new tax administration system tohelp it better enforce multinationals’ tax compliance. CbCR is applicable to New Zealand-headquartered

companies with global gross revenues exceeding NZ$1.2 billion ($860 million), for fiscal years commencingon or after January 1 2016. It is expected around 20

local companies will be affected. The automaticexchange of information will begin on a voluntarybasis from 2018 and on a mandatory basis from 2019. Furthermore, Mathew McKay of Bell Gully assumes

that New Zealand will be part of the multilateralinstrument (MLI) which is likely to impact internation-al investment in New Zealand. “Among the concerns seen in the submissions on

the MLI is a strong sentiment that the detailed MLItext should be made public before it is signed, aswell as a preference for the focus to be on ‘getting itright’ through full consultation, rather than on thecurrent December 31 2016 deadline for signing theMLI. It is unfortunate that wider interest groups inNew Zealand have no visibility over its detail, andmay not do so until the instrument is signed,” saidMcKay.

Tier 1Bell Gully’s tax and transfer pricing practice is man-aged by Mathew McKay. There are three partnersand nine professionals, with one legal assistant,focusing on tax and transfer pricing issues. The practice has consistently been involved with

some of New Zealand’s largest, most high profileand challenging corporate transactions across vari-ous sectors in the market. This includes the NewZealand aspects of a number of significant interna-tional deals. In these transactions the team hasworked on due diligence, advising clients on dealstructure and tax treatment, and negotiating anddrafting the tax aspects of deal documentation. Diana Maitland oversees the transfer pricing prac-

tice of Deloitte New Zealand as its sole transfer


New ZealandTax authorities Inland RevenuePO Box 39010, Wellington MailCentre, Lower Hutt 5045Tel: +64 4 978 0779 Website: www.ird.govt.nz

http://www.ird.govt.nz


pricing partner the support of 20 other professionals.The TP team works alongside the corporate taxgroup, identifying risks and opportunities for clientsto solve their transfer pricing issues.

Maitland has more than 25 years of tax experienceand 20 years of specialising in transfer pricing sincethe inception of the New Zealand transfer pricingregime in 1996. She has expertise in all areas of TP

New Zealand




Withholding tax Non-residents Dividends 30% (a) Interest 15% (b) Royalties from patents, know-how, etc. 15% (c) Payments to contractors 15% Branch remittance tax 0% Residents Dividends 33% Interest 33% (d)


a) This is a final tax. If dividends are fully imputed,the rate is reduced to 15% (for cash dividends)or to 0% (for all non-cash dividends and forcash dividends if non-resident recipients havedirect voting interests of at least 10% or if a taxtreaty reduces the New Zealand tax rate below15%). The rate is also reduced to 15% to theextent that the dividends are fully creditedunder the dividend withholding paymentsystem (which is being phased out) or to theextent that imputation credits are passed on toforeign investors through the payment ofsupplementary dividends under the foreigninvestor tax credit regime.

b) This is a final tax if the recipient is not associatedwith the payer. For an associated person, this is aminimum tax (the recipient must report theincome on its annual tax return, but it may not

obtain a refund if the tax withheld exceeds thetax that would otherwise be payable on itstaxable income). Under the Income Tax Act,associated persons include the following:

• Any two companies in which the samepersons have a voting interest of at least50% and, in certain circumstances, a marketvalue interest of at least 50% in each of thecompanies

• Two companies that are under the control ofthe same persons

• Any company and any other person (otherthan a company) that has a voting interestof at least 25% and, in certaincircumstances, a market value interest of atleast 25% in the company

Interest paid by an approved issuer on aregistered security to a non-associated personis subject only to an approved issuer levy (AIL)of 2% of the interest payable. An AIL rate of 0%applies to interest paid on or after May 7 2012to nonresidents on certain widely offered andwidely held corporate bonds that aredenominated in New Zealand currency.

c) This is a final tax on royalties relating to literary,dramatic, musical or artistic works. For otherroyalties, this is a minimum tax.

d) The 33% rate is a default rate if recipients’ taxfile numbers are not supplied. Individuals mayelect rates of 10.5% (if their expected annualincome does not exceed NZD14,000), 17.5%,30% or 33%. The basic rate for interest paid tocompanies is 28%, but companies may elect a33% rate.


in New Zealand. She covers including restructuring,New Zealand and global documentation require-ments, TP transactions, TP defence, and negotiatingTP policies with Inland Revenue, including advancepricing agreements (APAs). The firm is also engaging with the New Zealand

Inland Revenue about the effect of BEPS actions andhelping to shape the direction of transfer pricing inthe nation.

EY’s transfer pricing group is headed by MarkLoveday which consists of 11 professionals offering acomplete range of transfer pricing support to clientsacross all sectors. Loveday has more than 23 years ofexperience in advising on international tax, specialis-ing in the field of transfer pricing. His clientele includemultinationals and local companies. He is adept inassisting in the sectors of automotive, pharmaceutical,software, financial services, and insurance. The firmadvises on TP planning as well as compliance. The transfer pricing practice of KPMG New Zealand

is led by Kim Jarrett. Two new professionals, JeanKim and Sunita Mehta, joined the team in the pastyear, as managers. The firm has five offices in New Zealand, advising

clients on a range of TP matters including unilateraland bilateral APAs, guidance on executing supplychain models and general transfer pricing compli-ance. KPMG has also been working with variousclients to document and defend related party debtstructures. The practice focuses on offering international serv-

ices to assist clients with expansion and overseasstructuring operations through tailored commercialadvice, which includes the direct and indirect taximplications influencing their businesses. The main industries the firm’s transfer pricing team

serves include technology, media and telecommuni-cations (TMT), fast-moving consumer goods (FMCG)and digital and software. One client said: “They have been professional in all

our dealings. In particular, they have been very pro-fessional when dealing with tax authority people,who do not always have a great understanding ofthe commercial world and practice.”

Erin Venter is a partner at PwC New Zealand spe-cialised in transfer pricing for more than 12 years andhas led the transfer pricing team since 2012. Shefocuses on cross border transactions and providespractical and robust TP solutions using a deep under-standing of the client’s commercial and businessobjectives. She is experienced in negotiating APAsand representing clients before courts in TP auditsand disputes. Richard McGill is director at the firm, located in

Auckland assisting clients concerning all business,regulatory and tax matters related to exporting. Hisexpertise includes supply chain planning, exportstrategy development, international tax planning andcompliance and other aspects of transfer pricing.

TP Equilibrium is a boutique transfer pricing advi-sory firm, providing all aspects of transfer pricingservices including APA. The firm covers numerousindustries for both the Australian and New Zealandmarkets including financial services, consumer elec-tronics, agricultural, and retail operations. The man-aging director, Leslie Prescott-Haar, leads the transferpricing services for the Australasian region with morethan 18 years of experience in transfer pricing. The firm regularly contributes to numerous interna-

tional publications and the Duff & Phelps TP Times.In addition, the firm has published various articlesand chapters in books on transfer pricing.This year, Prescott-Haar and Stefan Sunde assisted

an Australian taxpayer in detailed research andanalysis of the Berry Ratio. They conducted a com-prehensive level of research and analysis, includinga close consideration of comparability issues andpotential adjustments.

Tier 2Greg Thompson heads both the transfer pricing andtax department at Grant Thornton, focusing on crossborder risks, structuring and strategies. The transferpricing team includes three partners and one profes-sional who assist clients in TP valuation, TP docu-mentation, understanding and managing risk, theplanning of tax efficient international business struc-tures and supply chains, and audit support.

New Zealand



Brendan Brown oversees both the tax and transferpricing practice at Russell McVeagh where transfer pric-ing forms part of the general tax practice. There arethree partners and nine professionals at the tax practice. The firm has extensive experience in tax disputes

advisory and in negotiating for clients with InlandRevenue, whether in audits, litigation or APAs. The firm’s partners have been invited to speak at

industry events on transfer pricing matters, includingon the likely approach of the New Zealand courtswhen a transfer pricing case comes before thosecourts. In the past year Brown and Tim Stewart advised

on a transfer pricing dispute with Inland Revenue inrespect of the financing of receivables worth around$10 million. This was the first transfer pricing case tohave reached the formal disputes process; if it pro-

ceeds to litigation it will likely be the first transferpricing case to be decided by the New Zealandcourts. The approach Inland Revenue is taking to thecase raises the novel question of the extent to whichInland Revenue may, under the transfer pricing pro-visions, characterise an arrangement differently fromthe character it has as a matter of law.

Tier 3Chapman Tripp provides support on various negoti-ations and disputes with Inland Revenue includingtransfer pricing and cross border financing. The taxpractice embraces TP services, offering integratedassistance for a wide range of clients from differentindustries. Graeme Olding leads the tax departmentof the firm and there are two partners and ten pro-fessionals at the practice.

New Zealand


1. How does the tax authority selecttransfer pricing cases to audit?According to Norwegian legislation, qualifyingtaxpayers are obligated to file a high-level, stan-dardised tax assessment form (RF-123) con-cerning the type and extent of all inter-compa-ny transactions. This form has to be submittedtogether with the tax return. Normally, the taxauthorities will select the companies for trans-fer pricing audits based on the information pre-sented in this form and other available data.The Norwegian tax authorities typically

select companies for transfer pricing audit that:• have carried out business restructuring duringthe year;

• own and/or rent significant intangible assets;• are involved in significant cross-border trans-actions;

• have significant amount of loans; and/or• are consistently in a loss situation.

2. How will a company find out it is beingaudited? What is the official notification?The tax authorities will notify the company in aletter addressed to the company’s businessaddress.Normally, the tax authorities will request

that the company submit the transfer pricingdocumentation when the transfer pricing auditis initiated (if the company is required to pre-

pare such documentation), and/or that thecompany submit additional information aboutintra-group transactions as well as all intra-group agreements.

3. When a company has been notified ofaudit, what is the first thing it should do?When a company is notified of a transfer pricingaudit, they should be well prepared and involvetheir transfer pricing adviser as early as possible.They should also establish a dialogue with thetax inspector.

4. Is there any legislation for generalprocedure for a taxpayer under audit? Ifnot, what is the recommended practice?The taxpayer is obligated to give informationto the tax authorities that will affect the taxassessment, according to the Tax AssessmentAct section 4-1, the Tax Assessment Act sec-tion 4-12, and the corresponding secondarylaw, state the filing and documentationrequirements.

5. How does Norway differ in its approachto TP audit to other countries?In an audit, the taxpayers should ensure thatthe transfer pricing documentation fulfills spe-cific Norwegian transfer pricing documentationregulations prior to filing. For example, the


An overview of the audit environment in Norway by Silje Brattetveit Helle and Per FrodeSundby, PwC.

Norway

Tax authorities Ministry of FinancePO Box 8008 DepNO – 0030 – OsloTel: +47 22 24 90 90Email: [email protected]: www.regjeringen.no


http://www.regjeringen.no


documentation must cover branches as well asdomestic transactions. If a comparability studyis prepared it must be submitted to the taxingauthorities in addition to agreements. The general statute of limitation is 10 years.

6. How does the tax authority compile itsinformation on a taxpayer for an audit?The tax authorities compile its information ona taxpayer for an audit based on informationand documentation submitted by the taxpay-er. In addition, the tax authorities also makeuse of their own benchmarks, publically avail-able information, external databases, andother information made available to the taxauthorities.

7. What are the most likely instances thatprovoke an audit from the authorities?The most likely instances that provoke anaudit from the authorities are consistent loss-es, sudden drops in earnings before interestand tax (EBIT), business restructurings or sig-nificant cross-border transactions with relatedparties.

8. What documents are required by thetaxpayer during TP audit?During a TP audit the taxpayer is generallyrequired to submit the following documents:transfer pricing documentation, agreements,agreements with other tax authorities, andbenchmarks. The transfer pricing documentation is to be

submitted within 45 days upon request.

9. Are there any restrictions on acompany’s business during audit?No restrictions.

10. Are there any restrictions on thetaxpayer’s advisers during audit?No restrictions.

11. How long does an audit last?The tax authorities do not have any specificdeadlines within the statute of limitations.Proper audit management may reduce the

total time period of the audit.

12. What happens after an audit has beencompleted?When an audit is completed, an audit report ispresented to the company for comments.Thereinafter, the tax authorities make an admin-istrative decision.If the taxpayer disagrees with the decision,

the taxpayer may appeal to the appropriate taxappeal board.If the taxpayer disagrees with the appellate

board’s decision, they may take the case to theCourts. Norway has three levels of courts: thecity or district court, the Court of Appeals andthe Supreme Court, however there is no spe-cialised tax court.

13. Tips on negotiating with the authoritiesThoroughly document and substantiate the factsand circumstances of the case as early as possiblein the audit.Create an open and honest dialogue with the

tax authorities. Avoid any language barriers by ensuring that

the tax inspector is comfortable executing theaudit in another language than Norwegian.

14. How can a company manage its auditrisk?The company can manage the risk by ensuringthat its transfer pricing policy and documenta-tion are up-to-date and accurate, and in line withthe arm’s-length principle. The transfer pricingreporting form (RF-1123) should be alignedwith the accounts prior to filing, the transferpricing policy or documentation and the agree-ments. Business restructurings and/or transfersof significant assets should be within the scopeof the transfer pricing documentation.

Norway


LEADING FIRMS


2 BA-HR

3 Arntzen de Besche Wiersholm

Firms to watch Thommessen

In the past year, the Norwegian tax authorities havecontinued to be interested in multinationals’ opera-tions and transfer pricing audits have been high onthe agenda. Advisers said the demand for disputeresolution and litigation work, as well as compliance,has drastically increased over the past year. “Transfer pricing is growing in importance, and I

think that a lot of the companies have moved thishigher up on their agendas. The compliance burdenis increasing, but significantly, this seems to be themain, or one of the main, focus areas for tax auditsin Norway,” KPMG partner Thor Leegard said.Although it has been a stable year with few

changes, the OECD’s BEPS Project and its potentialimpact has been a main topic for advisers and tax-payers. Overall, companies appear to be more awareof the changing environment than in the past andmake efforts to review their TP documentation andstructures. Other international issues, such as therecent EU court rulings and Brexit, have also causedfurther uncertainty. “At least in TP audits, we see a tendency to refer-

ence BEPS more. Value chain analysis, substanceissues and the like are more in focus than a fewyears ago,” said Hans Martin Jørgensen, head oftransfer pricing at Deloitte.However, it has been challenging to adapt to the

unknown and the complete impact of BEPS is stillunclear. Norway’s transfer pricing rules generally fol-

low the OECD guidelines and the existing standardswere quickly revised to match the BEPS Project.Despite this, BEPS has been a huge driving force formany advisers. “Making clients aware of the fact thatthey need to align to regulations and ensure thatthey are reporting it correctly,” said Christin Bøsterud,managing director at EY. On May 11 2016, the Norwegian Ministry of

Finance released a legislative proposal with respectto country-by-country reporting (CbCR), requiringmultinationals with annual consolidated group rev-enue of NOK 6.5 billion ($8 million) or more, to sub-mit a CbC report to the authorities. The first reportswould be submitted by December 31 2017 for thefiscal years beginning January 2016. However, theproposal did not include any provisions related to amaster file or local file.

Norway



Corporate income tax 25%Capital gains tax 25/28.75%Branch tax 25%

Withholding tax Dividends 25% (a) Interest 0% Royalties 0% Branch Remittance Tax 0%


a) This tax applies to dividends paid to non-resident shareholders. Dividends paid tocorporate shareholders that are tax residentsand genuinely established in member statesof the European Economic Area (EEA)(including the European Union [EU], Icelandand Liechtenstein) are exempt fromwithholding tax



As more legislative changes are to come, advisersexpect to see an increase in the demand for infor-mation and seminars to understand the develop-ments in international tax law. Sverre Hveding, headof the tax practice at Selmer, said: “It’s really excitingtimes now and we expect new rules that willstrengthen the tax system and stop base erosionand profit shifting.”In the coming year, advisers expect more changes

and for transfer pricing to continue to be high on theagenda. “Transfer pricing is always going to beimportant, we will probably see more and moreaggressive tax authorities,” said Joachim Bjerke, headof tax at BA-HR.

Tier 1Deloitte’s transfer pricing team consists of more than14 specialists and is led by Hans-Martin Jørgensen.The practice covers all aspects of transfer pricing andhas a special focus on the oil and gas industry. Theteam’s integrated advisory incorporates elements oftax, customs, trade and VAT. The full-service firm alsooffers comprehensive assistance in areas includingTP audits, risk assessment, documentation andimplementation. Deloitte has offices in Oslo, Stavanger, Bergen and

Tønsberg. Among the partners at the firm is FinnEide, based in Stavanger, who has led several highprofile transfer pricing cases. Another significantmember of the team is partner Nick Pearson-Wood,who along with Jørgensen frequently lectures ontransfer pricing for the Norwegian tax authorities andprofessional and industrial bodies.This year, the team’s projects included: developing

the strategy and TP methodology for the digital serv-ices in a large telecom multinational; the defence ina significant TP audit relating to intercompany debtpricing; and the development of a new transfer pric-ing strategy for a Norwegian clothing multinational. Under the supervision of Marius Leivestad, EY’s

transfer pricing practice offers a complete servicerange, including litigation, advance pricing agree-ments (APAs) and cross-border restructuring. Itaccommodates multinationals of all sizes across

various industries and supplies various service linesto promote efficient intercompany trading and oper-ations such as operating model effectiveness, inter-company effectiveness and financial services. The team comprises two partners and 13 fee earn-

ers who are dedicated transfer pricing professionals.The team is highly confident in its assistance ofclients in the automotive, pharmaceuticals, fast-mov-ing consumer goods (FMCG), technology, media andtelecommunication (TMT), oil and gas, and shippingindustries. EY Norway has developed transfer pricingmethodologies, which have been adopted by theNorwegian tax authorities and are frequent speakersat national and international conferences. Marius Basteviken leads KPMG’s transfer pricing

team. This year, the practice was engaged in a lot ofsignificant projects. One involved assisting a multina-tional in tax efficient value chain analysis, includingremodeling the operational transfer pricing and intra-group agreements set up for the complete valuechain as well as implementation of the documenta-tion. KPMG applied its value chain analysis model tothe deal. The team offers a full range of services with a

holistic approach including operational transfer pric-ing, value chain analysis, audits, risk management,documentation and implementation. The practiceassists key clients within the financial sector, offshoreservice companies, pharmaceuticals, oil and gascompanies, as well as consumer businesses and ITand technology businesses. In October 2015, Per Daniel Nyberg was promoted

to partner of the firm, joining the three other partnersSvein G. Andresen, Basteviken, and Jan Samuelsen.The team is praised by clients for its good knowledge. The transfer pricing practice at PwC comprises four

partners and 14 other professionals and is overseenby Morten Beck. The team assists clients with allaspects of transfer pricing, including APAs, disputeresolution, documentation and planning, value chaintransformation and development of tax-efficientstructures to help increase compliance. Beck has more than 30 years of experience in

business taxation and transfer pricing, as well as in

Norway


international documentation and corporate restruc-turing. The firm comes highly recommended, oneclient said: “They are especially good with transferpricing. Morten Beck is simply recognised as the besttransfer pricing adviser in the country.” The team at PwC supports clients in multiple areas

including private equity, M&A, oil and gas, financeand retail. The firm operates in close contact withother professionals throughout the PwC network,which comprises more than 100 partners and 1,600dedicated transfer pricing professionals in more than70 countries.

Tier 2The transfer pricing department at BA-HR is overseenby Joachim Bjerke, who was also the head of the fullservice tax practice. Bjerke is a member of an eight-person expert committee appointed by the govern-ment to review the corporate tax system and has awealth of knowledge in a range of areas including cor-porate tax, transfer pricing, cross-border transactionsand tax disputes. He works closely with Jan Jansen,whose specialism is in the oil and gas industry. This year, the team assisted several companies

regarding their deduction for intragroup servicecharges as well as insurance premiums paid to cap-tive insurance companies. Clients praise the firm, one said: “My experience in

dealing with BA-HR is excellent! The law firm hashighly competent partners being hands-on with thelatest developments within the tax area. All in all thismeans that the service level and quality delivered isexcellent and I regard them amongst the best inNorway.”Key sectors for the practice include extractive, oil,

shipping, financial, insurance and consumer staplesindustries.

Tier 3Anders Heieren leads Arntzen de Besche’s transferpricing team of eight dedicated professionals.Heieren works on a broad range of corporate tax

matters related to transactions and group structuring,including TP methods and strategies. This year, thefirm represented a client in a three week court dis-pute before the court of appeals as well as major TPdisputes for the company related to its group internalsale of gas from Norway. Other significant partners are Ulf Werner Andersen,

who regularly appears before the courts in tax caseswith a focus on mergers and restructurings, andRune Tjomsås Andersen, who specialises in corpo-rate tax, oil and energy tax, international tax, real-estate property tax and special duties.Marius Tryland joined the firm this year from the

Ministry of Finance where he was a senior counselat the tax law department. The team’s focus indus-tries are oil and gas, finance and shipping.Clients praise the firm for its technical knowledge

of OECD guidelines and “ability to present this in aneasy, consistent and logical manner whilst maintain-ing the practical link to the case”.

Wiersholm’s tax practice offers a range of transferpricing services along with other legal servicesincluding international tax planning, cross-bordertransactions, litigation and dispute resolution.Andreas Bullen assists many companies in mattersof transfer pricing, including choice of corporatestructure, preparation of intra-group agreements, TPdocumentation, appeal cases and court cases. Hespecialises in transfer pricing, international tax law,Norwegian company tax law and EEA tax law.

Firms to watchThommessen offers assistance in transfer pricing aspart of its tax service offering. The team, formed bya group of legal and tax professionals, are confidentin drafting documentation for corporate clients suchas APAs, mutual agreement procedure (MAP), inter-company and external policies and transfer pricingpolicies. The professionals at the firm are also ableto provide services in M&A, restructuring, tax audits,due diligence with special tax schemes for energy,petroleum, and shipping clients.

Norway



Hans Martin JørgensenPartner / LawyerHead of Transfer Pricing, Norway

Deloitte Advokatfirma ASDronning Eufemias gate 14Postboks 221 Sentrum0103 OsloNorway

Tel: +47 99 44 60 61Email: [email protected]

Steenstrup StordrangeAdvokatfirmaet Steenstrup StordrangeDAP.O. Box 1150 SentrumTorgallmenningen 3 B5011 BergenNorwaywww.steenstrup.no

Key contact:Ulf H. Sø[email protected] +47 419 167 17

Norway



http://www.steenstrup.no


LEADING FIRMS

1 Deloitte EY PwC

2 BaseFirma Estudio Echecopar Estudio Olaechea Grant Thornton KPMG Rodrigo, Elías & Medrano Abogados

While transfer pricing in Peru has stood still duringthe past year in terms of legislation updates, therehave been movements in other parts of the market.New Peruvian president Pedro Pablo Kuczynski hasencouraged the tax authorities to take a newapproach to auditing companies, but it is a transitionthat will not necessarily happen overnight.

Superintendencia Nacional de Aduanas y deAdministración Tributaria (SUNAT), Peru’s tax authority, istrying to show a new, friendlier face and make it easierfor taxpayers to pay their taxes, said Dante Sanguinetti,partner at Philippi Prietocarrizosa Ferrero DU & Uría.“They are trying to be more helpful and closer to

the taxpayers, and they have people to help taxpay-ers to file and accomplish all the formalities. They’retrying to change the image they had,” said CarlosChirinos, tax manager at Grant Thornton.The new image, however, has not changed the

substance of how the tax inspectors carry out their

audits. Tax practitioners say that it is well known inthe industry that the tax inspectors have collectingfigures and an incentive to collect taxes.With regards to the OECD, Peru is not yet a member

but has been engaging with the organisationthrough participating in the substantive work ofmany of the OECD’s specialised committees.However, tax practitioners are uncertain aboutwhether the government will implement the actionsin the OECD’s BEPS project.“We [Peru] haven’t yet implemented any rules like

other countries have been doing, but we are devel-oping transfer pricing rules according to internationaltrends,” said Gustavo Lazo, on June 2 2016, when hewas head of tax at Estudio Olaechea (Lazo has sincemoved to Rodrigo, Elías & Medrano Abogados). “Wehave been watching the OECD, but the governmenthasn’t yet related any laws regarding that.”

Tier 1Gloria Guevara has led the transfer pricing depart-ment at Deloitte Peru since 2013. The team assistsclients in all phases of TP planning and in avoidingcostly defence actions. It works with clients to devel-op an effective, integrated local and global strategyfor managing the many complex issues involvedwith moving goods, services and other intangiblesacross borders. The practice also helps companies manage risk by

aligning practical TP solutions with overall local andglobal business operations and objectives andassisting with documentation to support TP practicesand resolve disputes efficiently.


PeruTax authorities Superintendencia Nacional de Aduanas y deAdministración Tributaria Av. Garcilaso de la Vega 1472, LimaTel: +51 1 315 0730; +51 1 634 3300;

+51 1 634 3600Website: www.sunat.gob.pe

Ministry of Economic and FinanceJr. Junín 319, Cercado de Lima, LimaTel: +51 1 311 5930Email: [email protected]: www.mef.gob.pe/investor

http://www.sunat.gob.pe


http://www.mef.gob.pe/investor


Deloitte’s services include TP planning and docu-mentation; dispute avoidance, including negotiation ofadvance pricing agreements (APAs) with local taxauthorities; dispute resolution, including defenceexamination and mutual agreement procedure (MAP)or competent authority; and business model optimisa-tion. Clients of the firm mainly work in sectors like min-ing, consumer business, life sciences, financial services,and telecommunications, media and technology (TMT).In October 2015, the team assisted a company

with transfer pricing planning for surety agreementby the leasing of aircraft between the related parties.The operation was a strategy for supporting the sur-plus of money sent from the subsidiary to the parentcompany and creating comparable operationsbetween related parties.

Guevara has more than 12 years of experience,and assists her clients with strategic planning andtransfer pricing, among other things.

EY’s TP department is managed by Marcial Garciaand comprises two partners and 50 other profes-sionals. EY’s TP professionals have extensive experi-ence in some of the most sophisticated areas of taxand transfer pricing as well as in-depth sector spe-cialisation. Some of the team are former tax authorityofficers who share their experience for counteringaggressive audit positions. The team consists ofexperts in law, economics and tax, allowing them toanalyse clients’ needs from all three perspectives. The practice offers a full range of transfer pricing

services, including planning, documentation, valua-tions, intra-group pricing policies, audit defence and

Peru



Corporate income tax rate 28% (a)(b) Capital gains tax rate 0/5/30% (c) Branch tax rate 28% (d)

Withholding tax Dividends 6.8% (e) Interest 4.99/30% (f)(g) Royalties 30% (f) Technical assistance 15% (f) Digital services 30% (f) Branch remittance tax 6.8% (d)

Net operating losses (years) Carryback 0 Carryforward 4/Unlimited

a) The corporate income tax is 28% for the 2015and 2016 fiscal years. For the 2017 and 2018fiscal years, the rate will be 27%. For the 2019fiscal year and future years, the rate will be26%.

b) Mining companies are subject to an additionalSpecial Mining Tax or to “voluntary” payments.

c) Capital gains derived by non-resident entitiesare subject to income tax at a rate of 5% if the

transfer is made in Peru. Otherwise, the rate is30%. For the period of January 1 2016 throughDecember 31 2018, capital gains derived fromthe transfer of shares, or listed securitiesrepresenting shares, carried out through thePeruvian stock exchange are exempt from tax ifcertain conditions are met. Capital gains derivedby resident entities are subject to income tax ata rate of 28%.

d) Branches and permanent establishments offoreign companies are subject to the samecorporate income tax rate as domiciledcompanies.

e) The Dividend Tax, which is imposed at a rate of6.8% and is generally withheld at source, isimposed on profits distributed to non-residentsand individuals. The Dividend Tax rate willincrease to 8% for the 2017 and 2018 fiscalyears and to 9.3% for the 2019 fiscal year andfuture years.

f) This tax applies to payments to non-residents. g) A reduced rate of 4.99% applies to certain

interest payments.


representation before the tax authority and in court.Clients include a number of Peru’s largest domesticand foreign multinationals in the mining, oil and gas,power, pharmaceutical, retail and consumer productssectors. The team offers regular client events in the form of

seminars and workshops to expand their knowledgeof key areas of transfer pricing. In addition, the teamregularly contributes to TP development in Peru byserving as guest lecturers at numerous tax seminarsand by publishing niche articles in various profes-sional journals and law reviews. Garcia was recognised as an expert in transfer pric-

ing disputes by competing firms. PwC provides its clients with transfer pricing stud-

ies and supporting documentation, corporate restruc-turing planning and audit defence advice. MiguelPuga leads the practice, and is recognised for hisskills in TP disputes by his peers.

Tier 2BaseFirma comprises three partners and four othertransfer pricing professionals, led by Claudia Cabada.The firm is part of an international network with officesin countries including Costa Rica, El Salvador,Guatemala, Belgium and the US. The initial focus of thefirm was the preparation of transfer pricing documen-tation. However, during the past few years the firm hasevolved to become a provider of additional services,such as valuation services, economic analyses, imple-mentation of pricing models, and BEPS analyses.In April 2016, the firm assisted a client on deter-

mining its market value. In March 2016, it alsohelped a client determine optimal interest rates forintercompany loans and royalty rates.Cabada has been a consultant for BaseFirma for

more than 10 years and has extensive knowledge ofLatin American transfer pricing legislation, specialis-ing in transfer pricing advisory and market analysisfor multinational companies located in Central andSouth America. She has coordinated multi-countrydocumentation projects for multinationals located inCosta Rica, Mexico, Colombia, Argentina, Uruguay,Peru, Panama and El Salvador.

Estudio Echecopar is a member firm of Baker &McKenzie. Rolando Ramírez-Gastón and MarthaMorales are partners in the transfer pricing depart-ment, and Morales leads the practice. The firm offersservices within consulting, documentation and dis-putes.In December 2015, the firm assisted on the trans-

ference of a Peruvian company’s business unit to arelated party. This included the determination of thebusiness unit market value. In March 2016, the firmassisted a separate client on the determination ofthe business unit market value under the costapproach method.Morales has broad experience in transfer pricing,

including in negotiation of APAs and MAP.The TP department at Estudio Olaechea has two

partners and five associates capable of helpingclients with a broad range of services. They provideservices to clients in the transportation, TMT, manu-facturing, energy, financial and food services, amongothers. In May 2015, Jorge Davila, Michael Morales and

former partner Gustavo Lazo were engaged to finda solution, from a tax point of view, to the treat-ment of post-sales services rendered by a client,with regard to the tires sold by a tire company tothe client’s customers in Peru. As part of this taskthe firm had to find the most tax-efficient transferpricing solution.Estudio Olaechea’s professionals have also spoken

at international and national conferences regardingtransfer pricing issues.

Grant Thornton has a team of experts that canassist with multiple transfer pricing services. JuanCarlos Basurco is director of the TP department withCarlos Chirinos as tax manager. The firm has onepartner and 20 other professionals, and has hiredfour new associates over the past year. The most important feature of the firm’s service is

mixing the focus on tax planning and TP services toserve its clients in an efficient way. The sectors thefirm advises on range from commercial to mininggroups, assisting not only with a TP perspective butalso with an international tax focus.

Peru



In May 2016, the firm assisted with the optimisa-tion of the transfer prices within one of the leadinglottery companies in the Latin American region. Thetransactions involved in the TP study dealt withintangibles, complex services, management fees andIT activities, where there are transactions that are notyet clearly defined by the Peruvian tax authorities ortax court.Chirinos has extensive experience in tax law, inter-

national tax law and TP issues, while Basurco focus-es on transfer pricing.Manuel del Rio is the leader of transfer pricing at

KPMG. Del Rio’s team advises more than 300 clients in

the finance industry and retail service. The practice pro-vides planning and related party documentation andrepresents clients before the tax authority and in court.

Rodrigo, Elías & Medrano Abogados has onepartner and two other transfer pricing professionals.Tulio Tartarini, partner of the firm, was appointed asleading partner of the transfer pricing area this year.The firm advises on legal assessment of transactions,on TP audit proceedings, and disputes over transferpricing. The team’s experience is specialised on audits and

administrative proceedings in which TP assessmentis being discussed.

Peru


LEADING FIRMS

1 Isla Lipana Navarro Amper RG Manabat & Co SyCip Gorres Velayo & Co

2 Du-Baladad and Associates

Since the issuance of its transfer pricing regulationsin 2013, there have not been many changes to thefield of transfer pricing in the Philippines. The taxoffice made no regulation changes except for thedraft of advance pricing agreement (APA) rules, buteven these APA rules have not been issued to date. In the second half of 2015 however, according to

Fredieric Landicho of Deloitte, the tax officeemployed a foreign consultant to train their staff,enabling the tax office to form a TP audit team.This TP audit team is incorporated into the largetaxpayers service in the national office, demon-strating large taxpayers are the focus of thePhilippines audit activity. “The tax office made huge progress also when it

subscribed to a commercial database (Bureau vanDijk) during the latter part of 2015. With access tocommercial database, the TP audit team was able toselect potential cases for TP audit from differentindustries, focusing mainly on cross-border related-party transactions and transactions of enterpriseswho are enjoying the Philippines economic zoneauthority or board of investments tax incentives,”said Landicho. “Given these significant developments

in the capacity and capability of the TP audit team,we can expect to see TP audits over the next 12 to18 months,” he added. BEPS has also been an area of concern in the

Philippines as taxpayers become more aware of it.The former commissioner of the Bureau of InternalRevenue, Kim Jacinto-Henares was an active partici-pant at the OECD. According to a KPMG report, the BIR is particularly

focusing on the following areas: limiting base ero-sion involving interest deductions and other financialpayments; preventing the artificial avoidance of per-manent establishment status; aligning transfer pric-ing outcomes with value creation; and measuringand monitoring BEPS. Notably, the Philippines is pro-jected to implement the standard of automaticexchange of information sometime in 2018.

Tier 1Carlos Carado oversees the transfer pricing practiceat Isla Lipana and has more than 14 years of profes-sional and extensive experience in providing adviceto various multinationals and local enterprises on taxand transfer pricing issues. Carado’s core experience includes transfer pricing,

tax advice, tax planning and corporate reorganisa-tion, tax due diligence, tax assessments and refunds.He focuses in the areas of energy, construction andengineering, pharmaceuticals, transportation, con-sumer and industrial products and technology, mediaand telecommunication (TMT). Fredieric Landicho, head of tax and corporate serv-

ices at Navarro Amper, leads the firm’s transfer pric-ing team as the sole partner with support from seven


PhilippinesTax authorities Bureau of Internal RevenueBIR National Office Bldg, BIR Road, Diliman, Quezon CityTel: +63 981 8888; +63 981 7000Email: [email protected]: www.bir.gov.ph/index.php/international-tax-matters.html


http://www.bir.gov.ph/index.php/international-tax-matters.html


professionals competent in both disputes and com-pliance. The team helps clients navigate a changing trans-

fer pricing environment, particularly the BEPS proj-ect’s impact worldwide. The team is proficient andpractised in rendering TP matters including advisoryand documentation, dispute resolution and preven-tion such as APA, dispute defence such as MAP andcompetent authority negotiations and businessmodel optimisation. Maria Carmela Peralta is the sole partner and head

of the transfer pricing practice at RG Manabat & Co.Along with 15 other professionals, she supports var-ious transfer pricing works from advisory and compli-ance to controversy and disputes. The team closely observes the Philippine tax office

for updates and developments on transfer pricing aswell as keeping abreast of the latest developmentsin the global TP environment, including BEPS activi-ties. The team has comprehensive and in-depthunderstanding of TP matters to ensure taxpayers fol-

low the arm’s-length principle and comply with TPrules and regulations. The transfer pricing services offered by the practice

include documentation and benchmarking analysis,transfer pricing advisory, assistance in managingtransfer pricing questions raised in audits, transferpricing health checks, risk analysis, support in APAs,and preparation of CbCR. In May 2016, the team, led by Peralta, provided a

transfer pricing documentation service for a localentity belonging to a global integrated energy com-pany. The team was engaged to conduct a TP studyfor the identified related-party transaction of thelocal entity. The team was able to justify the trans-fer pricing and allowed the local entity to achieveconsistency with the group’s transfer pricing policywith respect to the type of transaction, and compli-ance with pricing controls of the concernedPhilippine regulatory agency as well as administra-tive simplicity and convenience in monitoring itstransfer pricing.

Philippines



Corporate income tax rate 30%Capital gains tax rate Real property 6% Shares 5/10% (a)Branch tax rate 30% (b)

Withholding tax Dividends n.a. (c) Interest on peso deposits 20% (d)(e) Royalties from patents, know-how, etc. 20% (e) Branch remittance tax 15%


a) These rates apply to capital gains on shares indomestic corporations not traded on a localstock exchange.

b) Certain types of Philippine-source income offoreign corporations are taxed at preferentialrates.

c) Under domestic law, dividends paid todomestic corporations or resident foreigncorporations are not subject to tax. Dividendspaid to non-resident foreign corporations aregenerally subject to a final withholding tax of30%. However, this rate may be reduced to15% if certain conditions are met.

d) The withholding tax rate for interest on pesodeposits derived by domestic and residentforeign corporations is 20%.

e) Under domestic law, if the recipient is a non-resident foreign corporation, the finalwithholding tax rate is 30%. For reduced ratesunder tax treaties for non-resident foreigncorporations.


SyCip Gorres Velayo & Co’s transfer pricing prac-tice is led by Romulo Danao who is a certified publicaccountant and lawyer. His expertise spans local andinternational taxation and transfer pricing. He hasmore than 13 years of experience in developing,documenting and implementing transfer pricing poli-cies and representing clients before authorities in taxand TP disputes. The transfer pricing services the company provide

includes intercompany pricing support, transfer pric-ing method review, recommendations of the optimalTP model, TP policy planning, double taxation riskminimisation, optimal supply chain structure, andcompliant documentation.

Tier 2The transfer pricing service at Du-Baladad andAssociates is part of the tax advisory practice and

the team advises on transfer pricing studies anddefence including risk assessment, planning andbenchmarking analysis, optimal TP method selection,negotiating APAs, and handling audit defence. Theprofessionals are also able to work on application forrulings involving use of tax treaty provisions. The whole tax practice is headed by Benedicta Du-

Baladad, the managing partner and CEO of the firm.She has extensive experience in a range of tax prac-tice areas offered by the firm including transfer pricing.Last year, the team assisted in a transfer pricing and

documentation study of a local production, sales anddistribution company and its intercompany transac-tions with its parent company and five affiliates. Thecoverage of the study included thorough understand-ing of the intricacies of several related party transac-tions, selection of the most appropriate transfer pricingmethodology and executing a benchmarking analysis.

Philippines



BDB Law OfficeRufino (Herrera) cor. Valero Sts.20th Floor, Chatham House Bldg.1227 Makati CityPhilippineswww.bdblaw.com.ph

Key contact:Ms. Benedicta Du-BaladadManaging [email protected] +632 403 2001

Philippines


http://www.bdblaw.com.ph


LEADING FIRMS

1 Deloitte Doradztwo Podatkowe EY KPMG PwC

2 Crido Taxand, Taxand Poland DLA Piper Wiater Grant Thornton MDDP Sendero, Taxexperience

3 Arena Tax Dentons Linklaters Taxonity

Poland has been slightly ahead of the curve when itcomes to the implementation of measures relating toBEPS, with a raft of measures coming into effect in2016 and 2017 inspired by the OECD’s project. Spurred on at the international level, the impact is

felt as a key local plan. “Following the BEPS actionwe have seen a few things in Poland. They are onlyto some extent linked to BEPS but, a lot of taxpayersperceive them as local actions, they don’t link themto BEPS but BEPS is underlying these changes,” saidRafal Sadowski, partner at Deloitte Poland.These new measures being introduced have

included new requirements to use Polish data,where possible, in the preparation of benchmark-ing reports. There have also been anti-hybridinstrument provisions introduced, and country-by-

country reporting (CbCR) is expected to be in placeby January 2017.While the Polish market adjusts to the post-BEPS

world the tax authorities, which have in the past hada fierce reputation, have adopted a more co-opera-tive approach to dealing with taxpayers. This hasbeen combined with measures which are in princi-ple designed to make it easier to deal with the taxauthorities and submit documentation to them.Discussions between the authorities and the tax-

payer can still remain difficult to the point of litiga-tion. “Poland remains awkward because there isalmost no dialogue, the exchange between the tax-payer and the revenue [in cases where there is a dis-pute] is done in a formal way often through thecourts,” said Matthew O’Shaughnessy ofTaxexperience Poland.

Tier 1 Deloitte Doradztwo Podatkowe’s transfer pricingpractice is led by partner Iwona Georgijew, wholeads a team of 50 transfer pricing professionals, allof whom work on both transfer pricing disputes andtransfer pricing compliance. Deloitte in Poland represents high calibre multi-

national clients and Polish companies operating inthe fast moving consumer goods (FMCG), financialservices, healthcare and pharmaceuticals andtechnology, media and telecommunications (TMT)sectors. The transfer pricing department at EY in Poland is

led by Aneta Błażejewska-Gaczyńska, who leads ateam of 16 transfer pricing professionals, includinglawyers and accountants.


PolandTax authorities Ministry of Finance12 Swietokrzyska St, 00-916 WarsawTel: +48 22 694 55 55Email: [email protected]: www.mf.gov.pl


http://www.mf.gov.pl


KPMG in Poland offer their clients a full tax andtransfer pricing service, based on the advice of bothlawyers and accountancy professionals. The teamcan advise its clients on transfer pricing design,implementation and defence as well as giving sup-port by producing economic analysis and assistingclients during APA negotiations.A key contact at PwC in Poland is Tomasz

Barańczyk, the head of tax and legal in the jurisdic-tion. He leads a team of 31 transfer pricing profes-sionals, of which 17 work in transfer pricing disputesand 14 in transfer pricing compliance.This year saw the firm develop a TP policy and

methodology for setting interest rates for loan trans-actions within a multinational client’s group. The proj-ect developed a set of tools and manuals allowingPwC to calculate arm’s-length interest rates applicablefor multiple jurisdictions and multiple situations. The firm represents clients in the TMT, FMCG, finan-

cial services, and transport and aerospace industries,among many others.

Tier 2Crido Taxand, Taxand Poland has a team of more than30 transfer pricing professionals which has the abilityto assist its clients in the full scope of TP works, includ-ing TP disputes, IP matters, financial modelling, valua-tion, TP design, implementation and APA negotiation.The firm is involved in the TP legislative process,

and is able to exercise a degree of influence overPolish TP regulations due to the expertise in its team.In addition to advising clients, the team raises

knowledge and awareness about transfer pricingamong the business and tax administration commu-nity through web platforms and IT tax tools.The team at, DLA Piper Wiater, in Poland is led by

Bartosz Matusik and comprises six members. The firm is capable of delivering services to clients

relating to a range of transfer pricing issues. Thisincludes advice on the design, implementation anddefence of transfer pricing policies, the preparation oflocal and international documentation, market andprice analysis as well as assistance in the negotia-tion of APAs and MAP.

Grant Thornton in Poland is capable of deliveringto clients analysis of tax risks relating to transfer pric-ing, composing TP documentation, developing trans-fer pricing policy and benchmarking services. It alsoassists clients during the course of APA applications,as well as advising on their implementation. The firm works with Polish and international com-

panies in the areas of manufacturing, FMCG, TMT,chemicals and real estate, among others.

MDDP’s transfer pricing practice is led byMagdalena Marciniak, who leads a team of 14 trans-fer pricing professionals six of whom focus on TP dis-putes and eight of whom work on TP compliance.

Poland



Corporate income tax 19%Capital gains tax 19%Branch tax 19%

Withholding tax Dividends 19% (a)(b) Interest 20% (c)(d) Royalties 20% (c)(d) Branch remittance tax 0%

Net operating losses (years) Carryback 0 Carryforward 5 (e)

a) This tax is imposed on dividends paid toresidents and non-residents.

b) This rate may be reduced by a tax treaty, orunder domestic law, if certain conditions aremet.

c) This rate applies only to interest and royaltiespaid to non-residents.

d) The tax rate may be reduced by a tax treaty orunder domestic law if certain conditions aremet.

e) No more than 50% of the original loss can bededucted in one year.


The team assist clients in the design, implementa-tion and defence of their TP practices, and can alsooffer assistance during APA and MAP negotiations, aswell as at audit and litigation stages.This year saw MDDP advise a multinational group

on the implementation of their transfer pricing policy.The model it built included the client’s operations inseveral European countries and all the key transac-tions. In order to provide a solid basis for the modeland its implementation, all key assumptions of themodel were reviewed for compliance with applicableregulations across all tax jurisdictions where themodel is implemented, not only in the area of trans-fer pricing, but also including VAT and corporateincome tax. The transfer pricing practice at Sendero,

Taxexperience is co-lead by Grzegorz Młynarczykand Tomasz Wilk. The firm assists clients with docu-mentation preparation, verification of TP procedures,valuation analyses and benchmarking for transferpricing and support during disputes.

Tier 3Arena Tax in Poland consists of licensed tax advisersand licensed legal counsels, specialising in advisoryfor financial institutions. Clients include commercialand mutual banks, those working in the consumerfinance sector, debt collection companies and finan-cial-technology companies.The firm covers the mitigation of tax risk, interna-

tional structuring, preparation of TP documentation,

and the review and defence of TP policies. It alsoadvises clients during audits and transfer pricing lit-igation.A key contact in the transfer pricing department is

Joanna Deutryk who is the firm’s transfer pricing man-ager. She oversees a team of six TP professionals.A key deal that the firm was involved in this year

was to develop a transfer pricing methodology forservices rendered by a permanent establishment (PE)in Poland of a UK-based distribution company. Thisinvolved the development of an allocation of profitmethod between the main entity and its PE inanother country.

Dentons in Poland’s transfer pricing practice isoverseen by head of tax and legal, Karina Furga-Dąbrowska who works with two other TP profes-sionals to assist companies with compliance. This year saw the team supplying assistance to a

multinational client, in justifying the royalty ratesadopted in intragroup transactions concerning patentlicenses.

Linklaters in Poland offers its clients a tax andtransfer pricing service that covers documentationrequirements, advice on TP policies and their imple-mentation as well as defence during litigation.

Taxonity in Poland offers tax and transfer pricingservices to a range of Polish and international com-panies. It offers clients services such as the prepara-tion of TP policies, benchmarking and analysis serv-ices, as well as advice on the day-to-day implemen-tation of clients’ TP policies.

Poland



Doradztwo Podatkowe WTS&SAJA Sp.z o.o.ul. Towarowa 3561-896 PoznańPolandwww.wtssaja.pl

Key contact:Maja Seliga-KretSenior [email protected] +48 616 434 550

Poland


http://www.wtssaja.pl


LEADING FIRMS


2 Garrigues – Taxand, Taxand Portugal Grant Thornton TPricing Consultores Uría Menéndez – Proença de Carvalho

3 Abreu Advogados Baker Tilly Ricardo da Palma Borges & Associados

The corporate tax reforms that have been takingplace in Portugal over the past few years are viewedby advisers in the jurisdiction as largely positive.These tax reforms where tied into general reforms ofPortugal’s economy and sovereign debt structuresafter the sovereign debt crisis consumed the countryin 2010. Designed to make the country more com-petitive, the reforms were an attempt to attractinvestors with a stable environment and ultimatelyboost tax revenue without stifling growth. The reforms did not escape the influence of the BEPS

Project, with Portugal’s legislation made to be BEPScompliant before the report was released in full. Thisincluded provisions covering Action 2 on hybrid struc-tures and Actions 4’s stance on interest deductions. Further changes to domestic law are expected to

address the concepts of master file, and a new

Portuguese law which appears to be based veryclosely on the recommendations of the OECD hasintroduced a country-by-country reporting (CbCR)obligation, this took effect on January 1 2016.Further reforms to the tax system are set to be put

on hold however as the political situation shifts inPortugal. November 2015 saw the Socialist party takepower from the Social Democratic party which firstintroduced the reforms.The new prime minister António Costa has pledged

to reverse some of the more unpopular measures ofthe austerity and the fiscal reforms including the pro-posed corporate tax rate cut to 17%.

Tier 1 Deloitte’s transfer pricing practice is led by partnersRosa Soares and Patrícia Matos and consists of 27 TPspecialists located in three offices in Lisbon, Oportoand Luanda in Angola. The Deloitte team is thelargest dedicated transfer pricing team in Portugal.One deal the firm worked on this year was the

redesign of a multinational manufacturer’s globaltransfer pricing policy. This covered seven types ofinternal transactions in more than 13 countriesworldwide.The team also assisted a Portuguese taxpayer in

litigation through several procedures including arbi-tration court against a significant TP adjustment overa complex substance issue.

EY’s transfer pricing practice in Portugal is led byPaulo Mendonça, who has more than 20 years ofexperience working in tax, with nine of those at EY.EY offers a fully integrated tax and TP service, and


PortugalTax authorities Directorate General for TaxationRui da Prata 10 2nd Floor, 1149-027 LisbonTel: +351 21 882 3093Fax: +351 21 881 2938Email: [email protected]: www.portaldasfinancas.gov.pt


http://www.portaldasfinancas.gov.pt


advises clients on the design and implementation oftransfer pricing policies. It also offers assistance withlocal documentation, advises clients during auditsand defends them during litigation. Clients can alsoget advice on APA negotiations.KPMG in Portugal is led by Susana Pinto. KPMG

advises clients on the design, implementation andmonitoring of TP policies. Economic and businessanalyses, audit risk assessments, market analysis,due diligence, litigation, APAs and defensive docu-mentation projects are some of the services it offers.Jaime Carvalho Esteves is the head of the PwC

transfer pricing practice in Portugal. He oversees ateam of 23 transfer pricing professionals, all of whomcover TP disputes and compliance.

This year the team at PwC is working to securean APA for a client, this project is still underwayand is being worked on by Esteves and MartaElisa Machado.

The firm represents companies in financial services,energy and utilities, hospitality, fast-moving con-sumer goods (FMCG) and the manufacturing sectors,among other industries.

Tier 2Garrigues, Taxand Portugal is led by FernandoCastro Silva. Two professionals at the firm advise onTP disputes and two others on TP compliance.

This year saw the firm advise on the benchmarkingof intragroup financing on major investments inPortugal for several foreign multinationals who are inthe process of acquiring groups in Portugal.

Garrigues work as an integrated team with other taxprofessionals offering a wide range of services includ-ing benchmarking and TP documentation, tax litiga-tion, MAP, arbitration, TP planning and TP structuring. Grant Thornton in Portugal has offices in Oporto,

Lisbon and Funchal and offers a full tax and transferpricing service. The firm advises clients during thedesign and implementation of TP structures, as wellas offering advice during tax audits and the defenceof tax and transfer pricing structures.

It is led in the jurisdiction by Pedro Santos, whohas been with the firm for ten years and advises

clients from a range of industries in all issues per-taining to tax and transfer pricing.

A key contact at TPricing Consultores is LuisBotelho the founding partner of the firm. Before set-ting up TPricing Consultares, he was KPMG’s directorof global transfer pricing services. Botelho and thefirm have a proven track record structuring tax effi-cient transactions, offering assistance in tax and TPaudits, preparing global TP documentation andassisting companies during APA negotiations.Filipe Romão is head of tax and transfer pricing at

Uría Menéndez – Proença de Carvalho. The practiceconsists of a team of 15 tax and TP professionals.The firm is capable of advising clients on a range ofissues relating to tax and transfer pricing, includingthe design and implementation of TP structures, aswell as having the capacity to advise during disputesand litigation. It can also offer assistance to taxpay-ers during the negotiation of APAs.

This year saw the firm advise several multination-als, most notably advising one of the largest homefurnishing groups in Europe during a review of itstransfer pricing policies. This involved analysing thebest approach to be taken in a number of differentcircumstances, relating to either services or othertransactions specific to their client.

Tier 3Abreu Advogados offers transfer pricing advicealongside its tax practice. The professionals at thefirm are skilled in tax and transfer pricing and adviseclients from a range of industries. The firm supportsmultinational clients in preparing and reviewing TPfiles, risk assessment, reporting and compliance, taxlitigation, international and national taxation.

The firm has offices in Portugal in Lisbon, Porto, andMadeira, as well as overseas in Angola and Brazil.João Aranha is the head of transfer pricing at

Baker Tilly and heads a team of nine other profes-sionals. The team advises local and multinationalfirms from all industries on a range of tax andtransfer pricing issues.

As well as offering a full TP service, covering every-thing from document preparation to defence during

Portugal


Portugal



Corporate income tax 21% (a)Municipal surcharge 1.5% (b)Corporate income tax –

state surcharge 3/5/7% (c)Capital gains 0/21/25% (d)Branch tax 21% (a) (b) (c)

Withholding tax Dividends 0% to 35% (e) Interest 0% to 35% (f) Royalties from patents

and licences 0% to 35% (g) Branch remittance tax n.a.

Net operating losses (years) Carryback 0 Carryforwards 12 (h)

a) Corporate income tax (CIT) applies to residentcompanies and non-resident companies withpermanent establishments in Portugal. Smalland medium-sized companies can benefit froma 17% reduced rate for the first €15,000($20,000) of taxable profit.

b) A municipal surcharge of up to 1.5% isgenerally imposed on the taxable profitdetermined for CIT purposes. Certainmunicipalities do not levy the surcharge.

c) A state surcharge of 3% is imposed on thetaxable profit determined for CIT purposesbetween €1.5 million and €7.5 million. If thetaxable profit for CIT purposes is more than €7.5million, the state surcharge is levied at a rate of5% on the excess up to €35 million. If thetaxable profit for CIT purposes is more than €35million, the state surcharge is levied at a rate of7% on the excess.

d) Gains on the disposal of shares may beexempt from tax, provided certain requirementsare met. Non-resident companies that do nothave a head office, effective managementcontrol or a permanent establishment in

Portugal are taxed at a 25% rate on taxablecapital gains derived from disposals of realestate, shares and other securities. For thispurpose, a tax return must be filed. A tax treatyand/or a domestic exemption may override thistaxation.

e) Dividends paid to non-resident companies aretaxed at 25%. The rate of 35% applies ifdividends are paid to a resident of a listed taxhaven, or in cases where the beneficial ownerof the income is not properly disclosed. Therate may be reduced under a tax treaty orexempt under the participation exemptionregime (if the beneficiary is resident in EU/EEA,a tax treaty country and if certain otherconditions are met).

f) The rate for interest paid by companies is 25%.The rate of 35% applies if interest is paid to alisted tax haven or in cases where thebeneficial owner of the income is not properlydisclosed. The rate may be reduced under a taxtreaty or exempt under the EU Interest &Royalties Directive.

g) Royalties paid to a non-resident are taxed at25%. The rate of 35% applies if royalties arepaid to a listed tax haven or in cases wherethe beneficial owner of the income is notproperly disclosed. The rate may be reducedunder a tax treaty or exempt under the EUInterest & Royalties Directive.

h) For tax losses computed before 2010, the priorsix-year carry-forward period applies. For taxlosses computed in 2010, a four-year carry –forward period applies. For tax losses computedin 2012 or 2013, a five-year carry-forwardperiod applies. For tax losses used from January1 2014, the amount deductible each year iscapped by 70% of the taxable profit for theyear.

Source: EY and Garrigues, Taxand Portugal


litigation, the firm also provides BEPS updates andanalysis, hosting events on the topic such as execu-tive breakfasts.

Ricardo da Palma Borges & Associados is aPortuguese tax boutique which is led by Ricardo da

Palmas Borges. It offers services that cover allaspects of tax and transfer pricing including therestructuring of Portuguese and international eco-nomic groups, foreign investment and divestment,and tax litigation and controversy management.

Portugal


LEADING FIRMS


2 Mazars Taxhouse, Taxand Transfer Pricing Services

3 BDO Consulting Baker Tilly PKF Finconta TPA Horwath

Romania has undergone a period of politicalupheaval in the past year and is, at the time ofwriting, without an elected government after theprevious government resigned following a wave ofanti-corruption demonstrations. The interim gov-ernment has still managed to implement a seriesof reforms, including an almost complete re-word-ing of the country’s tax code.

The aim of the amendments is to create a settled,OECD BEPS-compatible tax environment for the future.

The previous tax code was amended nearly onehundred times in its existence, the new tax code haslikewise been amended several times since it wasimplemented in January 2016. This, according toTudor Nedelea, tax partner at DLA Piper Romania hasled to uncertainty for taxpayers.

“It’s not a very good sign, if the target is stability –obviously from that point of view it is not good. We,and our clients, want to have a stable and pre-dictable tax environment but we are still quite farfrom that,” said Nedelea.

In June 2016 the country became an associate tothe BEPS project, committing to implement the min-imum BEPS standards against harmful tax practicesand transparent exchange of information. This com-mitment will impact Romania in the upcoming yearsin a series of regulation updates.

One of the major challenges for taxpayers inRomania is working with the tax authorities whohave a problematic reputation for having often unre-alistic expectation of taxpayers. Advisers said theauthorities in Romania are focused on havingRomanian comparables when setting transfer prices,which presents difficulties when there are no ade-quate comparables within the jurisdiction.

While the comparable uncontrolled price (CUP)method for establishing the transfer price remains theRomanian authorities’ preferred method, since theimplementation of the tax code reform they havebeen accepting other OECD prescribed methods.

Tier 1 Deloitte’s head of transfer pricing in Romania isCiprian Gavriliu, who leads a team of 25 transfer pric-ing professionals. The firm advises clients in the fast-moving consumer goods (FMCG), manufacturing, tech-nology, media and telecommunications (TMT), trans-port and financial services industries, among others.


RomaniaTax authorities The Ministry of Public FinanceStrada Apolodor nr. 17, sector 5,Bucharest 050741Tel: +40 21 319 9759Fax: +40 21 312 2509Email: [email protected]: www.mfinante.ro


http://www.mfinante.ro


Deloitte is capable of assisting clients in the deliv-ery of a range of TP projects which include detailedreview of the TP model, functions performed, risksassumed, and remuneration determined, betweenrelated parties.

The team is also capable of reviewing their clients’entire transfer pricing structures, with the intention ofoptimising, preparing and adjusting to meet new BEPS-inspired legislation.

EY in Romania has offices in Bucharest, Cluj-Napoca,Timisoara, Lasi and Chisinau. The firm offers a fully-inte-grated tax and transfer pricing service. Notable servicesit offers include the optimisation of TP policies and riskassessments of complex transactions. The team advis-es clients in the financial services, energy, FMCG, auto-motive and retail sectors, among others.

KPMG in Romania’s transfer pricing practice is ledby Teodora Alecu, whose team advise local andmultinational enterprises in all aspects of tax andtransfer pricing. This includes TP structure design,local documentation requirements, economics analy-sis, negotiation of APAs and assistance during auditsand litigation.

PwC’s tax and transfer pricing practice in Romaniais led by Ionuţ Simion, who contributes to the prepa-ration and implementation of legislation governingtransfer pricing arrangements and APAs.

The firm offers clients a range of fully-integrated taxand TP services, including economic analysis, docu-ment preparation, TP structure design and imple-mentation, assistance during audits and advice dur-ing litigation.

Tier 2Mazars in Romania has a team of more than 150professionals who assist local and internationalclients in all aspects of tax and transfer pricing. Thefirm’s professionals specialise in audit, accountingand tax advisory services. Its clients include compa-nies in the financial services, FMCG, manufacturing,TMT, energy and utilities, healthcare and pharmaceu-ticals industries among others.

In the past year, Mazars assisted several large multi-national firms, active in various industries, with services

including the preparation and update of TP documen-tation specific to Romania.

Taxhouse, Taxand Romania is led by Angela Rosca.It offers its clients services in transfer pricing documen-tation, as well as the creation and implementation ofTP policies, and assistance during audits and transferpricing litigation.

The firm advises clients in multiple sectors includingfinancial services, manufacturing, FMCG, energy, privateequity, construction, pharmaceuticals and tourism.Notable clients include leading banks, some of thelargest multinationals involved in the food and drinksindustry, and two of the top three companies involvedin energy production and distribution in Romania.

Transfer Pricing Services this year assisted a client inthe first APA in their industry in Romania. For anotherclient it undertook analysis at a global level of thegroup’s intra-company transactions, as well as assist-ing in the preparation of TP documentation for thecompany.

A key contact at the firm is Adrian Luca, who hasmore than 13 years of experience working in transferpricing. He and his colleagues can assist clients in taxcontroversy and dispute resolution projects, valuationof intangible assets, as well as more routine transferpricing functions.

Tier 3BDO Consulting focuses its attention on the prepara-tion of TP documentation for its clients, which includeforeign multinationals and domestic companies. It alsoassists companies as they prepare for an audit, as wellas offering advice on the design and implementationof TP structures.

Baker Tilly in Romania assists clients, large andsmall, domestic and international, in a wide array of taxand transfer pricing issues. This includes transfer pricingstrategy, documentation, business model optimisation,advice during audits and defence during litigation.Valentin Tic-Chiliment, head of the tax and

accounting departments, and Alina Lahman, taxmanager, oversee the transfer pricing department.The firm also recently welcomed Camelia Horlaci,country manager partner for Romania and Moldova.

Romania


Romania


Tax rates at a glance (As at September 4 2015 – ref. legislation applicable as of January 1 2016)

Corporate income tax 16%Capital gains tax 0/16% (a)Branch tax 16%

Withholding tax Dividends 0/5% (b) Interest 0/16% (c) Royalties from patents and licences 0/16% (c) Branch remittance tax n.a.

Net operating losses (years) Carryback Not allowed Carryforward 7 years (d)

a) Capital gains obtained by corporate entities areincluded in their regular profits subject tocorporate income tax at 16%; capital gainsobtained by resident legal entities from disposalof Romanian entities or entities resident in atreaty-country are exempt from corporateincome tax as long as two conditions aresimultaneously observed: there is a minimumholding of at least 10% of the share capital ofthe investee, held for a minimum uninterruptedone-year period at the time of the disposal(Minimum Holding Requirements); capital gainsobtained by individuals are taxed at 16% asinvestment income irrespective of the holdingperiod and type of securities traded.

b) The 0% rate applies for payments qualifyingunder the conditions of the EU Parent-SubsidiaryDirective for EU tax resident legal entities (basedon inter-alia the Minimum Holding Requirementsmentioned above subject to specificdocumentation requirements); 0% also applies todividends paid under the Agreement betweenthe European Community and the SwissConfederation to Swiss tax resident parentcompanies holding at least 25% of the sharecapital of the Romanian dividend payer for aminimum two-year period at the time of dividendpayment; else, as of January 1 2016, a 5% rate

applies to dividends paid to all other non-residents and resident legal entities (assumingthe Minimum Holding Requirements are not met,otherwise 0% applies to resident legal entities) orindividuals, unless a more beneficial rate appliesunder a double tax treaty or a specific domesticexemption (for example, dividends paid toEU/EEA pension funds are exempt fromRomanian withholding tax).

c) The 0% rate applies for payments qualifyingunder the EU Interest & Royalties Directive tobeneficial owners being EU tax resident legalentities which are affiliated with the Romanianpayer by a direct minimum holding of at least25% maintained for two uninterrupted years atthe time of payment (the exemption applies alsoin case both the Romanian payer and the EUqualifying beneficial owner are held by a thirdcompany which at the same time has aminimum direct holding of 25% both in thecapital of the first company and in the capital ofthe second company for at least twouninterrupted years at the time of payment); 0%also applies to payments made under theAgreement between the European Communityand the Swiss Confederation to Swiss tax residentcompanies qualifying under specified conditions.The domestic law increases the withholding taxrate to 50% in case of, for example, interest androyalties paid towards accounts in countries withwhich Romania does not have in placeexchange of information mechanisms and if thesaid payments are made within transactionsqualified as “artificial” under the Romanian taxlegislation. Dividends are excluded from thistreatment as of January 1 2016.

d) The seven-year period applies starting with theloss related to fiscal year 2009 (losses incurredbefore 2009 can only be carried forward for fiveyears).

Source: Taxhouse, Taxand Romania


PKF Finconta is led by Christina Saulescu. Sinceits establishment in 2009, the transfer pricingdepartment has supported clients with a numberof essential services including documentation(facilitated by tools such as Amadeus andRoyaltyRange), TP reporting, risk management andaudit assistance.

Professionals at PFK Finconta offer advice to com-panies from a range of industries including speciali-

sation in the pharmaceuticals, retail, oil and gas,financial services and IT services sectors.

TPA Horwath can assist clients in a range of trans-fer pricing and tax issues, including preparation oftransfer pricing documentation, economic analysis,and assistance during tax authority audits anddefence during litigation.

The firm assists domestic and multinational firmsfrom a range of industries.

Romania


N ew transfer pricing legislation in Russia isnow actively enforced by the Federal Tax

Service (FTS) via special TP audits, which havegenerally resulted in significant assessment ofthe tax base (about 10% of the annual turnoverof the audited transaction). Most of the taxassessments have been settled via pre-trial pro-cedure, and as of August 2016 there is no TPcourt practice.In addition, the Russian Supreme Court has

confirmed that local tax authorities during anordinary field tax audit are entitled to adjustprices within intragroup non-controlled transac-tions if unjustified tax benefit is proved. Thus, the application of TP legislation

remains uncertain and requires the specificattention of taxpayers to intragroup transac-tions, regardless as to whether they are formallycontrolled or not.

1. How does the tax authority selecttransfer pricing audit cases?Generally, TP audits can be carried out follow-ing the submission of a TP notification on con-trolled transactions by the taxpayer.The TP notification contains information on

the controlled transactions, including the calen-dar year the transaction was carried out in, thesubject of the transaction, information aboutthe parties involved, and the value of the trans-

action. It is optional to also include the pricingmethods used and the information sources usedfor the transactions.Based on analysis of the information from the

TP notification, the FTS decides whether or notto conduct a TP audit on the taxpayer, takinginto account the respective risk indicators.For 2012 to2013 TP audits, the Russian FTS

focused on cross-border transactions on the saleof commodities performed by the core Russiangroup of companies. However, for the followingperiods, the FTS plans to start auditing intra-group financing, construction, development andservice transactions.

2. How will a company find out it hasbeen selected for audit? What is the officialnotification?If a controlled transaction is chosen for a TPaudit, the taxpayer will receive an officialDecision from the FTS on performing a TPaudit with regard to the selected intragrouptransaction. The Decision must contain the fol-lowing details on the selected transaction: • name and details of the audited taxpayer;• name and details of the counterparty; • name and details of the selected intragrouptransaction (including number and date ofthe contract); and

• the selected audited period (calendar year).


Tax authorities

Russia

Federal Tax Service, Transfer Pricing Department23 Neglinnaya Street, Moscow, 127381Tel: +7 495 913 04 48Fax: +7 495 913 04 39Website: www.nalog.ruEmail: [email protected]

An overview of the transfer pricing audit environment in Russia as of August 2016 byKPMG Russia.

http://www.nalog.ru



In practice, the Decision is provided to tax-payers starting from June 1 of the followingyear.

3. When a company has been notified ofan audit, what is the first thing it shoulddo? Upon receipt of a Decision to perform a TPaudit, a taxpayer also receives a request for theprovision of (a) the relevant TP documentation,which must be provided within 30 days, and (b)the primary supporting documents related tothe audited transaction, which generally mustbe provided within five to 10 days. Therefore, the first thing to do is to analyse

the list of information requested by the taxauthorities in order to identify the particularpieces of information that must be provided tothe tax authorities in line with the defencestrategy chosen by the taxpayer. While collecting information, taxpayers

should take into consideration the following:• Usually the tax authorities tend to requestsignificant amounts of information, thereforeit may be necessary to understand what infor-mation may have already been provided tothe tax authorities (e.g. within a field taxaudit) and what information is pending.

• It is prudent to take a balanced approachbetween cooperating with the tax authorities,and not providing too much and too detailedinformation that has not been explicitlyrequested.

• If a taxpayer understands that it does nothave enough time to provide all the request-ed information, it is possible to ask for a timeextension (usually up to 10 days, providedthe tax authorities find the arguments for thedelay reasonable).

• It is crucial that taxpayers take a fresh look atthe most recent TP practice and update therelevant TP files (if necessary) before theyare provided to the tax authorities.

4. Are there legislative, regulatory, or otherprocedures applicable to taxpayers subjectto a transfer pricing audit? If not, what isrecommended practice? There is no formal procedure applicable to tax-payers subject to a TP audit. At the same time, based on the results of the

first TP audits (for calendar year (CY) 2012),the following should be noted: during a TPaudit, taxpayers have few possibilities to com-municate with the tax authorities, as the latterare mainly concentrating on analysing the TPdocumentation, and the relevant supportingdocuments, provided. Normally, taxpayers areinvited in for discussion after the TP audit hasclosed, but before the final decision of the FTSregarding the tax assessment. However, in somecases the FTS may arrange interviews withcompany officials during the TP audit.Thus, it is crucial that the taxpayer is pre-

pared beforehand for a possible TP audit, whichincludes: • preparation of the relevant TP defence filebefore the TP audit has been initiated;

• performance of TP adjustments where neces-sary;

• preparation of TP notification forms andtimely submission to the FTS.Considering the lack of court practice with

respect to TP audits and the significant accrualsmade by the tax authorities with respect to thefirst TP audits (for CY 2012), it may be pru-dent to engage a professional consultant whengoing through a TP audit procedure.

5. How does the Russian Federation differin its approach to transfer pricing audits toother countries?The stand-out feature of TP practice in Russia isthe vital importance of pre-trial disputes withthe tax authorities due to the following:• Existing TP legislation is relatively new(effective since CY 2012), which meansthere is limited practice and ambiguity

Russia


regarding the approaches that both the FTSand courts will apply;

• The FTS has finished about 20 TP audits forCY 2012 (all on major companies engaged incommodity trading). The Russian FTSassessed a tax base for all of these audits,which in several cases reached 10% of theannual turnover of the audited transaction;

• In addition, Russian courts have alsoapproved the right of local tax authorities tochallenge prices if they can prove that theprice understatement or overstatement led toan unjustified tax benefit for the taxpayer.As such, Russian taxpayers have preferred to

deal with TP issues in pre-trial procedures, andthe disputes have only reached court in criticalcases.

6. How do the tax authorities compileinformation on a taxpayer for a transferpricing audit? The FTS generally employs the followingsources of information regarding the targetedtaxpayer and its controlled transactions:• Information provided to it in the submittedTP notification on the controlled transactions,which contains detailed information abouteach intragroup operation (an invoice) withinthe year. Each taxpayer must annually notifythe tax authorities (by no later than May 20 ofeach year) of controlled transactions per-formed in the previous calendar year.

• Notices sent by the local tax authorities to theFTS. The local tax authorities can identify con-trolled transactions during their field tax audits(or other tax procedures) of the taxpayer or itscounterparty, and notify the FTS about trans-actions which were not properly reported bythe taxpayer in the TP notification.

7. Which issues are more likely to trigger atransfer pricing audit by the taxauthorities? Normally, the FTS initiates TP audits as a resultof a risk assessment of the controlled transac-tions presented in the TP notification. The fol-lowing transactions and cases might also alertthe FTS and initiate a TP audit:• transactions with commodities for whichprices significantly deviated from applicablemarket indicators;

• transactions with counterparties located inlow-tax jurisdictions;

• outbound intragroup financing is provided atlower rates than the inbound financing; loansare provided at lower rates/attracted at high-er rates as compared to the bank’s interestrates;

• the company is involved in a significantamount of intragroup transactions reflectedin low or loss-making financial results.The late filing or non-filing of a TP notifica-

tion could trigger a TP audit as well.

8. What documents are requested from ataxpayer during a transfer pricing audit? Companies that fall within the scope of a TPaudit are normally requested to provide twotypes of documents:• A TP documentation file for the analysedyear substantiating the arm’s-length nature ofthe applied intragroup prices. The TP docu-mentation file must contain the obligatorysections as stipulated by article 105.15 of theTax Code and Letter of the FTS #OA-4-13/14433 as of August 30 2012. If the TPdocumentation is not compliant with legisla-tive provisions, the FTS might state that thedocumentation is non-compliant and insuffi-cient. The penalty for underpayment of taxarising from non-compliance with TP regula-tions is 40% of the underpaid tax from 2017,for 2014 to 2016 the penalty is 20%.Considering the relatively formal approach of

Russia



the FTS during TP audits, TP documentationshould contain references and documentattachments supporting each material factand figure presented in the file.

• Other different document types/otherinformation/clarifications of the company’sofficials relevant to the audited controlledtransaction (e.g. copies of contracts, invoic-es, bank account statements; counterparties’registration documents and tax returns;internal policies and any other informationwhich might be useful and needed by theFTS during an audit).

9. Are there any restrictions on acompany’s business during a transferpricing audit?No.

10. Are there any restrictions on thetaxpayers’ advisers during a transferpricing audit?No.

11. How long does a transfer pricing auditlast?The TP audit itself could last up to 21 monthsfrom the date started, according to the RussianTax Code. However, additional time is neededto process and discuss the results between thetax authorities and taxpayer. Thus, the totaltime from the start of a TP audit (a Decision toperform a TP audit) to the last date when thetax authorities can appeal to court is about twoto three years. In practice, TP audits for 2012lasted up to two and a half years, and were onlyfinished in 2015 to 2016.

12. What happens after an audit has beencompleted? Once a TP audit is finished, the followingprocess takes place:• The FTS provides a taxpayer with a Note ofTP audit completion (which only means the

official audit has ended; no tax assessmentsare presented).

• If any TP deviations are identified duringthe audit, then the FTS provides the taxpay-er with a Certificate of Audit that containsa description of the identified deviations,the sum of tax base understatement andimposed penalties (if no TP documentationwas provided to the FTS). This Certificateof Audit has to be drafted within twomonths from the date the Note of TP auditcompletion was issued, and then provided tothe taxpayer within five days from themoment it is drafted.

• The taxpayer may challenge the contents ofthe Certificate of Audit and provide the taxauthorities with the relevant written objec-tions within 20 days from the date on whichit was received.

• The tax authorities examine the providedobjections within 10 days (may be prolongedfor no more than one month) and adopt afinal decision.

• If the final decision is made in favour of thetax authorities, then the tax authorities havesix months to appeal to the relevant court toclaim the respective amount of taxesaccrued. The taxpayer has only threemonths to appeal against the decision issuedby the FTS;

• In practice, the taxpayer will have to gothrough three court instances to receive afinal court decision (original hearing, appealhearing and reversal hearing). Sometimesafter these instances the case may also beheard in the Russian Supreme Court, thoughthis usually happens only if a case involveseither complex or ambiguous issues (whichmay be the case for a TP audit).

13. Tips on negotiating with theauthorities?• Make sure that the FTS’s understanding ofthe facts and circumstances of the audited

Russia


transaction is correct and comprehensive,otherwise, provide the FTS within additionalclarifications and information regarding thesignificant missed details.

• Try to prove the taxpayer’s position by con-sidering the economic nature and substance ofthe transactions, but not the incorrect inter-pretation of the TP legislation by the FTS.

• As of August 2016, around 20 TP audits havebeen performed, with each new decision ofthe FTS forming a precedent in the approachto TP analysis of the respective transactiontypes. If the FTS adheres to an aggressive taxassessment position, try to convince the taxauthorities that their approach will hindersimilar companies or the industry as a wholeif other companies will have to stick to theFTS’s position.

14. How can a company manage its auditrisk?• Identify the most material intra-group con-trolled transactions and review the arm’s-length nature of the applied pricing mecha-nism and the factual prices and margins.

• Develop a TP methodology based on theRussian TP requirements and keep controlover its actual application to make sure thatactual prices and margins are at arm’s length.Prepare TP documentation templates defend-ing the controlled transactions in advance,

• Each year, file detailed TP notifications andprepare in advance TP documentation forcontrolled transactions. Having sufficient TPdocumentation supporting the applied intra-group prices provides protection againstpenalties.

• Before filing the annual corporate incometax return, verify that the actual results ofthe intragroup transaction are at arm’slength. If deviations are identified, considerthe following actions, depending on the typeof transaction: • For domestic transactions make corre-

sponding adjustments to the company’s,and counterparty’s, tax bases.

• For cross-border transactions make volun-tary TP adjustments in the form of taxadjustments or adjustments to financialresults.

Russia



LEADING FIRMS

1 Deloitte EY KPMG Pepeliaev Group, Taxand Russia PwC

2 AO Mazars Baker & McKenzie BDO Unicon CMS Russia FBK Legal Goltsblat BLP

3 FinExpertiza Taxexperience

With Russia under no obligation to the OECD, advis-ers in the jurisdiction expect the government to pickand choose which of the recommendations from theBEPS Project suit its position and are incorporatedinto Russian tax legislation. Country-by-country reporting (CbCR) is supported

by the Russian government and legislation is expect-ed to be introduced and effective by 2018.Guidelines relating to the common approach totransfer pricing documentation are under develop-ment and implementation is expected in the sameyear. As well as this several of the BEPS Action Points,such as new legislation defining what constitutespermanent establishment, already exist in a waywhich is ‘BEPS compliant’ in Russia.The Russian government has been keen to encour-

age Russian controlled foreign companies (CFCs) toincorporate, or re-incorporate, under Russian law,something which many taxpayers had in the pastbeen reluctant to do because of the risk of expropri-ation of their assets by the state. This is known as the de-offshorisation campaign and

starting from 2017, concealing, or not declaring anyassets held offshore will be an offence. For the purpos-es of the law a CFC is any company in which a Russiantaxable person or entity has a controlling stake.

Reforms were introduced to the tax code in 2014 tothe effect that the Russian state could essentially forceany Russian citizen’s business activities not conducted,or incorporated, in Russia back into the country underRussian law. If a Russian citizen held a controlling stakeof 25% or more in the foreign asset, then the lawmeans that the Russian government has jurisdiction. The extra information available to the tax authori-

ties through the implementation of CbCR and theautomatic exchange of information between taxauthorities will likely see a significant increase in thetax collected in Russia, as the information can beused to fuel additional audits. Advisers expect to see an uptick in the amount of

litigation as a result of increased audits in an alreadylitigation-heavy environment. The tax authoritieshave shown an increasing willingness to engage init, and an increasing sophistication as regards theirunderstanding of complex tax and transfer pricingarrangements. This, combined with courts tending tofind against the taxpayer, will encourage multination-als to seek other dispute resolution methods.

Tier 1 Deloitte in Russia’s transfer pricing practice is led byDmitry Kulakov, who heads up a team of 27 transferpricing professionals advising clients across a broadspectrum of industry backgrounds on all issues relatingto tax and transfer pricing.This year saw the firm advise a large multinational

on the development of a new operational structuredesigned to reallocate profits and losses within thegroup through the consolidation of different groupfunctions such as managerial functions, operationalactivity and the provision of maintenance services.Deloitte in Russia is well spoken of by peers and

clients alike.EY in Russia is led by Evgenia Veter. It employs 51

transfer pricing professionals, 12 of whom cover TPdisputes and 51 of whom cover TP compliance. Thefirm’s clients include some of the world’s largestmultinationals operating in a variety of sectors.This year saw EY assist a revenue authority in the

development of a bilateral advance pricing agree-

Russia


ment (APA) procedure. The firm also helped a majorprivate spirits company to conduct an operatingmodel effectiveness review leading to a transfer pricerevision, and then defended the newly revised pricesto the Russian tax authorities. The firm offers a fully integrated tax and transfer

pricing service, including the preparation of TP docu-mentation, design and implementation of TP policies,the negotiation of APAs, and assistance in audits andlitigation defence. KPMG’s transfer pricing team in Russia is led by

Natalia Valkovskaya. This year saw the firm engagein a project concerning the integration of Europeanproduction operations into the supply chain of amultinational group. This involved conducting a com-parative analysis of two operating models within thegroup’s supply chain from a transfer pricing perspec-

tive, as well as the development of a TP methodol-ogy in order to comply with both the Russian and aforeign jurisdiction’s transfer pricing legislation andundertaking benchmarking studies to identify arm’s-length remuneration for all parties in the supplychain. KPMG then developed an allocation method-ology and assisted in the preparation of the transferpricing documentation for the client.The team includes 68 professionals employed in

the area of transfer pricing, 14 of whom cover TP dis-putes and 52 of whom cover TP methodology. Thefirm’s clients include some of Russia’s, and theworld’s, largest multinationals primarily from theenergy and utilities, manufacturing, fast moving con-sumer goods (FMCG), technology, media andtelecommunications (TMT) and the healthcare andpharmaceuticals industries.

Russia



Corporate profits tax rate 0/15.5/20% (a)(b)Capital gains tax rate 0/15.5/20% (a)(c)Branch tax rate 15.5/20% (a)

Withholding tax Dividends 0/13/15% (d) Interest on certain types of

state and municipal securities 15% (e) Other interest 20% (e) Royalties from patents, know-how, etc. 20% (e) Income from the operation,

maintenance or rental of vessels orairplanes in international traffic 10% (e)

Payments of other Russian-sourceincome of foreign companies 20% (e)

Branch remittance tax 0%


a) The basic corporate profits tax rate consists of a2% rate payable to the federal government andrates ranging from 13.5% to 18% payable to

the regional governments. The regionalgovernments set the rates applicable to theirrespective regions.

b) The 0% rate applies to profits of companiesperforming educational and medical activities.

c) The 0% rate applies to capital gains realised byRussian tax residents on the disposal of certainshares or participation interests acquired afterJanuary 1 2011 and held for at least five years.

d) The 13% rate applies to dividends received byRussian tax residents (companies orindividuals). The 15% rate applies if therecipient of the dividends is a foreign legalentity. The 0% rate applies to dividendsreceived by Russian tax residents if therecipient has held at least 50% of the payer’scapital for more than 365 days, subject tocertain limitations.

e) This tax applies if the payments are made toforeign legal entities that are not Russian taxresidents and if they are not attributable to apermanent establishment in the RussianFederation. The tax is considered final.



Pepeliaev Group, Taxand Russia offers a full servicetax and transfer pricing practice and is led by managingpartner Sergey Pepeliaev. The team at Pepeliaev hasadvised major multinationals, governments and NGOson a variety of transfer pricing issues in the past year. The group has a total of 60 professionals engaged in

the area of tax and transfer pricing, and can assist ineverything from routine TP functions to the defence ofstructures in the highest courts.The transfer pricing practice at PwC employs a total

of 28 professionals and advises clients including someof the world’s largest multinationals on all issues of taxand transfer pricing. The firm offers clients a full tax andtransfer pricing service which covers routine TP func-tions to the more extreme cases such as defendingtheir clients in litigation.Industries that it primarily represents include financial

services, energy and utilities, FMCG, healthcare andpharmaceuticals, manufacturing and transport. This year has seen the firm advise the Russian

Ministry of Finance on the drafting of ordinances gov-erning the negotiation of APAs and MAPs.

Tier 2The transfer pricing team at AO Mazars is part of thetax and legal department led by Maria Semenova,who joined the firm in March 2016. Transfer pricingoperations are led by senior manager AlexanderSimonov.All eight members of the team focus on compliance

work, and the firm works with clients on TP risk assess-ment, developing internal policies for intra-group trans-action pricing and TP documentation. Many of itsclients are foreign companies entering the Russianmarket, and the team helps educate clients on theRussian system by hosting client seminars and send-ing members of the team to speak at internationalconferences.In one deal, a Simonov and senior consultant

Liudmila Lazareva assisted a company importing spareparts and components on significant losses resultingfrom the slump of the Russian ruble. The duo proposedan approach to mitigate the impact of currency fluctu-ations by justifying the manipulation of transfer prices.

Key industries for Mazars include food and fast-moving consumer goods, manufacturing, healthcareand pharmaceuticals, TMT, and financial services,although the firm also offers services in a wide rangeof other industries.Baker & McKenzie in Russia is led by Alex

Chmelev. The firm has offices in Moscow and St.Petersburg and employs six transfer pricing profes-sionals. Four team members cover TP disputes andfive cover TP compliance. This year has seen the firm advising a major Russian

multinational game developer on Russian andUkrainian transfer pricing issues relating to the restruc-turing of its operations in Russia and the Ukraine. Italso advised the company on the development of aglobal transfer pricing model.The team primarily advises clients in the TMT, health-

care and pharmaceuticals, transport and aerospace,FMCG and manufacturing industries, among others.BDO Unicon’s Russian transfer pricing team seeks to

offer more than transfer pricing analysis and aims to,where possible, minimise the tax risk and the amountof tax payable. A key contact at the firm is EvgeniyKivenko, who was involved in a number of complex taxand transfer pricing cases for the firm in the past year.The firm has been active in Russia since 1989 and

in that time has built a solid reputation amongclients and peers. CMS Russia is able to offer its clients a range of

transfer pricing services, including documentation man-agement and advice on cross-border transactions, taxaudits and conflict resolution. Its approach incorporateselements of tax, legal and transfer pricing awareness.A key contact at FBK Legal is Tatiana Matveicheva,

who is the head of the firm’s tax consulting depart-ment. The firm boasts a number of high-calibreclients, including the Russian oil firm GazProm aswell as Yamaha Motors and McDonalds Restaurants.This year saw the firm represent clients on a range

of TP issues, notably representing one of the jurisdic-tion’s largest multinationals in a dispute with theRussian tax authorities. Goltsblat BLP’s transfer pricing team in Russia is

well spoken of by the firm’s clients and peers. It

Russia


represents clients from a number of different indus-tries, including FMCG, manufacturing, financialservices, TMT, transport and aerospace.The Moscow-based team assists clients in com-

plex tax and TP structuring and high profile disputeresolution among other tax and transfer pricingservices. This year saw Alexander Erasov andAlexander Kirilchenko promoted to co-heads ofthe group.

Tier 3FinExpertiza’s head of transfer pricing is YuliaEshkina, who leads a team of 20 professionals, three

of whom cover TP disputes and six who cover TPcompliance. The team’s clients include a number ofhigh-profile Russian and international multinationalgroups.FinExpertiza offers a fully integrated tax and trans-

fer pricing service, covering everything from routinedocumentation advice, to high profile dispute resolu-tion and structure re-design. Taxexperience in Moscow is led by Ernstjan

Rutten, who has 20 years of experience in tax andtransfer pricing issues. Taxexperience advises clientson tax and TP compliance documentation, and dur-ing tax inspections and litigation.

Russia



KPMG RussiaKPMG has one of the largest TransferPricing practices in Russia with 2 partnersand more than 60 professionals based inMoscow, Saint-Petersburg, NizhniyNovgorod and Ekaterinburg.In 2016, KPMG won the Russia TransferPricing Firm of the Year award, as recog-nized by ITR magazine.KPMG’s client portfolio includes majorRussian and multinational firms operatingin a vast number of industries. More than40% of the top-100 companies in theExpert-400 rating have used KPMG astheir trusted TP advisor.KPMG is one of the first advisors inRussia to provide global worldwide trans-fer pricing compliance services (includingunder BEPS 13).KPMG in Russia offers the followingtransfer pricing services:• Transfer pricing risk diagnostics;• Preparation of transfer pricing docu-mentations and notifications on con-trolled transactions;

• Preparation of Country-by-CountryReporting and Master file;

• Economic analysis and benchmarkingstudies;

• Structuring intragroup transactions(including value chain analysis);

• Developing business processes forinternal transfer pricing control;

• IT solutions for the preparation oftransfer pricing documentation;

• Transfer pricing audit defences;• Assistance with concluding APAs;• Development of transfer pricing poli-cies and cost-allocation methodologies

that are sustainable from the tax pointof view in Russia and foreign jurisdic-tions;

• Educational transfer pricing seminars.

10 Presnenskaya NaberezhnayaMoscow, Russia 123317Tel: +7 (495) 937 44 77Web: www.kpmg.ru

Natalia ValkovskayaPartner, Transfer Pricing LeaderTel: +7 (495) 937 44 44 (ext. 13766)[email protected]

Ilarion LemetyuynenPartner, Transfer PricingTel: +7 (495) 937 44 44 (ext. 18225)[email protected]

Olga PletnevaDirector, Transfer PricingTel: +7 (495) 937 44 44 (ext. 14007)[email protected]

Russia


http://www.kpmg.ru




LEADING FIRMS


2 Baker & McKenzie.Wong & Leow

Firm to watch RSM

Transfer pricing has been a big focus and a concernfor multinationals in Singapore in the past year.Reflecting the developing global standards recom-mended by the BEPS project, the Singapore transferpricing regime has experienced significant changesand reforms in the past few years. The Singapore TPrules were updated in 2015 and 2016 with new doc-umentation requirements as well as access to formaladvance pricing agreements (APA) and mutual agree-ment procedure (MAP) programmes.“To assist taxpayers in coping with the changes,

the authorities in Singapore have taken an approachof close engagement and consultation with affectedtaxpayers and the professional community. It is alsoclear that the Inland Revenue Authority of Singaporehas really ramped up enforcement of its TP regime,including a marked increase in transfer pricing con-sultations, where they evaluate how businessesestablish and implement their TP policies and man-age their compliance,” said Mike Nixon, director ofeconomics at Baker & McKenzie.Wong & Leow.

Singapore has committed to adopt the four mini-mum standards under the BEPS project, which are theadoption of Action 5 on harmful tax practices, Action6 on treaty abuse, Action 13 on country-by-countryreporting (CbCR), and Action 14 on dispute resolution.The common reporting standard will also be imple-mented with effect from January 1 2017 and automat-ic exchange of information will commence in 2018.On June 16 2016, the Ministry of Finance

announced that Singapore will implement CbCR forfiscal years beginning on or after January 1 2017 forSingapore-headquartered multinationals. Specificguidelines are expected to be released in September2016. “This move reinforces Singapore’s commitment to

the BEPS Project, which is important in maintainingSingapore as an attractive business location and ajurisdiction which does not tolerate treaty abuse ortax evasion,” said Low Hwee Chua, regional manag-ing partner of Deloitte.The transfer pricing industry is expecting more TP

related regulation updates on top of more stringentadministration by the authorities. “There is a notableincrease in clients’ interest in assessing and conduct-ing ‘health checks’ on the readiness of existing taxmodels and structures in the post-BEPS environ-ment,” said See Jee Chang, head of transfer pricing atDeloitte. Furthermore, there is a strong level of interest in

APAs, as more taxpayers are willing to invest in APAsfor certainty given the anticipated harsher tax auditenvironment. “We also observed an increasingamount of audit activities in Singapore, from transfer


SingaporeTax authorities Inland Revenue Authority of Singapore (IRAS)55 Newton Road, Revenue House, Singapore 307987Tel: +65 6356 8622Fax: +65 6351 4360Website: www.iras.gov.sg/IRASHome/Businesses/Companies/ and

www.iras.gov.sg/IRASHome/GST/GST-registered-businesses/

http://www.iras.gov.sg/IRASHome/Businesses/Companies/

http://www.iras.gov.sg/IRASHome/GST/GST-registered-businesses/


pricing-related questions in the routine queryprocess, to full-blown transfer pricing consultationprocess, akin to a more in-depth field audit,” saidGeoffrey Soh, head of transfer pricing at KPMG. “It is more important than ever for multinationals to

be prepared,” Soh added. To start with, he advisedmultinationals to review current transfer pricing poli-cies, evaluate the competence of existing TP docu-mentation, plan how to prepare a consistent andsystematic TP document, and prepare for CbCR com-pliance by conducting “dry runs” to assess readinessand how it ties in with the overall TP position. Healso urges companies to consider proactive meas-ures such as APA, and conducting a BEPS healthcheck on existing related party transactions.

Tier 1See Jee Chang has many years of experience indealing with the Singapore tax authorities on inter-national tax and transfer pricing issues. Chang leadsDeloitte’s transfer pricing team which boasts twopartners and 14 professionals who aim to helpclients efficiently manage risks and resolve potentialtransfer pricing matters. Lee Siew Ying is a transfer pricing partner who has

more than 13 years of experience advising multina-tionals on TP documentation, economic analysis,planning, APA and audit defence. The team focuses on assisting in analysing TP risks

to measure the potential exposure, prepare TP doc-umentation, integrate transfer pricing methodology,avoid disputes by successfully negotiating APAs, andresolving disputes by advising on use of MAP. Luis Coronado is EY’s ASEAN head of international

tax and transfer pricing as well as Singapore transferpricing leader. Coronado has more than 25 years ofexperience in his expert areas of international taxa-tion and transfer pricing and has advised numerouscompanies on negotiation of bilateral APAs in diversecountries such as Mexico, China, Japan and the US. The transfer pricing group has professionals repre-

senting more than 10 different nationalities, ensuringthat the team is able to advise and deliver seamlesssolutions to the Asia Pacific region.

The practice focuses on the financial services, tech-nology, media and telecommunications (TMT), lifesciences, and consumer products industries. With more than 30 professionals, the transfer pric-

ing team at KPMG is headed by Geoffrey Soh. All ofthe team are capable of providing an extensive arrayof transfer pricing services. Soh has been specialisingand developing the practice in the region for 13years. Felicia Chia is a partner and key contact in the

practice and has more than a decade of experiencein dealing with multinationals advising on TP plan-ning and documentation, restructuring as well asaudit defence and TP risk analysis. Last year, the firm offered a transfer pricing review

and documentation support for a gaming companythat is growing rapidly and has diversified into othere-commerce and e-payment businesses. The com-pany’s operations in Singapore were complex andentrepreneurial, necessitating a high level of detailand explanation in its regional TP documentation.KPMG provided the required level of support andreview to the client on technical matters. The transfer pricing service of PwC in Singapore

has a dedicated team of professionals and special-ists including four partners capable of providing highquality and practical industry solutions in regards totransfer pricing. Nicole Fung is the leader of thetransfer pricing team and has more than 23 years ofconsulting experience in corporate tax and has ledthe team for more than 10 years. The team offers pragmatic, end-to-end transfer

pricing solutions for multinationals such as valuechain transformation, tax controversy and disputeresolution, planning and structuring and documenta-tion including CbCR.

Tier 2Eugene Lim is the head of the tax and transfer pric-ing practice at Baker & McKenzie.Wong & Leow andhas years of professional and broad experience inproviding tax services, particularly relating to thestructuring of supply chain and distribution strategiesin the Asia Pacific region. The transfer pricing team

Singapore


boasts five partners and 11 specialists offering clientssupport in transfer pricing compliance and planningincluding APA and MAP negotiations, dispute resolu-tion, restructuring and valuation. Peter Tan is a senior consultant at the tax and

transfer pricing practice and has vast experience ofhandling numerous multinationals across variousindustries involving M&A, business restructuring, jointventures, intellectual property (IP), franchising anddistribution transactions as well as tax dispute reso-lution. One client said: “They [the firm] have a strongteam to support tax litigation. I found Peter Tan to beable to draw on his vast experience in dealing withtax issues.”Another notable partner is Michael Nixon who is

the director of economics with 16 years of experiencein transfer pricing, IP valuation, business restructuringand economic consulting. He has proven to have agood reputation among clients, one client said:“Michael Nixon is very clear and logical in his advice.I also found Michael to be able to listen to the clientvery carefully, is extremely structured and good at pre-senting things and framing the issues.”

Firm to watchThe transfer pricing team at RSM offers a wide scopeof services including documentation, related-partytransaction matters, and global group transfer pricingpolicy advice. Three partners and three professionalsfocus on TP compliance and disputes, led by PaulLee who is the head of both the tax and transfer

pricing team. Elis Tan joined the team as director inAugust 2015, bringing 15 years of experience in allaspects of transfer pricing to the team, includingcompliance and documentation, planning and con-troversy management, transfer pricing risk assess-ment and audit defence.

Singapore



Corporate income tax rate 17% (a)Capital gains tax rate 0%Branch tax rate 17% (a)

Withholding tax (b) Dividends 0% (b)(c) Interest 15% (b) Royalties from patents, know-how, etc. 10% (b) Branch remittance tax 0%

Net operating losses (years) Carryback 1 (d) Carryforward Unlimited (d)

a) Various tax exemptions and reductions areavailable (see Section B).

b) See Section F.c) See Section B.d) See Section C.


Visit http://bit.ly/29YUmYq to read the footnotes in full


http://bit.ly/29YUmYq

LEADING FIRMS


2 ENSafrica, Taxand South Africa

3 Bowman Gilfillan Cliffe Dekker Hofmeyr

Firms to watch Webber Wentzel

As a result of the changing international tax climate,South Africa made a number of amendments to itstransfer pricing system this year. Although not a mem-ber of the OECD, the country remains a front-runner inapplying measures outlined in the BEPS Project. South Africa has been quick at adopting the OECD

recommendations and a number of BEPS points havebeen implemented. On April 11 2016, the SouthAfrican Revenue Service (SARS) published draft regu-lations regarding country-by-country reporting (CbCR)for multinational enterprises. This draft followed thecountry’s signing of the OECD’s multilateral competentauthority agreement for the exchange of CbC reportsin January this year. The regulations are effective fortax years beginning on or after January 1 2016 andthe first reports must be filed by December 31 2017. “The area where we see the most activity is the

area of BEPS. South Africa has had significant newrules introduced. We’ve had transfer pricing for a

long time, draft regulations are out now which isgoing to make documentation compulsory,” saidBilly Joubert, head of transfer pricing at Deloitte.On December 15 2015, the SARS issued another draft

notice regarding TP documentation setting out addi-tional record-keeping requirements, although it is yet tobe finalised. On July 28 2016, the SARS issued draftpublic notice asking for comments on TP documenta-tion to be submitted by August 19. As in many other jurisdictions around the world, TP

professionals have been busy as taxpayers are askingmore questions and are more aware of their structures.“BEPS is a very big topic in South Africa and globally,and we are very aware of what is going on and areclose to the ongoing BEPS discussions,” said Joubert.Reassuring taxpayers that their structures are BEPS

compliant has been a service in high demand thisyear, while advisers also saw a growing demand fordispute advice as the authorities increased theamount of audits they were conducting, with a clearagenda to try and collect funds. “South African multinationals are very much trying to

get to grips now with what this [BEPS] actually meansfor them,” said Anne Bennett, head of tax and transferpricing at Webber Wentzel. SARS has been busy adapting to the regulation

changes and radically enhanced the size of its internaltransfer pricing team. Despite some departures of sen-ior people to the private sector recently, SARS have saidit intends to keep growing the team, advisers reported.

Tier 1Deloitte’s transfer pricing practice comprises fourpartners and 20 other professionals and is headed


South AfricaTax authorities South African Revenue ServiceVisiting address: Lehae La Sars, 299 Bronkhorst Street, Nieuw Muckleneuk, 0181 PretoriaPostal address: Private Bag X923, Pretoria 0001Tel: +27 12 422 4000Website: www.sars.gov.za

http://www.sars.gov.za

by Billy Joubert. The practice, which is DeloitteAfrica’s largest member firm, and one of the largesttransfer pricing departments in South Africa, offers afull range of services, including cross-border transac-tions, advance pricing agreement (APA) negotiation,compliance and business structuring. Joubert has years of experience in specialist con-

sulting, including international tax, document prepa-ration, corporate income tax, tax disputes and litiga-tion. He also has over 14 years of knowledge fromworking in transfer pricing. The firm’s key industryspecialisations include consumer products, banking,technology, media and telecommunications (TMT),finance, oil and gas, and mining. Deloitte’s members in South Africa are actively

involved in various committees across corporate andbusiness tax, VAT and tax disputes. Michael Hewson oversees the TP team at EY,

which consists of one partner, three senior managersand 18 other professionals. Hewson is an expert ininternational tax and has extensive experience inassisting clients with issues regarding cross-borderand intercompany transactions, structuring, disputeresolution, and drafting transfer pricing policies. The professionals have a wide range of expertise,

developed over years of working in the public sector,various tax administrations and with local and inter-national advisers. They assist multinational clientsfrom across the globe and industries including inTMT, energy and resources, financial services andconsumer business. The team is monitoring the TPdevelopments in Africa and keeps its clients up todate by issuing EY tax alerts on a regular basis. The team of transfer pricing specialists at KPMG

offers the full suite of services including planning,implementation, controversy, compliance and docu-mentation, and helps clients adapt to the everchanging tax environment. Natasha Vaidanis headsthe practice and advises on a broad spectrum ofissues, from preparation of contemporaneous docu-mentation and planning to dispute resolution. Sheworks across a range of industries and has a wealthof experience in managing integrated tax projectsacross several jurisdictions.

PwC offers the full scope of TP services among itssuite of corporate tax services. David Lermer is theSouth Africa country leader for PwC global tax servic-es and specialises in transfer pricing, along withinternational tax and exchange control requirements,structuring and cross-border transactions. He hasmore than 30 years of experience in the field. The team of professionals provides a complete TP

solution with expertise in business transformation,compliance, audit defence strategies, and web-based solutions.

Tier 2Bernard du Plessis and Peter Dachs are joint heads ofthe transfer pricing practice at ENSafrica, TaxandSouth Africa. The three partners and six other feeearners have experience in advising corporate clientsin financial services, energy and mining, real estate,automotive and industrial and manufacturing. Theteam provides expertise to its full range of TP servicesincluding analysis to determine the functions and risksof cross-border transactions, arm’s length price withthe aid of TP methodologies and databases, tax plan-ning and documentation, disputes and compliance.

Tier 3Bowman Gilfillan’s managing partner Alan Keepleads the tax practice which offers a wide range ofservices, including transfer pricing. The team is ableto assist South African and international clients on abroad scope of matters, with competencies in inter-national tax planning, debt and equity funding, doc-umentation, compliance and dispute resolution. The transfer pricing team of five at Cliffe DekkerHofmeyr has over the past year steered their focustowards TP litigation and has built up expertise in thearea. The team, led by Emil Brincker, has seen transferpricing litigation continuing to be a trend in South Africaand assisted clients on various disputes this year. Brinker is praised for his expertise in international

tax, tax controversy, corporate tax and transfer pric-ing. The team of specialists is particularly strong inadvising clients in the automotive, retail and finan-cial industries. Among the many services, the firm

South Africa



provides assistance in a range of TP-related issuesincluding dispute resolution, M&A, structuring andinternational tax planning.

Firm to watchThe tax team at Webber Wentzel is headed by AnneBennett, who also overlooks all transfer pricing activ-ities. The firm recently expanded, appointing TP spe-cialist Karen Miller to the team to complement andstrengthen its tax advisory capabilities. Miller has a

wealth of corporate tax experience, with more than20 years in the field in South Africa and the UK. Shehas worked for Deloitte and EY as well as the SARSwhere she led the transfer pricing practice.The firm is known for its offerings in corporate tax,

M&A, private equity-related work, international tax,tax dispute resolution and transfer pricing. The firmhas extensive knowledge on finance structuring, taxissues surrounding the design and implementationof holdings and the drafting of relevant documents.

South Africa


LEADING FIRMS

1 Kim & Chang Samil PwC

2 Deloitte Anjin Samjong KPMG Yulchon

3 EY

4 Lee & Ko Yoon & Yang

Firm to watch Bae, Kim & Lee

Korea has one of the most advanced tax and transferpricing regimes in the region, where many of the reg-ulations addressed in the BEPS project have alreadybeen functioning in the market and enforced by thegovernment. However, the importance of transferpricing has only increased in the Korean market as aresult of the BEPS discussions.Korea is very active in implementing major BEPS rec-

ommendations, particularly Action 13 requiring localand master files, which has been effective since January1 2016, with the first submissions due March 31 2017. “The challenge here is the short deadline for filing

tax returns, within three months of fiscal year end,and the requirement for documentation to be sub-mitted in Korean. While taxpayers may requestextensions, it’s unclear what criteria will apply togrant an extension,” said Henry An of Samil PwC.

“It’s safe to say that many of the companies sub-ject to the new documentation requirements havenot prepared transfer pricing documentation contem-poraneously in the past. Hence, there’s a significantamount of transfer pricing documentation workbeing performed in the market with a strong senseof urgency,” he added. The Korean Ministry of Strategy and Finance is

planning additional legislation both this year and inthe future to adopt additional BEPS guidelines.“Major accounting firms have newly recruited moretransfer pricing staff, expecting the increased workburden related to transfer pricing documentationpreparation,” said Shin Jong Kang, transfer pricingleader at Yoon & Yang. The Korean tax authorities have continued to be

aggressive in tax audits and disputes, and transferpricing seems to be one of the largest issues affect-ing audits and disputes. “Advance pricing agree-ments (APAs) have been very popular in recent yearsas a means to avoid unreasonable tax assessmentsfrom increasingly aggressive tax auditors. This hasled to complaints by field auditors in search of rev-enue sources and higher hurdles to obtain NationalTax Service approval to proceed with unilateral APAs,”said Jeremy Everett of Kim & Chang. Transfer pricing is a major concern for taxpayers from

both a corporate income tax perspective as well ascustoms perspective, as it is difficult to align TP poli-cies with the differing rules and objectives of both.However, Kang suggested another option in Korea isto obtain advance customs valuation agreements(ACVA) which are the customs equivalent of APAs.


South KoreaTax authorities National Tax ServiceSejong Government Complex II, 8-14, Noeul 6-roSejong Special Self-Governing City, 30128Tel: +82 44 204 2200Email: [email protected]: www.nts.go.kr


http://www.nts.go.kr


Tier 1Dong Jun Yeo has expertise in general tax consulting,transfer pricing, tax audit and tax dispute resolution. Heis the head of Kim & Chang’s transfer pricing practice,leading more than 30 professionals. Yeo has a wealthof experience in advising clients in the US and Koreaon TP issues involving planning, strategies, restructuringand complex audits. The industries he specialises ininclude automotive, pharmaceutical and medical serv-ices, consumer goods, software and semi-conductors. The team assists clients in all areas of transfer pric-

ing across a broad range of industries, including thedevelopment of TP policies, preparation of TP studies,assistance in TP audits, and advising clients regard-ing mutual agreement procedure (MAP) filings andAPAs. In recent years, the firm has assisted marketleading companies in numerous unilateral and bilat-eral APAs and MAPs. Kim & Chang in December 2015 represented a

client in a MAP between Korea and Sweden underthe Korea-Sweden income tax treaty. The firm assist-ed the client in analysing options for appropriateprofit level indicators and helped the client eventual-ly settle on utilising the operating margin method.This matter was important to the client because itresulted in an 80% reduction in their tax assessment.The arguments used to defend costs incurred by theKorean distributor set a valuable precedent fordefending transfer pricing in future cases.

Samil PwC’s transfer pricing team is managed byHeui Tae Lee who is responsible for the outboundworks while Henry An is responsible for the inboundworks. Its transfer pricing practice is one of the mar-ket leaders in Korea both in terms of the size of thepractice and diverse experience in TP issues. Thereare four partners and 37 professionals with back-grounds in accounting, tax, finance, economics, andlaw as well as experience working for tax authorities. The team has great experience in concluding

extremely complex and difficult APAs in relativelyshort periods of time and effectively covering all TPrisks. The team is capable of providing full servicesfor all transfer pricing needs, such as documentationand compliance, risk assessment, transfer pricing

audit defence and appeal assistance, litigation sup-port, APA, competent authority negotiations, planningand restructuring. In the past year, the team has done a myriad of

transfer pricing work including group brand licencepolicy set up, unilateral APAs, and TP advice on crossborder intercompany guarantee fee arrangements. One client said: “I am very much satisfied with the

quality of services and expertise from the PwC KoreaTP team. They delivered engaged services on timewith high quality.”

Tier 2Deloitte Anjin’s transfer pricing group continues togrow in size, revenue and client range. Tae HyungKim is co-lead partner of the transfer pricing team atthe firm. He has more than 20 years of experience inadvising international corporations on their transferpricing and supply chain management. Seong KwonSong is a senior partner and the co-group leaderwith more than 25 years working on internationaltax administration in Korean government. The teamhas nearly 40 specialists and professionals. The firm provides differentiated TP services such as

master file and CbCR by fully analysing TP policies tosupport and prepare for the new requirements, glob-al tax audit defence, APA and competent authorityassistance, business restructuring, and guarantee feeanalysis. Dong Kwan Kim and Tae Hyun Park from KPMG

have joined the firm in the past year as director andsenior manager respectively.

Samjong KPMG’s transfer pricing team consists ofthree partners and more than 40 professionals withbackgrounds as accountants, lawyers, economistsand in-house in business and industry. The firm’score clients are automobile manufacturers, luxurybrands, financial services, electronics and chemicalcompanies. Its transfer pricing team is headed by GilWon Kang. The team has been actively engaged in developing

and implementing plans to reduce transfer pricing risks,negotiate APAs and MAP, assist tax audit defence, andto deal with BEPS-related issues such as CbCR.

South Korea


This year Kang led the team to advise on globaltransfer pricing risk assessment, policy review and setup, and implementation of the policy and operationalguidelines for the leading automobile manufacturer inKorea. The team provided an in-depth review of theglobal transactions and pricing policy to analyse theexposure to tax risks, along with feasible solutions,considering specific domestic legislation of the coun-tries involved. BEPS developments on transparencyand consistency also informed the advice the teamprovided on the $1 million project.Under the management of Sai Ree Yun, Soon Moo

Soh, Seok Hoon Kang, and Dong Soo Kim, the transferpricing practice of Yulchon provides services of unilat-eral and bilateral APAs, tax ruling requests, transferpricing audit defence and litigations. The transfer pric-ing team consists of six partners and nine profession-als focusing specifically on solving TP related issues.

Soh’s expertise includes corporate tax, M&A, taxcrimes, customs, insolvency and restructuring and dis-pute resolution and he has served as a presidingjudge for 20 years. Kang primarily focuses on generaltaxation, tax litigation, international tax, tax crimes andcustoms with 17 years of experience as a judge. Kimhas been part of Yulchon since its founding in 1999.His main clients include Goldman Sachs, MorganStanley, ING, Samsung Corporation, Hyundai Group,and Citibank. The firm has worked on various transfer pricing

projects for leading companies in Korea related toguarantee fee and transfer pricing audit defencesover the year.

Tier 3Sang Min Ahn is the head of the transfer pricingpractice at EY and has more than 15 years of

South Korea



Corporate income tax rate 22% (a)(b)Capital gains tax rate 22% (a)(b)(c)Branch income tax rate 22% (a)(b)Branch profits tax rate n.a. (d)

Withholding Tax Dividends 0% (e) Interest 14% (b)(e) Royalties from patents, know-how, etc. 0 (e)

Net operating losses (years) Carryback 1 (f) Carryforward 10 (g)

a) This is the maximum rate.b) Local income tax (formerly referred to as

resident surtax) is also imposed at a rate of10% of corporate income tax payable beforeoffsetting tax credits and exemptions.

c) Capital gains are included in ordinary taxableincome for corporate tax purposes.

d) This tax is imposed on income that is remittedor deemed to be remitted by a Korean branch

of a foreign corporation. The branch profits taxmay be payable if the foreign company isresident in a country with which Korea hasentered into a tax treaty and if the treatyrequires the imposition of a branch profits tax.For a list of these countries and the rates of thetax. The branch profits tax is imposed inaddition to the income tax imposed onbranches.

e) For payments to domestic corporations andforeign corporations with a place of business inKorea. For withholding rates applicable topayments to foreign corporations that do nothave a place of business in Korea.

f) Only small and medium-sized enterprises areentitled to carry back losses.

g) Except for small and medium-sized enterprisesand certain other companies (for example,companies under court receivership), theannual deductibility limit for loss carryforwardsis 80% of taxable income.



experience specialising in transfer pricing, interna-tional tax, corporate tax, tax advisory, restructuring,and tax audits. The practice boasts three partnersand more than 30 transfer pricing specialists capa-ble of both TP compliance and dispute work. Thefirm expanded by hiring a new partner Sung HanPark from PwC in December 2015. EY was hired by the Ministry of Strategy and

Finance as an adviser for the amendment of theKorean transfer pricing rules concerning the new TPdocumentation requirements corresponding to BEPSAction 13. The TP team, along with with the interna-tional tax service team, worked closely with the min-istry on the proposed amendments. Over the past year, the firm saw a growth in

inbound and outbound projects including BEPS relat-ed projects, APAs, and the need for TP policy settingup for Korean multinationals. The team alsoreviewed supply chains of clients, prepared for newTP documentation rules, and negotiated unilateraland bilateral APAs.

Tier 4Jay Shim is the head of the tax and transfer pricingpractice at Lee & Ko which consists of seven part-ners with experience in transfer pricing. Shim has awealth of experience and knowledge in all areas oftax, specialising in tax advisory, international tax,cross border transactions and private equity withenergy and natural resources expertise. The firmhired Duk Won Suh from Yulchon in May this yearas partner. Suh primarily focuses on internationaltax, transfer pricing and overseas investment tax,he is particularly strong at assisting clients on APA,MAP and tax audit appeals. In September 2015, the team, led by Shim, pro-

vided a group-wide tax efficient supply chain andTP policy design for a family owned distributionbusiness. The team customised its service to best

utilise its experience and resources in order tomatch this specific business offering’s needs.The international tax and transfer pricing group of

Yoon & Yang is led by Shin Jong Kang as the solepartner with seven legal, tax, transfer pricing andcustoms specialists and professionals. Kang was pre-viously a partner at PwC and has focused on transferpricing for more than 20 years. Jeong Woo Ahn isone of the notable professionals in the team, com-petent in various TP related advisory services includ-ing MAP, APA, tax audit defence and tax appeal. JinWoo Kim, specialising in advising Chinese sub-sidiaries regarding tax and transfer pricing issues andTae Hyoung Kim, adept in global transfer pricing pol-icy set up, TP planning and documentation studies,are also key contacts at the firm.Yoon & Yang represented a client in a criminal case

for suspected customs evasion as well as the cus-toms related administrative litigation where the clientsought to invalidate the customs duties imposed onits intercompany transaction with its foreign affiliate.The team successfully defended the client by provid-ing the non-wilfulness of reporting. The administra-tive litigation is still in progress. The team is alsohelping the client to prepare the transfer pricing doc-umentation to reflect the customs audit result and tocope with future tax audits.

Firm to watchBae, Kim & Lee’s transfer pricing group comprisesdedicated transfer pricing specialists with extensiveexperience in the field. The team is capable of draft-ing pricing agreements, reducing transfer pricingrisks, studying and examining the transfer pricingand TP planning for companies in a broad range ofindustries including financial services, telecommuni-cations, cosmetics, and textiles. Kim Tae Kyoon leadsthe tax and transfer pricing team with abundantexperience in international tax and financial tax.

South Korea


Deloitte Anjin LLC 8 Fl., One IFC 10 Gukjegeumyung-ro Youngdeungpo-gu, Seoul 150-945, Korea

Contact: Seong Kwon Song Email: [email protected]

Mr. Seong Kwon Song, former AssistantCommissioner for International TaxInvestigation and Head of the CompetentAuthority at the Korean National TaxServices (“KNTS”) leads the Deloittetransfer pricing group in Korea. The grouphas over 40 specialists including ex-KNTSofficers and economists with global back-ground.

The group has advised MNCs in automo-tive, electronics, IT, chemical industries,providing balanced solutions that fitMNCs’ business goals and transfer pricingobjectives at the same time. In addition,the group’s expertise and experienceshave helped MNCs to resolve complexissues in APA, MAP, and audit defense sit-uations. With the introduction of newtransfer pricing regulations on BEPS doc-umentation requirements, the group alsoadvises and supports many MNCs to getprepared for the new BEPS environmentby providing services such as mock audit,planning, and Master File/Local File doc-umentation, etc.

Deloitte Korea’s transfer pricing grouphas been consistently recognized as a tier-1 transfer pricing service firm in Korea

and received recognition as one of theWorld’s Leading Transfer Pricing Advisorsby Legal Media Group for several years ina row and Tax Controversy Leaders byInternational Tax Review (2013, 2014,2015, 2016).

South Korea




SAMJONG KPMG27F, Gangnam Finance Center,152, Teheran-ro, Gangnam-guSeoul, 06236, South Korea

Gil Won Kang (Head of Transfer Pricing)Tel: +82-2-2112-0907Email: [email protected]

Seung Mok William Baek (Partner)Tel: +82-2-2112-0982Email: [email protected]

Sang Hoon Kim (Partner)Tel: +82-2-2112-7939Email: [email protected]

Yulchon LLCThe Textile Center Building, 12F518 Teheran-ro, Gangnam-guSeoul 06180, KoreaTel: +82 2 528 5200Website: www.yulchon.com

ContactsDong Soo KimTel: +82 2 528 5219Email: [email protected]

John DrydenTel: +82 2 528 5077Email: [email protected]

South Korea





http://www.yulchon.com



LEADING FIRMS

1 Deloitte EY Garrigues, Taxand Spain KPMG Landwell (PwC)

2 Baker & McKenzie Cuatrecasas, Gonçalves Pereira Freshfields Bruckhaus Deringer Grant Thornton Transfer Pricing Services

3 BDO GTA Villamagna Mazars Ramón y Cajal Abogados

The political situation in Spain is ambiguous at bestafter two general elections failed to return a majoritygovernment, meaning the legislative environment fortaxpayers is uncertain. It is possible that the nextmajority government could reverse the fiscal reforms,which have included tax measures, which havetaken place since the financial crisis. Without a clearpolitical direction, taxpayers cannot plan for all taxand transfer pricing risks.

The implementation of the BEPS Action Points intodomestic law has, for the most part, already takenplace, with Spain being a rapid adopter of both theOECD guidelines and the EU Anti-Tax Avoidance

Directive which was implemented in Spain before itcleared the European parliament.

Spain was also one of the first countries in theworld to implement country-by-country reporting(CbCR) requirements, which came into effect fromJanuary 1 2016.

New rules on TP documentation were agreed inJuly 2015 and have been in effect since January 12016, requiring multinationals to prepare a masterfile for submission to the Spanish tax authorities. Thisfile will have to detail the group’s organisationalstructure, a description of its business activities, itsintangibles, its financial activities and its financialand tax positions.

Given that Spain is ahead of other jurisdictions onBEPS implementation, it has been necessary for thetax authorities in the jurisdiction to discuss with tax-payers their thinking on certain issues, somethingwhich they have been happy to do according toRafael Fuster, head of tax at Uría Menéndez.

“There are a lot of tax officials making themselvesavailable to explain the ideas and how they seethings – making themselves available for discus-sion,” said Fuster. He further noted that the Spanishtax authorities “want to be on the front line of thedevelopments of BEPS, so far as implementation isconcerned”.

Tier 1The head of the Deloitte transfer pricing practice inSpain is Juan Ignacio de Molina, a lawyer with morethan 13 years of professional experience in the area


SpainTax authorities Taxation AgencyPaseo de la Castellana, 106Madrid 28046Tel: +34 915 908 000Fax: +34 91 568 08 80Email: [email protected]: www.agenciatributaria.es


http://www.agenciatributaria.es


of transfer pricing, seven of which have been spentwith Deloitte. There are four partners and 22 otherprofessionals who work in all areas relating to trans-fer pricing.

The firm is particularly adept at advance pricingagreement (APA) negotiations and groundwork, havingworked on a particularly complex case for a largemultinational in the past year. The firm representsclients, including large multinational groups anddomestic companies, to offer a full tax and TP service.

It primarily represents clients in the financial servic-es, manufacturing, technology, media and telecom-munications (TMT), hospitality, and healthcare andpharmaceuticals industries.Ramón Palacín is the head of transfer pricing at EY,

leading a team of 49 transfer pricing professionalssplit equally between TP disputes and TP compli-ance. The team advises top Spanish and internation-al multinational groups, including top retail, financialservices and oil and gas companies.

This year the firm was selected as the sole adviserto a key Spanish multinational. EY is working onanalysis of, and documentation for, said client’s TPpolicies to ensure that it is compliant with Spain’sAction 13-inspired legislation. The project particularlyfocuses on intangibles, value chain analysis and ondeveloping new guidance on risks facing the groupin this context, and transfer price comparabilityanalysis. This is one of the first projects of this typein Spain and has been heavily informed by theongoing developments at OECD and EU level.Garrigues, Taxand Spain is particularly active

advising multinational groups on their Latin Americaninvestments. This kind of work has been increasingin recent years as a result of economic activity in thatpart of the world. Garrigues boasts the largest taxdepartment in Spain and the second largest in theworld, meaning that it can offer clients a dedicatedand in-depth tax and transfer pricing service.

This year has seen the TP team engaged in advis-ing on a mutual agreement procedure (MAP), as wellas offering the client advice on how BEPS-inspireddomestic law changes will impact on MAP requestsissued in the past.

Alongside MAP advice, the team at Garrigues offersa full TP service. This includes advisory services dur-ing audits, dispute resolution and litigation services,as well as day-to-day TP compliance assistance.

A key contact at the firm is Mario Ortega Calle, thehead of the transfer pricing department, who, asidefrom heading the department, keenly involves him-self in client’s cases. He heads a team of 48 profes-sionals, all of whom cover TP compliance and TP dis-putes.KPMG’s head of transfer pricing Vincente Durán

and his cross-disciplinary TP team have extensiveexperience in the design, planning and documenta-tion of TP policies for multinational groups, the valu-ation for tax purposes of complex business models,the negotiation of MAPs and APAs and in givingadvice and support during transfer pricing audits.

KPMG in Spain primarily advises firms in the finan-cial services, TMT, fast-moving consumer goods(FMCG), energy and utilities and infrastructure indus-tries. Their clients include both large multinationalgroups and Spanish companies.Landwell, the Spanish affiliate of PwC, has 39

offices across Spain. It offers clients a range of serv-ices in tax and transfer pricing, including TP design,compliance, audit, litigation, economic and financialanalysis as well as MAP and APA negotiations.

Tier 2Baker & McKenzie in Spain is led by Pedro Agarón,at the firm’s office in Barcelona, and Raúl Salas inMadrid. Agarón and Salas and their teams can offeradvice in all areas of tax and transfer pricing, offeringTP structuring advice, advice during audits, TP docu-mentation and reporting.

The firm primarily represents clients in the pharma-ceutical, financial services, insurance, real estate andfood processing industries.Cuatrecasas, Gonçalves Pereira’s head of transfer

pricing is Joan Hortalà, who oversees a team of morethan 50 professionals, all of whom cover TP disputesand TP compliance.

The team gives advice to clients such as market-leading multinational groups, Spanish companies

Spain


and foreign companies in all areas of transfer pricing,including structure design, economic and businessanalysis, TP documentation and assistance duringaudits, disputes or litigation.

The firm has offices in 14 cities across Spain, aswell as a presence in Portugal, Belgium, Morocco,Mexico and New York among other jurisdictionsworldwide.Freshfields Bruckhaus Deringer’s diverse portfolio

of clients includes domestic and international multi-nationals from a wide range of industries.Professionals at the firm deliver transfer pricing audit

advice, as well as structuring advice to clients. Thefirm also assists clients in economic and businessanalyses, tax authority disputes and litigation as wellas more routine tax and TP functions.

The firm specialises in delivering services to clientsin the financial services, governments, health andpharmaceuticals, infrastructure as well as the TMTand FMCG industries. Grant Thornton in Spain, from its offices in

Barcelona, Bilbao, Madrid, Murcia and Valencia, offersits clients a broad range of tax and TP services,including audit assistance, supply chain optimisation,

Spain


Tax rates at a glance (As of July 2016)

Corporate income tax 25% (a)Capital gains 0% to 19% (b)Branch tax 25% (c)

Withholding tax (d) Dividends 0% to 19% (e) Interest 0% to 19% Royalties from patents and licences 0% to 24% Branch remittance tax 0% to 19%

Net operating losses (years) Carryback Not permitted Carryforward Without time limit (f)

a) Under Corporate Income Tax (“CIT”) Law, thegeneral CIT rate is 25% for 2016 onwards.

b) Under non-resident income tax law, capitalgains (obtained not through a PE) are taxed upto 19% for 2016 onwards. An exemption regimeis granted subject to the fulfilment of certainrequirements.

c) A general branch tax rate is applicable to non-residents with a permanent establishment (PE)in Spain. Permanent establishments are taxedat the same rate as domestic companiescommented in letter (a) are.

In addition, a 19% branch profit tax is imposedon after-tax profits remitted to a foreign headoffice. The branch profit tax does not apply to

branches of EU entities or entities resident in acountry that has signed a tax treaty to avoiddouble taxation with Spain which does notexpressly provide otherwise.

d) The higher rate applies unless it is reducedunder a tax treaty or exempt under the EUDirectives for interest, dividends and royalties.

The general tax rate for non-residents(obtaining income not through a PE) is 24% in2016 onwards. This general tax rate is notapplicable to dividends, interests or capitalgains, but to other income. In the case ofcompanies resident in EU country, the generaltax rate is 19% for 2016 onwards.

e) Dividends distributions to residents of other EUmember states benefit from an exemption ifthe foreign parent company has continuouslyheld a minimum of 5% of the share capital ofthe Spanish company for one year before thedividends are declared or the acquisition costof the holding in the company was higher than€20 million. Certain anti-abuse measures mayapply.

f) Tax Authorities are allowed to review tax losscarryforwards within 10 years from the end ofthe filing period for the tax return in whichthose tax losses were generated.

Source: Garrigues


preparation of documentation, structuring and TPplanning assistance, and MAP and APA negotiations.

A key contact at Transfer Pricing Services, a trans-fer pricing boutique, is David Cañabate Clau, a part-ner with more than 15 years of experience in the dis-cipline. The firm acts as a partner to law firms to offertransfer pricing services, including during audits,restructuring, risk analysis, global documentationrequirements, assistance during APA and MAP nego-tiations, assistance in economic analysis and bench-marking studies and assistance in dispute resolutionand litigation services.

Tier 3BDO in Spain offers audit and legal services toSpanish and foreign companies, including multina-tional groups, in the energy, financial services, logis-tics, real estate and construction, public and thirdsector, TMT and insurance sectors.

The firm offers services including TP auditingadvice, TP structuring advice, due diligence and eco-nomic and business analyses, assistance during dis-pute resolution proceedings with the tax authorities

and defence during tax and transfer pricing litigationproceedings.GTA Villamagna is led by founding partners Felipe

Alonso and Ernest García-Trevijano Garnica, andoffers services to companies in industries such asfinancial services, TMT, manufacturing and FMCG, ina wide range of tax and TP areas.

Their advice includes assistance during TP audits,TP documentation preparation, business and eco-nomic analyses, transaction support and defenceduring TP disputes and litigation with the tax author-ities.

Professionals at Mazars in Spain offer their clientsservices in TP structure design and implementation,TP documentation, reporting, due diligence, adviceduring APA and MAP negotiations and assistanceduring TP audits, disputes and litigation.

A key contact at Ramón y Cajal Abogados is LuisRodríguez-Ramos, who leads a team which offers TPlitigation and dispute resolution advice, and assis-tance during transfer pricing audits. The team alsoprovides TP analysis, design and implementation,restructuring and controversy management.

Spain


ARCO Abogados y Asesores TributariosC. Roger de Llúria, 119 4° 2a08037 BarcelonaSpainwww.arcoabogados.es

Key contact:Mariano [email protected] +34 934 871 020

Contact: Juan I (Willy) De MolinaPartner | Transfer Pricing – TaxAv. Diagonal 654, 08034 Barcelona,SpainTel: +34 932304804Mobile: +34 608624064 [email protected]

Spain


http://www.arcoabogados.es



http://www.deloitteabogados.es


LEADING FIRMS

1 EY PwC

2 Deloitte Grant Thornton KPMG

3 Skeppsbron Skatt, Taxand Sweden

Swedish taxpayers continue to be concerned aboutthe impact of the OECD’s BEPS Project and many arereviewing their structures more thoroughly while try-ing to come to terms with the changing environment.Overall, there is a lot of uncertainty over how the proj-ect will be interpreted in Sweden, and BEPS remainsone of the biggest topics within transfer pricing.

“Of course we find that the BEPS initiative is creat-ing further work for TP specialists especially and alsosome of the discussions that are going on abouttightening our system around tax evasion rules,” saidCarl Magnus Uggla, head of tax and transfer pricingat Bird & Bird.

On April 29 2016 the Swedish tax authorities sub-mitted draft legislation to the Ministry of Finance toimplement new documentation standards and theautomatic exchange of country-by-country reports(CbCR). The government has also implemented theamended EU Parent-Subsidiary Directive into domes-tic legislation and the law includes controlled foreigncompany (CFC) rules. In many areas, Sweden is

already in line with the BEPS recommendations andits TP rules follow the OECD guidelines.

Taxpayers have been updating their policies totake the BEPS recommendations into consideration.CbCR particularly has been a key topic as the first fil-ings will be due at the end of 2018. “There’s been alot of talk about BEPS and people trying to concep-tualise it in terms of how to adapt your transfer pric-ing and how to act,” said Niklas Bång, head of trans-fer pricing at Skeppsbron Skatt.


Sweden


Corporate income tax 22%Capital gains 22%Branch tax 22%

Withholding tax (a) Dividends 0/30% Interest 0% Royalties from patents and licences 0/22% Branch remittance tax

Net operating losses (years) Carryback 0 Carryforwards indefinitely

a) Payments to European companies that qualifyunder EU Directives may be exempt or subjectto reduced withholding tax rate.

Source: Skeppsbron Skatt, Taxand Sweden

Tax authorities Ministry of FinanceRosenbad 4SE-103 33 StockholmTel: +46 8 405 10 00Fax: +46 8 21 73 86Website: www.sweden.gov.se/sb/d/2062

Swedish Tax AgencyPostal address: 171 94 SolnaVisiting address: Solna strandväg 22Tel: 0771-567 567(in Sweden);

+46 8 564 851 60 (abroad)Email: [email protected]: www.skatteverket.se

http://www.sweden.gov.se/sb/d/2062


http://www.skatteverket.se

The tax authorities have taken an aggressiveapproach and have increasingly moved their focustowards structures and the substance in compa-nies’ models. “They have been more aggressive,there have been less audits and a smaller numberof audits but the tax agency have been quite moreaggressively taking litigation cases that really don’thave support,” said Erik Björkeson from DLA Piper.

As for the coming year, Elvira Allvin, head oftransfer pricing at Deloitte in Sweden, said: “Wewill continue to see strong audit activity, especiallybecause BEPS provides ammunition to the agencyto question the viability of existing transfer pricingpolicies and models. The demand for transfer pric-ing services will continue to grow given the currentlandscape.”

Tier 1Mikael Hall is a partner at EY’s international taxservice and leads the transfer pricing practice inSweden and the rest of the Nordics. The Swedishteam of 25 professionals, including three partners,advises clients on international tax and transferpricing and is devoted to keeping clients up todate on global developments. It has advisorystrength in reporting, documentation, operatingmodel effectiveness and dispute resolution. Otherkey areas include pricing planning, risk manage-ment and the pricing of financial services and cus-toms. The firm has extensive knowledge of allindustries, but specialises in automotive, pharma-ceuticals, telecommunications, media and technol-ogy (TMT), oil and gas, and shipping.

Hall works closely with Olov Persson, head of theTP team in Stockholm, and Ulrika Eklöf, who man-ages the teams in Malmö and Gothenburg.

PwC’s transfer pricing team comprises five part-ners and 40 professionals and is headed by PärMagnus Wiséen. The team assists private andpublic clients on all aspects of transfer pricing andtax matters with a key focus on compliance. Thefirm is respected for its advisory work in variousindustries, with prominent specialism in industrialproducts, automotive, medical technology and

pharmaceutical, telecommunications and financialindustries.

This year, partner Mika Myllynen assisted in win-ning a significant transfer pricing case in relation tosubstance issues for a client, as well as a largeSwedish multinational in the filing of a large mutu-al agreement procedure (MAP) case based on anadjustment proposed by a foreign tax agency.

Tier 2Deloitte’s transfer pricing team of 16 professionalsoffers a broad range of TP services, including busi-ness model optimisation, valuations, controversymanagement and efficient compliance solutions.The team, headed by Elvira Allvin, has variousexperience working in other jurisdictions andacross numerous industries, and is able to adviseclients in a wide variety of languages.

The team has helped clients align their existingpolicies and documentation with BEPS require-ments, as well as worked with some of the leadingSwedish conglomerates to support their TP positionin light of business restructuring. Along with engage-ment in various deals, the team also launched tech-nology based solutions aimed at facilitating costefficient TP compliance for its clients.

This year, the team expanded with the additionof new advisors and graduates from Sweden,Lithuania and Romania. Kate Watterson, an expe-rienced adviser from the Australian Taxation Officewith experience in transfer pricing, risk manage-ment and equity derivatives trading, also joined theteam. Another prominent addition to the team isUlrika Bengtsson, a former official of the Swedishtax agency, who is a leading specialist in the areaof audit and court processes.

Led by Monica Söderlund, the transfer pricingteam at Grant Thornton is focused on selling andimplementing tax effective centralised structures.The team also offers standard TP services includingdocumentation and policy planning, assistancewith the implementation of optimised and tax-effi-cient transfer pricing models, advance pricingagreements (APAs) and MAP support. The team of

Sweden



five comprises tax, legal and financial experts, spe-cialised in project management, TP analysis, tax lit-igation and audits.

Annika Lindström supervises the transfer pricingpractice at KPMG, working alongside 17 other pro-fessionals. The team has a wealth of legal and taxexperience as well as a thorough understanding ofSwedish and international TP regulations and isdedicated to assisting clients in all areas of transferpricing.

Among the many projects that the team engaged inthis year, the professionals initiated discussions onbehalf of a leading Nordic retailer with the Swedishtax agency to mutually agree a disputed assessment.

The full-service practice works across all indus-tries, with a key focus on manufacturing, retail,consumer goods, financial and digital. This year,

the TP team expanded with the addition of twonew professionals: Clemens Mader, who joinedfrom PwC, and Tobias Ekwall from EY.

Tier 3Skeppsbron Skatt, Taxand Sweden’s transfer pricingdepartment offers assistance in the drafting of com-pliant TP policies, intragroup transactions, negotia-tions with the tax agency, tax litigation and disputeresolution, structuring, APAs and MAP.

Niklas Bång is the head of the team of five otherprofessionals and works closely with managing part-ner Mac Berlin. The team has extensive experiencein advising clients in industrial production, financialand insurance, real estate, building and constructionand state controlled companies and institutions. Thisyear, Ingrid Faxing joined the TP team from Deloitte.

Sweden


PricewaterhouseCoopersTorsgatan 21SE-113 97 StockholmSwedenTel: +46 10 212 4000www.pwc.se

Contacts: Pär Magnus Wiséen (Stockholm)[email protected] Hammarstrand (Gothenburg)[email protected] Koponen (Malmö)[email protected]

ContactNiklas BångDeputy Managing DirectorTel: +46 40 10 71 92Mobile: +46 73 640 91 92Fax: +46 40 23 98 28Skeppsbron 5, SE-211 20 Malmö

www.skeppsbronskatt.se

Quality tax advice,

globally

Sweden


http://www.pwc.se




http://www.skeppsbronskatt.se


LEADING FIRMS


2 Aspect Advisory Tax Expert International

On June 17 2016, the Swiss Parliament approved thefinal bill of the Swiss Corporate Tax Reforms III (CTR III).The stated aim of the reforms is to bring Switzerlandinto line with international standards in key areas ofcorporate taxation. It is also intended to ensure thattaxpayers can engage in effective international taxplanning, maintaining Switzerland as an attractiveplace to do business even in a post-BEPS world. Further, the government introduced a draft law on

April 13 2016 based on Acton 13 of the OECD’s BEPSProject. This introduced the requirement for Swiss-parented multinationals to submit country-by-countryreports (CbCR) to the authorities for fiscal years start-ing on or after January 1 2018. Failure to do so couldresult in a fine of CHF 250,000 ($260,000). The day before this draft law was published, the

European Commission (EC) declared its intention tomake it mandatory that CbCR be made public. If thiscomes to pass, it will be implemented in Switzerlandthrough its obligations to the EU via the bilateralagreements it has in place. Some taxpayers who value the confidentiality that

incorporation in Switzerland has afforded in the past

may see this as a deterrent to locating headquartersin the country. Advisers in the jurisdiction suggestedthat while this has been an influencing factor in somemultinationals deciding to relocate, Switzerland other-wise remains attractive to foreign investment, mean-ing that the jurisdiction will continue to be competi-tive in the future.

Tier 1Deloitte in Switzerland have a team of 13 TP profes-sionals, 10 of whom work in TP disputes, and threeof whom who work in TP compliance. The practice isled by partner Raoul Stocker and other notablenames in the TP department include GeorgyGalumov, who joined the Swiss office in September2015 and Frédéric Pili, who joined Deloitte fromanother Big 4 firm in Switzerland.The firm primarily advises companies in the finan-

cial services, healthcare and pharmaceuticals, manu-facturing, fast-moving consumer goods (FMCG) andtechnology, media and telecommunications (TMT)industries, among others. Their clients include someof Switzerland’s and the world’s largest public andprivate companies and multinational groups.The team can offer a full tax and transfer pricing

service, from routine functions such as documenta-tion preparation, business and economic analysisservices through to tax and TP dispute resolution.The professionals at the Swiss branch of Deloitte

were well spoken of by their peers in Switzerland andacross Europe.

EY’s transfer pricing practice in Switzerland is led byHans Rudolf Habermacher, who has more than 13years of experience advising clients on a variety of TP


SwitzerlandTax authorities Federal Tax AdministrationFederal Chancellery, Federal Palace West Wing, 3003 BernTel: +41 58 462 21 11Email: [email protected]: www.admin.ch


http://www.admin.ch

issues and concepts. The firm advises internationaland Swiss multinationals on all areas of transfer pric-ing and has significant experience in the areas ofdesign and implementation of TP structures, the suc-cessful negotiation of advance pricing agreements(APAs) and the avoidance of double taxation throughtreaties. The firm also offers advice during tax authority

audits, dispute resolution services and defence of TPstructures during litigation, as well as more routine TPfunctions such as due diligence, documentationpreparation, and business and economic analysis oftransfer prices.Professionals at KPMG are assisting their clients in

their preparations for the post-BEPS tax and TP envi-ronment. A large volume of this work is focused onthe introduction of CbCR. KPMG advises clients on the final allocation of tax-

able profits and the undertaking of value-chain analy-sis, allowing them to manage and defend compa-nies’ global profit allocation. The firm also offersadvice on the creation and defence of clients’ TPstructures. Other services include assisting clients withtheir TP documentation requirements, risk manage-ment and counsel during dispute resolution and liti-gation proceedings.

PwC in Switzerland’s TP practice is headed byBenjamin Koch, a partner with more than 13 years’experience in transfer pricing. He oversees a teamwho assist clients in TP risk management, tax efficienttransfer pricing structuring, as well as advice duringaudits, dispute resolution and litigation proceedings.The practice represents clients in industries such as

asset management, financial services, hospitality andleisure, healthcare and pharmaceuticals and energyand utilities, among other areas.

Tier 2Aspect Advisory represents clients in the TMT, manu-facturing, healthcare and pharmaceuticals, FMCG andfinancial services industries, among others. The firmoffers a full suite of TP services including global doc-umentation, benchmarking, CbCR and systems andprocess solutions around transfer pricing compliance.

Tax Expert International assists clients includingforeign and Swiss privately and publicly held compa-nies and multinational groups on a broad range oftax and transfer pricing issues. This includes thenegotiation of APAs, TP documentation preparation,structure design, economic and business analysis aswell as offering assistance during TP audits and liti-gation proceedings and advice during preliminarydispute resolution processes. The firm has offices inZug and Zurich.

Switzerland



Corporate income tax rate 11% - 24% (a)Capital gains tax rate 11% - 24% (a/b)Branch tax rate 11% - 24% (a)

Personal income tax rate (c) 22% - 48%

Withholding tax Dividends 35% (d) Interest n.a. (e) Royalties from patents and licences n.a. Branch remittance tax n.a.

Net operating losses (years) Carryback Not allowable Carryforward 7 years

a) Combined federal/cantonal/municipal corporateincome tax rate on profit before tax, dependingon domicile, under reservation of privileged taxscheme (mixed companies 6%-10%).

b) Higher rates may apply to real estate capitalgains, depending on location of property.

c) Combined federal/cantonal/municipal personalmaximum income tax rate, depending ondomicile.

d) Under reservation of treaty tax reduction or fullexemption under domestic law.

e) Under reservation of interest paid by banks.

Source: Professionals from Tax Partner, Taxand Switzerland


Deloitte AGGeneral Guisan-Quai 38P.O. Box 22328022 Zurich

Phone: +41 (0)58 279 60 00Fax: +41 (0)58 279 66 00www.deloitte.ch

Contact: Hans Rudolf HabermacherEmail: [email protected]

Firm profile:The Deloitte Transfer Pricing team inSwitzerland is led by Hans RudolfHabermacher and consists of innovativeand highly motivated specialists with wideranging backgrounds in economics, tax, law,accounting, and business as well as experi-ence working in foreign jurisdictions, inindustry, and for tax administrations.

The Deloitte Transfer Pricing practice hasa presence both in Zurich and Geneva, butis acting as one team. In the light of itsexpansion in the Swiss market, Deloittehas become not only a leading serviceprovider for APAs and MAPs but is consid-ered the most innovative in terms of ITbased Transfer Pricing solutions.

The Swiss Transfer Pricing practice playsan instrumental role in the Deloitte globalTP network and has won the “SwissTransfer Pricing Firm of the Year award”from ITR in 2012, 2014 and 2015.

KPMG AGBadenerstrasse 172Postfach8036 ZürichTel: +41 58 249 31 31www.kpmg.ch

Contact: Markus WyssEmail: [email protected]

Dreikönigstrasse 55CH 8002 ZurichSwitzerlandT: +41 43 434 67 00F: +41 43 266 55 59

Contact: Beat [email protected]

Switzerland


http://www.deloitte.ch


http://www.kpmg.ch



LEADING FIRMS


2 Grant Thornton Lee and Li

Since the OECD started the BEPS discussions in 2013,the Taiwan Ministry of Finance (MOF) has beenexpanding the scale of transfer pricing special auditswhich targets both domestic and foreign investors.“We see tax authorities have begun to do more TPinvestigations from last year, showing more aggres-sive attitudes. More clients are seeking for documen-tation and compliance work [advice] as they arereceiving more notifications from the tax office,” saidJay Lo, head of tax at Grant Thornton. In the past few years, the MOF conducted 30 TP

special audits annually and the average extra taxpayable in each case as a result of the auditsamounted to approximately $730,000. “The targets of TP special audits are in various

industries, but most targets are in the electronicsindustry. In the near future, TP special audits inTaiwan will focus on companies in the financialsector,” said Austin Chen, head of tax at Deloitte. The influence of BEPS on the MOF showed fur-

ther in eight rounds of seminars it held to discussBEPS recommendations. Many BEPS action points

are set to be implemented in Taiwan in the nearfuture. The first move by the MOF will be to amend

Taiwan TP guidelines and announce a safe harbourthreshold for the preparation of TP master file andcountry-by-country reporting (CbCR) by 2017.Secondly, new regulation with respect to Actions 8to 10 on related party intangibles transactions isexpected to be issued in 2016. Thirdly, the incometax act is expected to be amended, introducing theconcept of controlled foreign companies (CFC) andeffective management. Lastly, the tax authoritieswill apply tax to the digital economy by requestingforeign companies conducting digital transactionswith Taiwanese clients to apply for VAT registrationin Taiwan and take the tax compliance obligation. “From the perspectives of tax authorities, the TP

and tax audits will increase, the audit techniqueswill strengthen, and the information exchangeunder tax treaty could be more common,” saidChen. “We could see that most Taiwan companieswill face issues like rearrangement of employeeassignment accompanied with permanent estab-lishment (PE) risk and intercompany servicecharge,” Chen added.

Tier 1Deloitte’s transfer pricing practice, led by MingChang, has five tax partners and more than 70 taxprofessionals committed to transfer pricing.The practice’s services include TP planning and

advice, advance pricing agreements (APA), transferpricing compliance, business model optimisation,


TaiwanTax authorities National Taxation Bureau of TaipeiNo 2, Section 1, Jhonghua Road, Wanhua District,Taipei 10802Tel: +886 2 2311 3711 ext. 1116Fax: +866 2 2389 1052Website: www.ntbt.gov.tw/etwen/

Taxation Agency, Ministry of Finance2, Aiguo W. Road, Taipei, 10066Tel: +886 2 2322 8000Fax: +866 2 2396 9038Website: www.dot.gov.tw/en/

http://www.ntbt.gov.tw/etwen/

http://www.dot.gov.tw/en/


transfer pricing audit defence, and subjects relatingto BEPS. Financial services, technology, media and telecom-

munications (TMT), computers, software and digitalservices, fast-moving consumer goods (FMCG), andmanufacturing are the top five industries the firmadvises on.Deloitte Taiwan is focusing on BEPS-risk health

checks for clients and the team provides a tool forBEPS regulation tracking called BEPS Corner, to helpcorporates to navigate through updates related to BEPSactions. The platform delivers videos, international

BEPS developments, government response measures,action plan timetables, as well as news and informa-tion for clients to access easily.George Chou heads EY’s transfer pricing depart-

ment and is an expert in tax compliance, tax adviso-ry, transaction tax and transfer pricing as well asexperienced in advising corporates in customs andinternational trade. The transfer pricing team works closely with the

operating model effectiveness team to execute themost suitable operating model design to improveprocess and cost of trade. At the same time the team

Taiwan



Corporate income tax rate 17%Capital gains tax rate 17% (a)Branch tax rate 17%

Withholding tax Dividends Paid to residents 0% Paid to non-resident corporations

and individuals 20% (b) Interest Paid to resident corporations 10% (c) Paid to resident individuals 10% (d) Paid to non-resident corporations and

individuals 15/20% (e) Royalties Paid to resident corporations

and individuals 10% (f) Paid to non-resident corporations

and individuals 20% Branch remittance tax 0%


a) Effective from January 1 1990, income fromsecurities transactions is not subject to regularcorporate income tax. Such income is subjectto alternative minimum tax.

b) For details and the definition of a non-residentcorporation.

c) Payments in connection with securities issuedunder the Financial Asset Securitisation Act orReal Estate Securitisation Act and interestderived from short-term commercial paper aresubject to a 10% withholding tax. In addition,they are included in the computation of theresident corporation’s taxable income and aretaxed at a rate of 17%.

d) Interest arising from short-term commercialpaper, asset-backed securities, bonds, structuredproducts and repurchase agreements underlyingsuch financial instruments is not included in thetax computation in a resident individual’s taxreturn but is subject to a 10% withholding tax.

e) The applicable tax rate for interest arising fromshort-term commercial paper, asset-backedsecurities, bonds, structured products and interestarising from repurchase agreements is 15%. Othertypes of interest are subject to a tax rate of 20%.

f) The withholding of tax is not required if thelicensor issues a Government Uniform Invoice(GUI).


provides strategy and policy development, gover-nance optimisation and decision making to monitortransfer pricing structure, support advanced docu-mentation requirements, and risk mitigation andmanagement.

KPMG’s transfer pricing team boasts six partnersand 67 other professionals with technical skills pro-viding tailored services to clients. Stephen Hsu leadsboth tax and transfer pricing at the firm. The firm is keeping up to date with the dynamic

economic environment related to transfer pricing reg-ulations worldwide and offer full insights into gov-ernment policies and trends in different jurisdictions. The firm focuses on assisting multinationals with

constructive and innovative solutions to be in linewith the latest transfer pricing developments andreduce transfer pricing risk exposure. In January 2016, the TP team assisted a Taiwanese

company to dispute a TP assessment that hadalready been reported to the MOF in a special TPaudit. The team successfully reduced the adjustmentamount from $5 million to $1 million. Howard Kuo is the tax and transfer pricing leader

at PwC while Lily Hsu is the specific transfer pricingleader of the practice. The TP team works closelywith industry experts, economists and various spe-cialists to help analyse and develop the most suit-able strategy and solutions to serve taxpayers’ objec-tives and interests. The practice’s services include helping companies

establish optimal cross border investment structures,analysing investment strategies and transactionarrangements to minimise risks, assisting in outliningtheir TP policies, documentation support, filing APAs,and reviewing transaction contracts and related doc-uments.

Tier 2Jay Lo heads both the tax and transfer pricing group atGrant Thornton. Lo and three other transfer pricingspecialists look after the firm’s TP practice. The experts in the firm are able to offer audit sup-

port, documentation, planning and supply chain re-engineering services. The team uses research anddatabases to help defend clients’ transfer pricingpolicies, assist to prepare documents inline withlocal regulations and requirements, review transferpricing and restructure the company to minimise taxburdens and offer critical analysis to obtain tax effi-cient supply chain models. In March 2016, the firm helped a client align the TP

policy for its group and kept the client up-to-date onchanges in Taiwan TP issues. In May 2016, a client suf-fered loss from a rough economic year. The profit mar-gin of the client was below the 25th percentile, so thefirm assisted the client to calculate the appropriate taxadjustment value. Moreover, in December 2015, the firm hosted confer-

ences to discuss the future of regional cooperation inTP issues. A senior counsellor, Josephine Peng and a partner

Frank Lin look after both the tax and transfer pricingteam at Lee and Li. The transfer pricing team has threepartners and five professionals supporting the partners.The team is competent to provide transfer pricinganalysis of affiliated companies, transfer pricing docu-mentation and report review, and application for APAs. The lawyers and specialists in the team have exten-

sive experience and insights in Taiwan and overseasjurisdictions. They are knowledgeable of the regula-tions and trends related to transfer pricing globally, andare able to provide in-depth understanding andinsightful solutions on the associated matters.

Taiwan



LEADING FIRMS


2 Erdikler, Taxand Turkey Mazars Denge WTS Çelen

3 BDO Denet Pekin & Pekin YükselKarkinKücük

As a founding member of the OECD, Turkey is usuallya fast adopter of its recommendations. The provi-sions from the organisation’s BEPS Project have notbeen the exception to this general rule.On March 16 2016 the Turkish Tax Administration

released draft Communiqué No. 3 on disguised profitdistribution through transfer pricing, which had theaim of implementing BEPS Action 13 on country-by-country reporting (CbCR), which will require multina-tionals to prepare reports for the 2016 financial year,to be submitted in 2017.The communiqué will also require Turkish corpo-

rate taxpayers with assets and net sales of andabove 250 million Turkish lira ($85 million), to pre-pare a master file which will need to include detailsof the organisational structure of the multinationalgroup, a description of the business activities of thegroup, details of intercompany financial transactions,

list of intangibles owned and the financial and taxposition of the group. A variety of other TP concepts have been intro-

duced via Communiqué No. 3, including “locationsavings and other local market features”, “assembledworkforce” and “group synergies” to be taken intoconsideration when undertaking TP comparabilityanalysis. As well as new rules about cost compara-bility arrangements.Broadly speaking the measures that have been

introduced are in line with BEPS Actions 8-10 as wellas 13, and are aimed at preventing abuse throughclaims that a business activities are taking place out-side of Turkey, hence the references to workforcesand local market features. This raft of new TP measures will increase the

compliance burden for multinationals operating inthe jurisdiction, and advisers in Turkey are expectingan increase in the amount of compliance work theyhave to do as a result. It is not clear yet however what the tax authorities’

stance will be when it comes to enforcing these newTP rules, and whether they will allow companiestime to bed in with the new requirements, or beginaggressively auditing companies and enforcing therequirements as soon as they come into force.

Tier 1 Deloitte in Turkey can assist clients in all tax andtransfer pricing areas including economic and busi-ness analysis, routine documentation functions,transfer pricing structure design and defence. It alsooffers companies audit services, advice during com-


TurkeyTax authorities Republic of Turkey Presidency of Revenue Administration Department of Taxpayer ServicesMaliye Bakanlığı Gelir İdaresi BaşkanlığıDikmen Cad. Merasim Sok. 06450 Çankaya / AnkaraTel: +90 312 415 30 00Fax: +90 312 415 28 21-22Website: www.gib.gov.tr

http://www.gib.gov.tr

petent authority proceedings and in disputes withthe tax revenue service, and before the courts duringlitigation proceedings.Through its firms located around the world, Deloitte

is able to offer its clients a truly international tax andtransfer pricing service.EY in Turkey employs a multidisciplinary tax and

transfer pricing team which assist their clients,through the full TP lifecycle. From structure design,implementation and documentation maintenancethrough to dispute resolution services and adviceand defense during tax and TP litigation.KPMG in Turkey’s transfer pricing offering is led by

Abdulkadir Kahraman, a tax partner with more than20 years’ experience advising domestic and foreigncompanies and multinationals on a broad range oftax and transfer pricing issues. He leads a multidisci-plinary team which assists clients in TP policy design,implementation and defence (including during courtproceedings) and TP documentation maintenance.PwC’s head of transfer pricing is Özlem Güç

Alioğlu, who heads a team which offers clients,including domestic and foreign private and publiccompanies, assistance in all areas of tax and TPaudit and legal services. This includes advice on thedesign and implementation of TP structures, assis-tance during tax authority disputes and litigation, TPdocumentation maintenance and business and eco-nomic analysis.

Tier 2The team at Erdikler, Taxand Turkey offers its clientsa full tax and transfer pricing service, as well as atruly international focus through its membership ofthe Taxand international network of firms. The team consists of professionals with tax and

transfer pricing experience and has the ability to assistclients with a broad offering of services includingadvance pricing agreement (APA) and mutual agree-ment procedure (MAP) negotiation, domestic andinternational documentation, benchmarking studies,supply chain optimisation and controversy assistance.The team of transfer pricing professionals at

Mazars Denge is competent in a wide range of

transfer pricing issues. The firm was praised byclients for its abilities in tax and transfer pricingdefence during audits and dispute resolution pro-ceedings and litigation. The team also offers routineTP structuring services and assistance during APAand MAP negotiations.WTS Çelen can offer a full tax and TP service to

domestic and international multinational groups. Itrepresents clients in the hospitality and tourism,healthcare and pharmaceuticals, technology, media

Turkey




Withholding tax Dividends 15% Interest From repurchase (REPO) agreements 15% From deposit accounts 15/12/13/ 15/18% From loans 0/10% From Turkish government bonds

and bills private sector bonds 0/10% From private sector bonds Issued in Turkey 0/10% Issued abroad 0/3/7/10% Royalties from patents, know how, etc 20% Professional fees Petroleum-exploration activities 5% Other activities 20% Progress billing on long term

construction and repair contracts 3% Payments on financial leases 1% Real estate rental payments 20% Branch remittance tax 15%




and telecommunications (TMT), fast-moving consumergoods (FMCG), and energy and utilities sectors.A key contact at the firm is Arif Çelen, who is the

firm’s founding partner. His peers in the market saidhe has a strong knowledge of international tax andtransfer pricing, and that his team shares in thisknowledge. The firm offers tax and TP structuringadvice, TP documentation assistance, assistance dur-ing audits, dispute resolution and litigation support,among other services.

Tier 3BDO Denet offers legal advisory, litigation supportand audit services to clients ranging from domesticprivately held companies to multinational groups.The firm provides a full tax and transfer pricing serv-ice, including TP structuring advice, routine functions

such as TP documentation maintenance and duediligence and assistance during negotiations withthe tax authorities, such as during an APA negotia-tion.The tax team at Pekin & Pekin is led by Firat Yalçın,

who joined the firm in 2012 from a Big 4 firm.The team represents a number of leading financial

services multinationals on a range of tax and transferpricing issues. It offers assistance to clients in all keyareas of transfer pricing, including tax structuring andlitigation services. The team at YükselKarkinKücük advises domestic

and foreign companies on a broad range of tax andtransfer pricing issues. The firm offers services suchas economic and business analysis, TP structuringservices, assistance during audits, dispute resolutionand litigation services.

Turkey


WTS & CELEN SMMM Ltd. StiCumhuriyet Caddesi Erk Apt. 38/3 34367 IstanbulTurkeywww.wts-turkey.com

Key contact:Arif ÇelenManaging [email protected] +90 212 347 4125

Turkey


http://www.wts-turkey.com



LEADING FIRMS

1 Baker & McKenzie Deloitte EY Grant Thornton KPMG PwC

2 Alvarez & Marsal, Taxand UK Duff & Phelps Freshfields Bruckhaus Deringer Hogan Lovells Transfer Pricing Solutions

3 Clifford Chance FTI Consulting Macfarlanes McDermott Will & Emery Shearman & Sterling

The international transfer pricing environment hasseen a lot of amendments in the past few years andtax advisers in the UK have been busy staying on topof the changing climate. The OECD’s BEPS Project hasbeen one of the hottest topics in transfer pricing thisyear, but as the UK voted to leave the EU on June 232016, there has been a rise in uncertainty as to whatmay happen to the market. There are two key possible impacts of Brexit on the

TP market in the UK: the freedom from relevant EUdirectives and the movement of companies andfinancial assets into or out of the UK. The UK may still choose to comply with certain

directives, but the extent to which EU rules will con-

tinue to apply is unknown. “The domestic TP ruleswere brought in mainly to assuage potential discrim-ination claims within the EU so if we wish, we canrepeal them in future. I doubt that will happen how-ever,” said Wendy Nicholls, head of transfer pricing atGrant Thornton. “Dependent upon our future relationship with the

EU, we may potentially be able to step away fromsome of the European Commission’s proposals likepublic country-by-country reporting (CbCR) for UKoperations, and there will be less concern aroundwhether advance pricing agreements (APAs) may bevulnerable to challenge under state aid rules – but itwill not be the Wild West,” she added. Despite the Brexit vote, BEPS will undoubtedly

remain a major talking point in the future as jurisdic-tions around the world implement the action points.Since the release of the reports in October 2015, tax-payers have been ensuring that they are BEPS com-pliant, particularly with CbCR, assessing the group’ssupply chain and determining the risks. “BEPS is undoubtedly the genesis of the new world

of transfer pricing,” said Tom McFarlane, head oftransfer pricing at Alvarez and Marsal, Taxand UK.“The key objectives of BEPS – coherence, substance,transparency and certainty – are all admirable andwelcomed, but do however come at a cost. Manyquestion whether such objectives are achievablegiven the complexities associated with implementa-tion, in particular the ability of tax authorities to pickand choose which recommendations they will adoptcreates uncertainty and potential inconsistencies.”The UK transfer pricing system is already mostly

aligned with the OECD’s recommendations andtransfer pricing documentation rules are already in


UKTax authorities Her Majesty’s Revenue and Customs, Corporation Tax ServicesPO Box 29997, Glasgow, G70 5ABTel: +44 151 268 0571Website: www.hmrc.gov.uk

http://www.hmrc.gov.uk

place; CbCR was enacted in the Finance Act 2015and regulations came into force in March 2016. It isalso one of the 83 countries that has signed themultilateral competent authority agreement for theautomatic exchange of CbC reports. “We are still verymuch at the forefront of the BEPS project, which is ofcourse not an EU affair but an OECD and wider ini-tiative, and it is to the credit of the UK’s officials thatwe are promoting a consistent approach, and notcherry-picking, like some countries. BEPS will onlywork if all countries implement it in the same wayand at the same time,” said Nicholls. HM Revenue and Customs (HMRC) has been under

increased pressure as they are lacking resources, how-ever advisers reported that they are still cooperative.“Given the public scrutiny of certain group’s tax affairs,companies were becoming increasingly conservativewith respect to their tax planning. There is no doubtthat BEPS has reinforced this trend,” said McFarlane.

Tier 1Baker & McKenzie’s transfer pricing department isheaded by Richard Fletcher, an international taxexpert with more than 30 years of experience in thefield. He is supported by two other partners andseven professionals. The team assists clients of allsizes on a broad range of transfer pricing mattersincluding APA negotiation, tax planning, litigation andcritical approaches to structuring and valuation. Theteam’s innovative approach helps clients implementsustainable and tax-efficient structures and policies. The firm comes highly recommended by clients

and was described as highly professional, committedand responsive. One said: “We use Baker &McKenzie as our preferred provider for TP servicesand this has enabled them to develop their knowl-edge of our business and to advise from a positionof deep understanding of the commercial as well asthe technical legal perspective.”

UK



Corporate income tax 20% (a)(b)(c)Capital gains tax 20% (d)Branch tax rate 20%

Withholding tax Dividends n.a. Interest 20% (e)(f) Royalties 20% (e) Branch remittance tax n.a.


a) The rate of corporation tax is 20% for bothlarge and small companies. Effective from April1 2017, the rate of corporation tax will decreaseto 19%, and will decrease by a further 1% to18%, effective from April 1 2020. The main rateof corporation tax for ring-fence profits (that is,profits from oil extraction and oil rights in theUnited Kingdom and the UK continental shelf)

is 30% (small profits rate of 19%). The rates forring-fence profits are not scheduled to change.

b) The small profits rate of 19% for ring-fenceprofits applies in certain circumstances iftaxable profits are below £300,000. This benefitis phased out for taxable profits from £300,000to £1,500,000. These limits are reduced ifassociated companies exist.

c) An additional 8% surcharge is levied on theprofits of banks in excess of £25 million (beforethe offset of losses carried forward), effectivefrom January 1 2016.

d) Capital gains are subject to tax at the normalcorporation tax rate.

e) This tax applies to payments to nonresidentsand non-corporate residents.

f) A 45% rate applies to compound interestreceived from the UK tax authorities in certaincases



Jukka Karjalainen recently joined the practice fromDeloitte with more than 20 years’ experience dealingwith transfer pricing and international corporate taxissues. His industry expertise is mainly in connectionto metals and mining, telecommunications and phar-maceuticals. The team also hired five new econo-mists. Professionals at Deloitte provide a range of transfer

pricing services and assist clients with planning,compliance, revenue handling, business model opti-misation and operational TP services. David Cobb isa key member of the transfer pricing team in the UKand has been practicing tax for more than 20 years.He has experience working with clients of all sizesacross a range of industries, particularly in technolo-gy, media and telecommunications (TMT). Simon Atherton leads the transfer pricing team at

EY, which is one of the largest TP practices in thecountry. The firm provides assistance in CbCR, APAnegotiations and aligning existing policies and struc-tures with these guidelines. As part of their full-ser-vice offering the team also assists clients in the areasof international tax planning, controversy, risk man-agement, inter-group transactions and compliance. The transfer pricing practice has industry expertise

in energy, real estate, TMT, products and services,government and public sector and private equity. Grant Thornton’s transfer pricing team is devoted

to supporting domestic and international clients invarious tax and transfer pricing matters includingcross-border transactions, CbCR, debt structuring, thincapitalisation agreements, supply chain restructuringand documentation. Head of transfer pricing WendyNicholls supervises the team of 19 professionals andspecialises in TP planning, dispute resolution, APAs,compliance and documentation. She works closelywith director Liz Hughes, who leads the financialtransactions and financial services TP offerings.Hughes specialises in thin capitalisation and transferpricing for financial services. The team advises clients from all industries with

emphasis on TMT, financial services, consumer andindustrial products, business services, energy, andtravel and leisure. Working closely with other profes-

sionals throughout the Grant Thornton network, thepractice has a strong focus on assisting clients intheir alignment with the BEPS guidelines. One of the deals the team worked on this year

was establishing a transfer pricing model for a newasset management fund with operations in five ter-ritories. This included assisting the global alternativeinvestment and asset management company withthe design and implementation of a transfer pricingmodel to be applied to a new investment fundwhich opened in 2015. Seven professionals joined the team this year

including two senior managers, three executives,one associate and one director. Komal Dhall is the main contact for KPMG’s trans-

fer pricing practice. She works closely with the teamof economists, tax experts, lawyers and financialanalysts to provide optimum solutions to its clients.The team offers a full range of services including riskassessment, transfer pricing design and optimisation,supervision with APAs, MAP, documentation and dis-pute resolution. Dhall has a wealth of expertise assisting clients in

the TMT sector and has worked across variousindustries including financial services, consumerproducts and diversified industrials. PwC’s transfer pricing team of more than 150 pro-

fessionals is led by Annie Devoy. She is a charteredaccountant and an expert in international tax withyears of experience and the ability to address a widerange of tax issues with expertise. PwC has officesacross the UK including in Scotland and has a strongawareness of varying standards in international taxand transfer pricing.

Tier 2Alvarez & Marsal, Taxand UK is one of the foundingmembers of the Taxand network, working closelywith professionals in more than 45 countries todeliver end-to-end transfer pricing services. DavidPert is the leader of the transfer pricing team of fiveother professionals in the UK. It has significant expe-rience providing practical solutions to its clients andis supported by the global network to assist clients

UK


on large and complex projects. This includes advis-ing on tax planning, global documentation, debt pric-ing and engagement with tax authorities under MAP. The firm comes highly recommended by clients

and has this year worked on the restructuring of amultinational group’s European operations in orderto manage declining sales and reduce high fixedoperating costs across Europe. The firm has a wide range of industry knowledge

with focus on real estate, private equity-backedestablishments, retail and consumer goods, and TMTand IT. The transfer pricing practice at Duff & Phelps was

established in 2014 and brings together establishedadvisory, industry and tax administration experts tooffer a rounded advisory service. Richard Newbyleads the team of eight other professionals. He hasmore than 20 years of cross-border practice experi-ence and is specialised in transfer pricing and busi-ness restructuring. The practice provides technical expertise and

industry experience to ensure results that are easy tounderstand, implement and support. The full serviceoffering includes cost sharing arrangements, globaltax efficient supply chain strategies, documentation,OECD policy analysis, transfer pricing analysis, duediligence analysis, tax controversy and audit support,and APAs. Partner Danny Beeton comes highly recommended

by clients. One client said: “Not only did I enjoy work-ing with Danny, I learned and continue to learn a lotfrom Danny. I believe Danny also teaches at univer-sities and this gives him a good academic ground aswell as practical skills. He also conducted a TP analy-sis interview with our non-tax personnel. In order todo so, he had to speak in the language non-tax peo-ple could understand and he did so brilliantly.”Freshfields Bruckhaus Deringer’s transfer pricing

department is headed by Murray Clayson. The teamoffers a wide range of services and works closelywith the firm’s tax department and other servicelines including intellectual property (IP), dispute reso-lution and anti-trust, competition and trade. TheLondon office works as an integrated part of the

global network of around 70 transfer pricing special-ists. The team combines technical tax, legal risk man-

agement and transfer pricing economics expertiseto uniquely help multinationals as the climatechanges and assist clients with specialist knowl-edge of the local and international tax environmentand legislation. With extensive market knowledge, the profession-

als assist multinationals from all sectors with specificexperience in consulting clients in consumer andhealthcare industries, manufacturing, real estate, andenergy and natural resources. Hogan Lovells’s London-based director for transfer

pricing Fabrizio Lolliri has a wealth of experienceadvising clients with regards to a range of transferpricing matters. He has expertise in the TMT, auto-motive, biotechnology and pharmaceuticals, engi-neering, high technology and food and drinks indus-tries. The team assists clients through a full range of

services including transfer pricing reporting, tax-effi-cient supply chain management, critical valuations,financial modelling, TP compliance and disputes. Gareth Green is the sole partner and founder of

Transfer Pricing Solutions, which provides specialistadvice on transfer pricing, thin capitalisation andassociated international tax issues. Green has morethan 20 years of experience in transfer pricing andhas extensive knowledge of risk analysis, TP docu-mentation and TP design. He set up the firm in 2003after leaving his post as director at EY. The firm’s clients benefit from cost-efficient and

prompt one-to-one assistance. Its services cover arange of TP matters including thin capitalisation, prof-it valuation for permanent establishments, compliantpolicy design and liaison with the tax authorities inrelation to transfer pricing and APA negotiation. Thefirm is a member of the Quantera Global network ofindependent transfer pricing advisers.

Tier 3Transfer pricing is one of Clifford Chance’s key prac-tice areas, offered under the management of the

UK



firm’s global head of tax, pensions and employment,Chris Davies. Davies has many years of experienceand has been a partner at the firm since 1999. Hespecialises in the taxation of corporate and financingtransactions with emphasis on structured financeand international taxation. The team advises clients on a range of domestic

and international transfer pricing issues such as cor-porate restructuring, IP and patent boxes, transfertaxes, cross-border transactions and refinancing inaccordance with global legislation.

FTI Consulting’s transfer pricing team is headed byMarvin Rust and comprises nine other professionals.The global advisory firm offers a combination oftransfer pricing expertise and economist resourcesallowing its professionals to provide unique transferpricing services. Rust has extensive experience invarious aspects of transfer pricing from audits tocomprehensive transfer pricing studies supportingcomplex transactions and APAs. His sector expertiseincludes TMT, pharmaceutical, leisure and consumerproducts. The extensive service offering includes TP concep-

tual design, global documentation concepts, IP struc-turing and reorganisations, benchmarking services,tax audit defence, litigation, arbitration and APAs. The firm was highly praised by its clients. One

described them as “a professional, well organisedand technically astute transfer pricing team”.The firm is part of the international WTS Global net-

work and the London practice was established in2014. This year, a number of professionals joined theteam including Vassiliki Gkioni from EY, Martin

Brooks who previously worked for HMRC, SergeyMaltsev from EY and Kirsty McMillan from PwC. Batanayu Katongera is the new head of transfer

pricing at Macfarlanes. He specialises in advisingmultinational enterprises on their TP policies andfocuses on dispute resolution across a broad spec-trum of industry sectors including financial services,private equity, TMT and life sciences. The teamassists clients through a range of services related tointragroup and party agreements, TP reporting andcompliance, documentation, policy managementand controversy assistance. Former head of transferpricing Martin Zetter left the firm in March 2016.

McDermott Will & Emery provides transfer pricingadvice as part of its tax offering, with transfer pricingspecialists based in the US and Europe. Tom Scott,James Ross and Matthew Herrington are key mem-bers of the firm’s UK practice and bring extensiveknowledge in tax-efficient structuring, fund manage-ment, inbound investments, M&A and TP disputes tothe team. The London-based TP practice consists of lawyers

with extensive experience in compliance, documen-tation, transfer pricing planning, APAs and controversymatters. Sarah Priestley is the head of tax at Shearman &

Sterling and oversees all transfer pricing activities.The team of professionals offers transfer pricingadvice, among many other services, and has awealth of knowledge in M&A, investment funds,restructuring, spin-offs, controversy and litigation. Thepractice specialises in energy and infrastructure,healthcare, financial, metals and mining, and TMT.

UK


Baker & McKenzie100 New Bridge StreetLondon, UK

Richard FletcherHead of Transfer [email protected]

Nigel DolmanHead of Valuations & Tax [email protected]

Jukka KarjalainenHead of Business [email protected]

Stephen LabrumHead of Financial Services Transfer Pricing [email protected]

The London Transfer Pricing Teamcomprises lawyers, economists andfinancial analysts to ensure we cansupport our clients on all aspects of theircompanies’ transfer pricing strategy. Theteam is known for identifying pragmatic,sustainable solutions that are aligned withour clients’ business models andobjectives. Our ability to offer integratedtransfer pricing, tax and legal advice froma single source also creates greaterefficiencies.The team was awarded the ITR “UKTransfer Pricing Firm of the Year” awardin 2015 and 2016 and as evidence of thestrength of our advice and reputation, weare now the largest and fastest-growingTransfer Pricing team in any UK law firm.This year we welcomed two leadingtransfer pricing partners, Jukka

Karjalainen and Stephen Labrum, to ourteam.Our advice is legally privileged and itsdisclosure cannot be compelled by taxauthorities. As lawyers, we can litigateagainst tax authorities if disputes arise.With tax specialists in over 40 countries,no other law firm can rival our globalreach or depth of tax expertise, which iswhy we are ranked Band 1 in ChambersGlobal Directory for Tax.

UK







LEADING FIRMS


2 Baker & McKenzie DLA Piper Sayenko Kharenko WTS Tax Legal Consulting

3 Avellum Partners International Legal Center EUCON Jurimex

Firms to watch Aleksey Pukha and Partners

The Ukraine Ministry of Finance announced at the endof 2015 changes to the transfer pricing rules, as partof broader tax reforms. Most of these changes relatedto the implementation of the OECD’s BEPS Project intoUkrainian law. The proposed amendments include therequirements for transfer pricing documentation andcountry-by-country reporting (CbCR). Although BEPS has been firmly on the Ukrainian

tax agenda, it has been unclear about whether thecountry will follow its Eastern neighbour, Russia’sUkraine approach or stick to the European-backedOECD recommendations. From advisers’ observa-tions, and the announcement from the Ministry ofFinance, is moving more towards an EU approach.

Transfer pricing was introduced in Ukraine in 2013and remains a very hot topic. Taxpayers are seekingmore compliance advice to prepare for the proposedamendments and are waiting for the implementa-tions expected to take place next year. “So far BEPS has only affected advisers in terms of

publishing articles and speaking at events,” saidSerhiy Verlanov, head of tax and transfer pricing atSayenko Kharenko. The Ukrainian economy has been struggling but

the gross domestic product (GDP) is expected toreturn to growth this year after two years of contrac-tions. The local currency remains weak and investorsare not interested, although there has been anincreased interest in infrastructure projects byinvestors from Turkey and Saudi Arabia who are‘ready to play by Ukrainian rules’. Advisers expectinbound investments to start later this year asPresident Petro Poroshenko now leads the govern-ment and parliament. “This control has beencemented and it looks like he has all the power nowto proceed with the reforms. That’s why, from thispoint of view, we are opening a new page and anew environment of Ukraine,” said Kharenko.Advisers report that there have been very few TP

audits and the tax authorities are looking for sub-stance and whether transactions should be filed ornot. For years the authorities have been said to beaggressive and this has not changed. “They’vebeen quite aggressive for a number of yearsalready so I don’t think it’s getting any better thanlast year, I cannot say that it is getting any worse.They are evenly aggressive. They are aggressive


UkraineTax authorities State Tax AdministrationPostal address: 8 Lvivska Square, 04655, Kiev – 53Tel: +38 44 272 44 02; +38 44 272 51 59; +38 44 272 08 41Fax: +38 44 272 08 41Email: [email protected]: www.sta.gov.ua


http://www.sta.gov.ua

and business feels the pressure,” SvitlanaMusienko, head of tax and transfer pricing at DLAPiper Ukraine.

Tier 1Alexander Cherinko is the transfer pricing leader atDeloitte Ukraine, supervising the team of 20 profes-sionals. He has more than 10 years of experience intransfer pricing, corporate tax and assisting clientswith respect to Ukrainian and international tax. Aspart of its full service offering, the team providesassistance to clients from a range of industry back-grounds, with extensive knowledge in food, bever-ages and agriculture, manufacturing, automotive,energy and resources and financial services. Deloitte engaged in many impressive TP projects

this year and provided innovative offerings whichinvolved effective preparation of TP documentationas well as consulting on developing pricing methods. Four consultants joined the team this year,

Kolomiitseva Khrystna, Mytrovka Yuiry, YevgeniyaVoychulis and Valerii Fedorenko. The accounting firmis part of the global Deloitte network with more than210,000 professionals in 150 countries.

EY’s transfer pricing experts have a wealth ofknowledge in tax and legal affairs and assist clientsin a range of matters related to optimisation of cor-porate operating models for compliance with localand international TP legislation, restructuring, riskmanagement and TP documentation. The transfer pricing practice at KPMG is overseen

by head of tax Sergiy Popov and head of transferpricing Konstantin Karpushin, both with years ofexperience in international tax, transfer pricing andactive engagement with the Ukrainian tax authori-ties. The team maintains a multidisciplinary approach to

its work with specialised knowledge in variousindustries including energy and natural resources,pharmaceuticals, consumer market, finance andindustrial manufacturing. PwC’s transfer pricing department assists clients of

all sizes, providing sound practice in cross-border andintercompany transactions with consideration toUkrainian and international transfer pricing legislation.The team of specialists have experience in TP audits,dispute resolution, documentation, compliance, policyplanning, APAs and business structuring. The firm has

Ukraine



Corporate income tax 18% (a)Capital gains tax 18%Branch tax 18%

Withholding tax Dividends 15% Interest 15% (b) Royalties 15% Branch remittance tax n.a.


a) Special tax rates exist for insurance companies.b) The following interest is exempt from

withholding tax:

• Interest and income (discounts) received bynonresidents from state securities, municipalbonds or debt securities if these instrumentsare secured by state or municipal guaranteesand if they are sold or placed bynonresidents outside Ukraine throughnonresident authorized agents

• Interest payments to nonresidents on loansreceived by the state or to a municipalbudget if they are reflected in the state ormunicipal budget or in the budget of theNational Bank of Ukraine

• Interest on loans obtained by businessentities if fulfillment of these loans is securedby state or municipal guarantees



a range of specialities, particularly in metal, chemical,financial services, fast-moving consumer goods(FMCG) and pharmaceuticals.

Tier 2Hennadiy Voytsitskyi is the head of transfer pricing atBaker & McKenzie, working alongside three otherassociates. The practice has developed expertise invarious TP areas, where the team applies a combi-nation of legal and tax knowledge, boosted with TPexpertise to provide clients with a complex and deepanalysis. The team offers a full scope of services including

international tax planning, audits, employee sharestrategy and negotiations with the tax authorities.Clients praised the firm stating it is their preferred taxadvisory service in the Ukraine due to the team’sstrong knowledge base of local regulations coupledwith the client-oriented attitude. The professionals are working on a transfer pricing

study for software development services includingadjustments of standard methodology to accommo-date clients’ business structures. DLA Piper’s transfer pricing team offers the full

suite of services through the support of the five ded-icated professionals. The team is headed by SvitlanaMusienko who has years of experience in interna-tional and Ukrainian tax as well as a strong ability toassist both domestic and multinational clients in arange of matters relating to transfer pricing, includingM&A, restructuring and business optimisation. The team assists clients with the design, documen-

tation, and implementation of tax-efficient transferpricing policies in accordance with local and interna-tional legislation. The team comprises lawyers fromaccounting and banking backgrounds as well as cer-tified accountants with a good understanding of thebusiness environment.Serhiy Verlanov joined Sayenko Kharenko as the

head of tax and transfer pricing in July 2015. He hasmore than 14 years of experience in tax and tax liti-gation having previously been head of tax litigationat PwC, and was praised for his knowledge by hispeers. He advises locals and international compa-

nies on sophisticated tax matters related to cross-border transaction structuring as well as representsclients in tax litigations. The team consists of five other dedicated profes-

sionals and focuses on assisting clients with TP dis-putes and negotiation with the tax authorities. TheTP practice engaged in a tax dispute involving one ofthe world’s largest tobacco producers with regards totransfer pricing and the free-of-charge distribution ofgoods. Clients describe the firm as reliable andresponsive and recommend it for its high profession-al standards. Oleksandr Markoov, Konstantin Penskov, Kateryna

Babych and Alexander Buryak also joined the firmthis year from PwC. The transfer pricing team of eight professionals at

WTS Tax Legal Consulting has both a strong legaland economic background. It offers a range of trans-fer pricing services including TP documentation, eco-nomical analysis on controlled transactions and sub-stantiation of market prices. Ivan Shynkarenko leads the transfer pricing practice

which provides support to clients within agribusiness,agrochemicals and biotechnologies, FMCG, retail busi-ness, food and beverage production, logistics andtransport industries. Litigation is also a key practicearea and the advisers offer a principled approachcombining their litigation skills and knowledge. A client said: “The firm provided top-notch, client-

oriented services in TP compliance in the situation ofnew TP rules with due account to special conditionsof our business.”

Tier 3Under the supervision of Mykola Stetsenko, transferpricing professionals at Avellum Partners supportclients in a range of TP matters such as structuring,international tax planning and risk management. Theteam has a strong understanding of Ukrainian andinternational tax regulations and advise domesticand foreign clients on the use of complex structures,vehicles and arrangements as well as the establish-ment of specific instruments such as dual-residentcompanies, hybrid entities and instruments.

Ukraine


The team of six also regularly supports clients innegotiating tax rulings with the local tax authoritiesand recently designed an international businessstructure which allowed a non-resident client tomanufacture machinery and sell it to foreign con-sumers in a tax efficient manner. Its industry experience ranges from governmental

institutions, companies in mining and chemicalsindustries, major FMCG companies, pharmaceuticalproducers and banks. Managing partner Yaroslav Romanchuk and part-

ner Larysa Vrublevska lead the transfer pricing prac-tice at International Legal Center EUCON. The team,comprising six other professionals, offers a range ofTP services including cross-border transactions, TPpolicy drafting and compliance. The practice assistscorporations of all sizes, with focus in agriculture,equipment production, construction, energy andtelecommunications. In response to the changingtransfer pricing climate, the firm developed a newstrategy to assess clients’ risks when executing con-trolled transactions and introduced strengths, weak-nesses, opportunities and threats (SWOT)-analysismethodology to assess prospects of each marketpricing method.

A client said: “The documentation was made intime according to Ukraine tax legislation and we aresatisfied by scope and work quality. So we woulduse this firm again and would recommend EUCON,Ukraine to others.”Jurimex transfer pricing department is jointly head-

ed by Danylo Getmantsev and Vita Forsuik. Bothhave experience in tax law and the team of profes-sionals offer various tax services across a range ofsectors including transport and infrastructure, gam-bling, trade and trade network, real estate and con-struction, and tourism and hospitality.

Firms to watchAleksey Pukha oversees the transfer pricing team atAleksey Pukha and Partners, supported by twoother professionals, Anna Gadiatska and AnnaNikolaychuk. The team specialises in the area ofmanufacturing, transport and technology and sup-ports clients with disputes and compliance. Thepractice provides legal services to international com-panies in Europe, the US and Asia. This year the team carried out extensive work in

preparation for the submission of reports to the taxauthorities.

Ukraine



WTS Consulting LLCPankivska St., 5th floor1033 KyivUrkainewww.wts.ua

Key contacts:Ivan [email protected] +380 444 907 197

Ukraine


http://www.wts.ua


LEADING FIRMS

1 Ferrere Grant Thornton Guyer & Regules

2 Bergstein Abogados Deloitte KPMG PwC

3 EY

Transfer pricing is still relatively new in Uruguay, witha formal system only being implemented in 2007.Both the tax authorities and the government are stillgaining experience regarding the rules, and newrequirements are slowly being implemented, practi-tioners say.“Uruguay is becoming closer to the OECD,” said

Juan Manuel Albacete, head of tax at Guyer &Regules. Although the country is not a member ofthe OECD, measures are being taken to ensureincreased transparency. PwC reports that the govern-ment has submitted a tax bill to the Congress thatincludes adoption of the OECD’s recommendationsfor country-by-country reporting (CbCR) and the mas-ter file for TP documentation. This would also allowtaxpayers to apply for bilateral and multilateraladvance pricing agreements (APAs). Practitionersexpect the bill to be passed by the end of the year. “We’re seeing an increasingly aggressive trend from

the OECD, demanding transparency and substantialchanges in our legislation,” said Jonás Bergstein,

partner at Bergstein Abogados. “The regulations thatthe OECD encourages and dictates upon us are notcompatible with our laws, so that means that manytax reforms are to come in order to meet the require-ments of the OECD,” he added.Transfer pricing is not yet an area where the

Uruguayan tax authorities are focusing the majorityof their time and money, however practitioners saythat the authorities are increasingly involved in train-ing in this area. “There is still scarce experience in TP audits and no

TP case law, but we expect this to change in thenear future,” said Gianni Gutiérrez, head of tax atFerrere. “The TP audits are getting more technicalthan they used to be, and soon taxpayers and thetax authority will clash on applicable criteria.”Nevertheless, practitioners agree that transfer pricing

is a growing area in Uruguay, especially consideringthe recent developments regarding CbCR, master fileand APAs. “More companies and firms are involved inthis recent practice in the market and we expect to bebusy with this area of practice,” said Albacete.

Tier 1Ferrere’s transfer pricing department is made up oftwo partners, four associates and 20 accountants,and regularly advises large multinationals on TP mat-ters. The firm has particularly strong experience incompiling transfer pricing reports, which includes theanalysis of whether transfer prices are within anarm’s-length range. The practice also has experiencehelping forestry companies, beverage distributorsand logistics companies with their transfer pricinganalysis, dispute and regional strategies.


UruguayTax authorities Dirección General Impositiva (DGI)Av. Daniel Fernandez Crespo 1534CP 11200 MontevideoTel: +59 82 1344Website: www.dgi.gub.uy

http://www.dgi.gub.uy


Gianni Gutiérrez leads the team. His expertiseranges from structuring the tax aspects of M&A andfinancial products to personal wealth planning, andhe has successfully led the defense of some of themost significant disputes initiated by the Uruguayantax authorities.Rafael Sánchez leads the TP department at Grant

Thornton. The team consists of two partners and 14other professionals. It performs transfer pricing stud-ies and documentation and represents its clients inlitigation in the agriculture, manufacturing, automo-tive and financial services industries. In 2015, the team prepared the TP report of Molino

Americano in order to comply with applicable regu-lations and assisted the company with the resolutionof a dispute with the tax authority regarding TPadjustments. Several clients described their experience with the

firm as “very good”.Juan Manuel Albacete leads the team of five part-

ners and six other TP professionals at Guyer &Regules. The team prepares TP documentation,advises on TP strategy, negotiates APAs and repre-sents clients before the tax authorities and in court.The firm’s clients are mainly in the automotive, agri-cultural and investment and holding industries. In February 2016, Guyer & Regules’ professionals pre-

pared the transfer pricing study of an import companyfor the 2015 fiscal year. The firm also assisted with thepreparation of the TP study of another company.“Very satisfactory experience. Solid knowledge of

the matter, plus experience, pragmatism and reputa-tion,” one client said.Albacete has been elected a board member of the

Bar Association of Uruguay and was president of theUruguayan Institute of Tax Studies.

Tier 2The TP department at Bergstein Abogados has twoprofessionals, including Domingo Pereira, who ishead of the practice. The firm serves companies inthe pharmaceutical, agribusiness and industrial

goods and services industries, and offers servicesincluding TP studies, TP analysis, and APAs.The firm is performing a TP analysis for a logistics

company, as well as assisting another law firm incompleting a number of transfer pricing studies.Pereira is a former professor in taxation, and is a

member of the Uruguayan institute of tax studies. Deloitte specialises in providing consultancy on

specific issues of transfer pricing. The TP team pro-vides advice on the development of certifications tosupport the transfer pricing used and the preparationof any additional information that could be required.The firm also provides complementary services oncustoms valuation. The firm has clients in wholesale trade, pharma-

ceutical, food manufacturing, chemical manufactur-ing and the financial sector. In 2016, the firm helpeda client negotiate new transfer prices with the cus-tom authorities.Gonzalo Lucas leads the team. He is a professor of

tax law and technology and has provided tax adviceto several national and international companies.Alejandro Horjales leads the transfer pricing

department at KPMG. Over the past year, the team has rendered tax

advice to a client on TP issues related to the marketentry of a peer-to-peer lending platform. The firm hasalso performed a TP study for leading financial enti-ties, and given advice on TP issues related to tradingof commodities. The firm has clients in the energy,natural resources, manufacturing and services indus-tries.A client described KPMG as a “top firm in the coun-

try”.PwC’s team of transfer pricing experts helps clients

with preparing and filing documents, negotiatingAPAs and controversy issues.

Tier 3Martha Roca leads the TP practice at EY, which helpsits clients with policy and strategy development, doc-umentation and controversy.

Uruguay


Uruguay



Corporate income tax rate 25% Capital gains tax rate 25% Branch tax rate 25%

Withholding tax Dividends 7% (a) Interest 12% (a) Royalties 12% (a) Equipment rent 12% (a) Technical assistance payments

and service fees 12% Branch remittance tax 7%


a) This tax applies to non-resident corporationsand individuals and resident individuals. Non-resident corporations are corporations notincorporated in Uruguay.



The US has enacted extensive statutory, regu-latory, and administrative guidance governing

the conduct of transfer pricing audits. Transferpricing audits are part of the general overallaudits of multinational taxpayers, but because oftheir complexity and magnitude, they frequentlybecome the major focus of IRS audits.

1. How does the tax authority selecttransfer pricing audit cases? In December 2014, the IRS announced that itwould initiate campaigns to examine specificareas of noncompliance in a move toward a risk-based approach to selecting cases and issues forexamination. The IRS identified transfer pricingas a sample campaign.

In 2016, the IRS reorganised its LargeBusiness and International (LB&I) division inthe context of the new risk-based approach.Under the 2016 reorganisation, the IRS formednine practice areas that report directly to onedeputy commissioner regarding complianceissues, suggested campaigns, and developmentof training and examination tools.

The IRS identified five subject matter prac-tice areas with treaty and transfer pricing oper-ations as one. The area is led by the director oftreaty and transfer pricing compliance withthree directors reporting to them: the directorof field operations transfer pricing practice(TPP); the director of advance pricing andmutual agreement (APMA); and the director of

treaty administration. The treaty and transferpricing practice has primary responsibility fortransfer pricing cases and the TPP has primaryresponsibility for examining transfer pricingissues during the examination.

To adequately staff the TPP, a number ofexaminers in the former international businesscompliance division and economists were trans-ferred to the TPP group. The international busi-ness compliance division is now the cross-borderactivities practice area, which handles cross-bor-der issues other than transfer pricing. As a resultof these changes, the TPP group is expanding itsfootprint into more transfer pricing audits.

In conjunction with the reorganisation and thefocus on campaigns, the IRS formalised its risk-based approach to examination. During the plan-ning phase of an audit, the scope will be deter-mined based on the issues to be examined. Issueschosen for examination should be those that havethe broadest impact on compliance, regardless ofthe taxpayer’s size. Given the expansion of theTPP group and the identification of transfer pric-ing as one of the first campaign issues, it is expect-ed that taxpayers with transfer pricing arrange-ments will continue to be under IRS scrutiny.

2. How will a company find out it hasbeen selected for audit? What is the officialnotification?The IRS notifies a taxpayer that it has beenselected for audit by sending out an opening


An audit guide by Cindy Hustad and Keith Reams of Deloitte Tax LLP.

US

Tax authorities Internal Revenue Service 77 K Street NEWashington DC 20002Tel: +1 202-803-9000Website: www.irs.gov/Businesses

http://www.irs.gov/Businesses

letter. This letter will relate to a specificaccounting period and will be issued to the cor-poration. Generally, standard information docu-ment requests (IDRs) are attached to the letter.After the letter is sent, the taxpayer and theIRS will establish a date for the opening confer-ence. During the opening conference, the IRSwill explain the audit process. At this point, theIRS will also expect the taxpayer to respond tothe initial IDRs, if it has not yet done so.

3. When a company has been notified ofan audit, what is the first thing it shoulddo?The company should review the standard initialIDRs and begin to gather the requested infor-mation, which includes tax work papers, trialbalances, board of directors’ minutes, financialstatements, etc. At the beginning of the audit,the IRS will request the taxpayer’s contempora-neous transfer pricing documentation asrequired by the Internal Revenue Code. Thisdocumentation must be provided to the IRSwithin 30 days of the request as one of the nec-essary conditions for the documentation to pro-vide transfer pricing penalty protection to thetaxpayer. The documentation must meet theother requirements under the regulations toconfer penalty protection. Therefore, the tax-payer should be prepared to provide its transferpricing policies and any contemporaneous docu-mentation that was prepared at the time the taxreturn was filed.

4. Are there legislative, regulatory, or otherprocedures applicable to taxpayers subjectto a transfer pricing audit? If not, what isthe recommended practice?At the time the taxpayer files its tax return, asa general matter, the taxpayer must have andmaintain the information necessary to supportits return filing position, including its transferpricing results. To avoid the imposition of trans-fer pricing-specific penalties, the taxpayer must

promptly prepare its transfer pricing documen-tation and provide it to the IRS within 30 daysof an IRS request. The transfer pricing docu-mentation must include:• An overview of the relevant business, includ-

ing an analysis of the economic and legal fac-tors that affect the pricing of its property orservices;

• A description of the taxpayer’s organisationalstructure (including an organisation chart)covering all related parties engaged in trans-actions potentially relevant under IRC sec-tion 482, including foreign affiliates whosetransactions directly or indirectly affect thepricing of property or services in the US;

• Any documentation explicitly required bythe regulations under IRC section 482;

• A description of the method selected and anexplanation of why that method was select-ed;

• A description of the alternative methods thatwere considered and an explanation of whythey were not selected;

• A description of the controlled transactions(including the terms of sale) and any internaldata used to analyse those transactions;

• A description of the comparables that wereused, how comparability was evaluated, andwhat (if any) adjustments were made; and

• An explanation of the economic analysis andprojections relied on in developing themethod.

In addition, the taxpayer must maintain and beable to provide the following items:• A description or summary of any relevant

data the taxpayer obtains after the end of thetax year and before filing a tax return, whichwould help determine if a taxpayer selectedand applied a specified method in a reason-able manner; and

• A general index of the principal and back-ground documents, and a description of therecord-keeping system used for cataloguingand accessing those documents.

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Once the audit begins, the Internal RevenueManual and various directives set forth guide-lines the IRS follows in auditing transfer pricingissues. The IRS in February 2014 issued aTransfer Pricing Audit Roadmap that providesdetailed guidance to its agents for the conductof a transfer pricing audit. The roadmap antici-pates that the agents will engage in extensivefactual development, including interviews ofcompany and non-company personnel.

5. How does the US differ in its approachto transfer pricing audits from othercountries?The US approach to transfer pricing audits issimilar to that of other countries, albeit withstronger tools to compel the US taxpayer toobtain information that might be in the hands ofa foreign affiliate. Transfer pricing continues tobe a major area of focus for the IRS. In addition,the IRS cooperates with foreign jurisdictions toexchange tax information.

6. How does the tax authority compileinformation on a taxpayer for a transferpricing audit?The IRS gathers information from a number ofsources including tax returns, financial state-ments, transfer pricing documentation, web-sites, and other public information. The IRSwill request additional documentation andinformation through the course of a transferpricing audit. Generally, the IRS gathers infor-mation from the taxpayer and seeks interviewsand site visits during the audit through IDRs.

In recent years, the IRS has begun to conductmore interviews of taxpayer and third-partywitnesses who may have information regardingthe transactions at issue, and to require tran-scripts of those interviews by a court reporter.In addition, the IRS has begun requesting con-temporaneous documentation surrounding thetransactions at issue, such as presentations tosenior management and/or the board of direc-

tors regarding the transaction, e-mails and othercorrespondence concerning the transaction, anda variety of accounting documents regardinghow the transaction was booked.

The IRS continues to follow the IDR direc-tive dated November 2013 governing the IRS’sissuance of IDRs. The directive requires the IRSto discuss the requests and timing of responsesto those requests with the taxpayer before issu-ing them. Generally, the IRS expects a responseto its requests within 15 to 30 days. If the IRSdoes not receive responses, the directiverequires the IRS to take steps that can lead tothe judicial enforcement of administrative sum-monses if the taxpayer does not provide theinformation voluntarily.

As mentioned above, the Transfer PricingOffice (TPO) released a Transfer Pricing AuditRoadmap in February 2014. The roadmap pro-vides examination teams involved in the exami-nation of transfer pricing issues with a broad setof tools and audit techniques to plan, execute,and resolve transfer pricing examinations. Italso provides taxpayers with an understandingof IRS expectations and processes.

7. What are some of the issues more likelyto trigger a transfer pricing audit by the taxauthorities?Items in corporate tax returns that might triggera transfer pricing audit include cost sharingarrangements, licensing of intangibles, transfersof intangibles, business restructurings, and man-agement charges. The IRS has stated that itlooks for transfers of intangibles from high-taxjurisdictions to low-tax jurisdictions. In addi-tion, the IRS examines inbound transactions todetermine if a company has a history of runningnet operating losses.

8. What documents are requested from thetaxpayer during a transfer pricing audit?In addition to the information that would beincluded in the transfer pricing documentation

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discussed above, the IRS may request any doc-uments and information that may be relevant tothe taxpayer’s transfer pricing. The actual infor-mation requested will be dictated by the factsand circumstances of the transactions beingaudited. The IRS may request documents andinformation supporting the assumptions, con-clusions, and positions in the transfer pricingdocuments. It may also request contemporane-ous presentations made to the board of direc-tors, audit committee, or others concerning thetransactions under audit, notes of meetingsabout those transactions, and interviews withindividuals involved in those transactions.Further, the IRS may request documents andinterviews to perform a functional analysis withrespect to the transactions. Finally, it mayrequest information and interviews from thirdparties.

As stated above, the IRS is using courtreporters more frequently to transcribe inter-views.

9. Are there any restrictions on acompany’s business during a transferpricing audit? No. Publicly traded companies may be subjectto disclosure requirements by the Securitiesand Exchange Commission.

10. Are there any restrictions on thetaxpayer’s advisers during a transferpricing audit? Taxpayers’ representatives are subject to rulesgoverning their practice before the IRS, setforth in IRS Circular 230.

11. How long does a transfer pricing auditlast?A transfer pricing audit may last from sixmonths to four or more years. The lengthdepends on the scope of the issues and whetherthe taxpayer agrees to an extension of thestatute of limitations.

12. What happens after an audit has beencompleted?If the IRS agrees with the taxpayer’s position, itwill issue a no change letter and accept the tax-payer’s return as filed. If the IRS proposesadjustments with which the taxpayer disagrees,the taxpayer has several options.

If a tax treaty exists between the UnitedStates and the country of the affiliate, thetaxpayer may seek double tax relief throughthe tax treaty’s mutual agreement procedure(MAP) article, which frequently results in areduction of the IRS’s proposed adjustment.The taxpayer may appeal the adjustmentadministratively, exercising care to protect thetaxpayer’s ability to obtain full double taxrelief through the tax treaty competentauthority procedure, if such relief applies, andif the administrative appeal results in a reduc-tion but not elimination of the proposedadjustment.

Another alternative is for the taxpayer tochallenge the adjustments judicially. If seekingjudicial redress, care must be taken to protectthe taxpayer’s ability to obtain full double taxrelief through a tax treaty competent authorityprocedure if such relief applies and if theadministrative appeal results in a reduction butnot elimination of the proposed adjustment.

The IRS in August 2015 issued RevenueProcedure 2015-40, which changed the proce-dure for seeking competent authority reliefwhile pursuing administrative appeals.Previously, a taxpayer could exhaust its admin-istrative appeal options and then request reliefthrough competent authority. Rev. Proc. 2015-40 provides that if a taxpayer in appeals wishesto also pursue competent authority relief, itmust request such relief within 60 days of theopening conference with appeals. APMA andappeals will then have joint jurisdiction of thecase and resolve it jointly.

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13. Tips on negotiating with theauthorities?It is important when negotiating with the IRSto present the taxpayer’s case fully at theexamination level. In 2014, the IRS issued newguidelines governing the appeals process calledthe Appeals Judicial Approach and Culture(AJAC) Project. Under these guidelines, if thetaxpayer produces information during theappeals process that was not provided to theIRS during the examination process, appealsmust return the case to the examination divi-sion to consider the new information. This canresult in delay and further investigation.Therefore, it is important that taxpayers pro-vide all the information they may need todefend their case to the examination division.

At the same time, it is important to reviewthe IRS requests carefully and to answer thequestions the IRS has asked. It may be helpfulfor taxpayers to engage outside advisors duringthe examination process to advise with respectto the documents or information that must beprovided, the information the IRS is requesting,and the information it is not requesting, and the

defences to providing information and any priv-ileges that may apply.

14. How can a company manage its auditrisk?The best way to manage audit risk is to establishand follow effective, sustainable, transfer pric-ing policies, prepare annual contemporaneoustransfer pricing documentation establishing theappropriateness of transfer pricing results, andprovide transfer pricing documentation within30 days of an IRS request.

To further mitigate audit exposure, companiesshould confirm they are fully compliant with therelevant tax laws, file tax returns within the pre-scribed time limits, pay tax on time, and monitortheir transfer pricing results, including keyindices such as industry margin profiles on anongoing basis during the year. In addition, a tax-payer can review the Transfer Pricing AuditRoadmap and maintain the documentation oftenrequested in an IRS audit to confirm it can sup-port its transfer pricing policies and results.Finally, taxpayers may enter into an APA withthe IRS to manage their US tax examination risk.

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LEADING FIRMS

1 Baker & McKenzie Deloitte EY Fenwick & West KPMG Mayer Brown PwC Skadden, Arps, Slate, Meagher & Flom

2 Alston & Bird BDO Caplin & Drysdale DLA Piper Duff & Phelps Grant Thornton McDermott Will & Emery Miller & Chevalier Morgan, Lewis & Bockius Thompson & Knight Vinson & Elkins White & Case

3 BaseFirma Clayton & McKervey Economics Partners Sullivan & Cromwell

The OECD’s BEPS project has been the root of a lotof uncertainty over the past year, tax practitioners inthe US report. As a member of the OECD, the US hassigned up to follow the BEPS rules, however imple-mentation has been slow as fears of a negativeimpact on multinationals have caused debateamong the authorities and politicians.

“I think that the fear is that the US will be a loserif all of the BEPS recommendations were implement-ed, and many don’t agree with all of the recommen-dations,” said George Gerachis, head of tax at Vinson& Elkins.

Gerachis added that ultimately the US would goalong with the programme regardless, but that theprogress has been slow.

“The BEPS programme has been important lately,and it will continue to be very important,” said DavidNoren, head of tax at McDermott Will & EmeryWashington D.C.

The BEPS project has also caused the American taxauthorities to take stronger positions in audits andprepare for a post-BEPS world as the recommenda-tions are being implemented. Many practitioners alsoreport a significant increase in transfer pricing exam-inations carried out by the tax authorities.

Not only has the amount of audits increased, butthe intensity of the process is also much greater,according to Mark Martin, head of transfer pricing atMcDermott Will & Emery Houston. “The audits aremuch more vigorous and we are seeing many moreinformation document requests,” he said.

Fabian Alfonso, BaseFirma’s head of transfer pric-ing, agreed. “US corporations are feeling targeted bythe IRS,” said Alfonso.

As the tax authorities begin to implement BEPS,with legislation on country-by-country reporting(CbCR) finalised in June, practitioners see a lot morework coming from BEPS-inspired regulations.

“In the short to medium term I think the demandfor tax planning would increase, if companies wantto make changes to their structures – in part withCbCR in mind,” said Noren.

Tier 1The team in Baker & McKenzie’s TP practice consistsof more than 40 partners, as well as counsels, asso-ciates, economists, analysts and other tax profes-sionals. In the past year, the team advised WesternDigital on a $19 billion deal on international tax plan-ning, TP and tax controversies. The advice includedplanning the merger with SanDisk Corporation, taxaudits and analysis of potential tax exposures. Otherclients of the company include Altera Corporation,Western Union and Whirlpool. Salim Rahim oversees the US TP practice and is

chair of the North American TP tax practice group. Histeam has experience in all facets of the transfer pric-ing area, such as documentation, advance pricingagreements (APA), competent authority matters and

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dispute resolution. Gregg Lemein, senior counsel,was recognised by a competing firm as being a lead-ing practitioner within TP disputes.Deloitte has a strong team of more than 230 TP

professionals nationwide. Todd Wolosoff, who isbased in New York, is the global TP managing part-ner. Rob Plunkett is the TP leader for Washington,D.C. and New York, while Ron Saake leads SanFrancisco and Los Angeles. Shannon Blankenshipleads Houston and Dallas, and David Reichow headsChicago.

The firm offers services in business model optimi-sation, tax structuring, international mergers andacquisitions (M&A), multistate tax services, cross-bor-der tax, indirect tax, tax compliance, tax manage-ment consulting, financial accounting and more.

Deloitte has experience working with clients in anumber of industries and is aiming to help compa-nies manage risks with its TP solutions. EY has a team of more than 40 partners working

with transfer pricing. The firm assists clients with TPplanning, documenting TP policies and practices,managing controversy, supply chain managementand state and local TP.

David Canale is the EY leader for TP controversyservices in the Americas, and Purvez Captain is theglobal leader for oil and gas TP and economics.Canale has more than 20 years of experience andprimarily works with TP controversy and risk man-agement, planning and structuring. Captain workswith economics, financial analysis and financialmodelling, among other things. Craig Sharon is prin-cipal in the US national TP office, and was recog-nised by a competing firm for his skills in APA nego-tiation.

The transfer pricing practice of Fenwick & West ismade up of 11 partners and 11 other professionals.It is headed by David Forst, who works with M&A,cross-border transactions, international tax, corporatetax, restructuring, intellectual property and more.David de Ruig, Mike Knobler and Sophia Huangjoined the practice over the past year.

The firm has represented over half of the compa-nies featured in the Fortune 100 list across a rangeof industries, including Analog Devices, Abbott Labs,Johnson Controls and Cameco. The practice assistswith TP disputes, APA negotiation and establishingand documenting TP policies, among other things.

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Corporate income tax rate 15% to 39% (a) Corporate capital gains tax rate 15% to 39% Branch tax rate 15% to 39% (a)

Withholding tax (b) Dividends 30% (c) Interest 30% (c)(d) Royalties from patents, know-how, etc. 30% (c) Branch remittance tax 30% (e)

Net operating losses (years) Carryback 2 (f) Carryforward 20 (f)

a) In addition, many states levy income or capital-based taxes. An alternative minimum tax is alsoimposed on corporations.

b) Rates may be reduced by treaty. c) Applicable to payments to non-US corporations

and non-residents. d) Interest on certain “portfolio debt” obligations

issued after July 18 1984 and non-effectivelyconnected bank deposit interest are exemptfrom withholding tax.

e) This is the branch profits tax applicable to non-US corporations.

f) Special rules apply to certain types of lossesand entities.


Members of the firm have also served as advisersin foreign countries, such as Japan, Denmark andCanada.

The TP professionals at KPMG help clients withplanning and policy development, compliance anddocumentation and implementation. They also pro-vide dispute resolution services through APAs, com-petent authority negotiations, arbitration and litiga-tion support. Sean Foley, based in Washington DC, is the head

of the global services and Brian Trauman is based inNew York and national TP leader. Foley and Traumanare both recognised by a competing firm as especial-ly skilled within APA negotiation.

Foley has more than 20 years of experience work-ing with big organisations and multinationals on TPmatters. Trauman has extensive experience withinTP, including structures and supply chains, APAs,MAPs, documentation, intercompany agreements,audits, appeals and other alternative dispute resolu-tion.

The transfer pricing professionals at Mayer Brownhelp clients with TP structuring, large-case audits andadministrative appeals, US and foreign unilateral andbilateral APAs, competent authority matters and liti-gation. The team is made up of 18 partners and 28other professionals, and is headed by JoelWilliamson, Brian Kittle and Tom Kittle-Kamp.

While clients mainly come from the manufacturingand healthcare industries, the firm also advises com-panies in most other sectors. In the Guidant/BostonScientific Case, Mayer Brown represented BostonScientific and its subsidiaries in a complex transferpricing dispute with adjustments totalling $3.5 billion.

“We had an excellent experience with MayerBrown,” said senior vice president of taxes at Nestlé,Alex Spitzer.Horacio Peña and his team of professionals make

up PwC’s transfer pricing practice. They work withclients to explore matters of controversy, documenta-tion, execution, planning and value chain transfor-mation. Peña has 25 years of experience, 18 of thoseas partner, and is assisting clients in audit defenceas well as in the formulation and implementation of

supply-chain optimisation, global profit alignmentand tax minimisation strategies.Ward Connolly leads the transfer pricing practice in

the Western region of the US. He is recognised bycompeting firms as an expert at TP disputes, APAnegotiation and documentation project manage-ment.

The transfer pricing team at Skadden, Arps, Slate,Meagher & Flom advises multinational companieson international structuring, planning and auditissues, cross-border transactions, managing tax con-troversies and more.

Tier 2Alston & Bird’s transfer pricing practice consists offour partners and two other professionals. HenryBirnkrant oversees the practice.

Manufacturing, technology, media and telecommu-nications, food, fast-moving consumer goods, agri-culture, healthcare and financial services are theindustries the firm focuses on. Alston & Bird is recog-nised for securing APAs with innovative methodolo-gies. The firm is currently representing a large foreignmultinational in securing an APA, where the firm hadto structure the APA to accommodate the multina-tional’s unique features and unusual circumstances.

A client said: “Alston & Bird has provided my firmwith exceptional service for over 20 years. We trulybelieve it is Mr Birnkrant’s expertise and ability tobuild relationships with his clients that separates thefirm from the rest. Twenty-plus years of continuedservice speaks for itself.”Veena Parrikar is the transfer pricing principal of

BDO. The team of economists, tax practitioners andfinancial analysts provides planning, compliance,audit defence, and benchmarking services.

Parrikar has more than 14 years of professionalexperience providing multinational companies withglobal TP services across a wide range of industriesincluding technology, electronics, pharmaceuticals,power supply, cement, food and agriculture and con-sumer goods. Robert Pedersen is the national prac-tice leader for tax and transfer pricing services, andhas more than 25 years of experience on tax matters.

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The team of TP professionals at Caplin & Drysdaleoffers services such as structuring international trans-actions, negotiating APAs, handling competentauthority cases and resolving TP issues. The team includes Patricia Lewis, whose practice

focuses on international TP issues, competentauthority matters and other aspects of internationaltaxation. She has represented businesses in manyindustries, including financial services. Lewis is alsorecognised for her skills in APA negotiation by a com-peting firm. Clark Armitage is another experienced TPattorney. His core practice is advising multinationalcorporations on TP in all contexts, from planning tocross-border dispute resolution.

DLA Piper’s TP practice is a global operation withprofessionals, including lawyers, economists andcertified tax advisors. The team advises on the TPrules of all countries with developed transfer pric-ing regimes, such as Mexico, Brazil, Australia,Taiwan and Russia. Paul Flignor is the principaleconomist and head of the TP department, whichcomprises four partners and 13 other profession-als. Flignor has more than 15 years of professionalexperience in resolving pricing and valuationissues in the areas of international tax planning,controversy resolution, transaction support, licens-ing and financial economics.The firm’s clients mainly come from industries such

as food, fast-moving consumer goods and agricul-ture; computers, digital and online; manufacturingand technology, media and telecommunications. Thefirm assisted a large software company in a spin-off,the international migration of intellectual property,and the development of new TP policies.Mike Heimert leads a team of about 60 TP pro-

fessionals at Duff & Phelps. The firm provides sup-port for TP issues including litigation, compliance,planning, controversy and implementation. Theyalso assist with cost-sharing agreements, globaltax efficiency supply chain strategies, OECD policyanalysis, multistate TP analysis, and TP due dili-gence analysis. Heimert has been the global TP leader for four

years, and his skills include valuation and intellectual

property analysis. Jill Weise, leader of the NewEngland TP team, is recognised by another firm as anexpert at documentation project management. Thefirm offers its services to a wide range of industries,such as oil and gas, pharmaceutical, software andretail.The TP practice of Grant Thornton offers insight

and help with audits, documentation, planning andsupply chain re-engineering. David Bowen, who isbased in Washington, D.C., has been the managingprincipal of the TP practice for more than nineyears. He works with tax and international taxservices, focusing on federal income tax planning,tax controversies and transfer pricing. The firm pro-vides services in multiple sectors including energy,financial services, healthcare and more.

McDermott Will & Emery’s TP practice is madeup of more than 30 lawyers. Mark Martin leads theGlobal Transfer Pricing practice. Clients of the firm work mainly in manufacturing,

food, fast-moving consumer goods and agriculture,energy and utilities and computers, software,online and digital. McDermott Will & Emery hasone of the largest TP groups in any law firmglobally, and specialises in TP controversies andlitigation. In May 2015, the firm assisted Fluor Inc., a multi-

national engineering and construction firm basedin Texas, when they were hit with a nearly $100million adjustment for the years 2003 to 2005.Following the firm’s intervention, the adjustmentwas revoked. The case involved both services andtransactions of intangibles as well as the provisionof financial resources. The TP practice of Miller & Chevalier is headed by

George Hani and consists of 10 partners and eightother professionals. Hani is experienced in areassuch as tax controversy, administrative dispute reso-lution, tax accounting, tax litigation and federalexcise tax. Key industries for the firm are financial services,

energy and utilities, manufacturing and food, fast-moving consumer goods and agriculture, althoughthe firm also serves many other industries. The team

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of TP professionals offer services in connection withaudits, appeals, fast-track mediation, competentauthority, APAs and litigation.

The firm is currently representing a multinationalcompany in connection with an audit, helping thecompany develop support for its TP methodologyand advising on audit procedures and strategy. Thefirm is described by an attorney from a competingfirm as a “top-tier firm”.

“My experience was excellent. I have already rec-ommended them to several other companies,” saida client. Morgan, Lewis & Bockius’s team of transfer pric-

ing professionals serves companies across sectorsincluding retail, life sciences, financial services, tech-nology and energy. The firm’s practitioners includenames such as Bart Bassett, who is known for hisskills in transfer pricing. Bassett’s practice is focusedaround international tax structuring, TP issues,domestic tax structuring and resolution of tax contro-versy matters. The firm’s specialists advise on cross-border TP issues, disputes, and administrative resolu-tions through audits and APAs. One client describedhis experience with the firm as “excellent”. John Cohn leads both the tax and the transfer pric-

ing practice at Thompson & Knight, which compris-es three partners and four other professionals. Thefirm assists clients in the energy and utilities, food,fast-moving consumer goods and agriculture, manu-facturing and technology, media and telecommuni-cations sectors.

The firm has a long history of successful tax litiga-tion counsel for petroleum, hard minerals, and natu-ral resources clients. The firm represented Texaco inthe largest tax case ever tried before the UnitedStates Tax Court, an international transfer pricing con-troversy involving $863 dollars in alleged deficien-cies.

Cohn assists multinational corporations, nationaloil companies, small businesses, and individuals indeveloping and implementing tax-efficient interna-tional business structures.George Gerachis leads the TP team of four partners

and eight other professional at Vinson & Elkins. The

firm serves clients in industries including energy andnatural resources, financial services, technology, lifesciences and real estate. In these areas they assistclients with establishing, planning and documentingTP strategies, dispute resolution, and audit supportand litigation services.

“I believe Vinson & Elkins stands out among thecompetition,” a client said.

Vinson & Elkins represented Core LaboratoriesHolding in a TP dispute with the IRS involving thevalue of Core Lab’s global network intangibles. TheIRS sought to reduce the intercompany royalty paidby Core Laboratories Holding to its Dutch parent, CoreLab NV, for use of the intangibles by $33 million. Onbehalf of Core Lab, Vinson & Elkins obtained a fullconcession by the IRS in tax court.White & Case supports its clients in both US and

cross-border tax controversy. The firm is capable ofhandling cases of a variety of controversies and TPissues. Brian Gleicher is a partner based inWashington, D.C. With more than 20 years of experi-ence, Gleicher focuses his practice on internationaltax issues, with an emphasis on TP, tax treaty issuesand domestic tax controversy. A client described theirexperience with the firm as “very good”, and saidthey would use the firm again.

Tier 3Three partners and eight other professionals makeup the team at BaseFirma, led by Fabian Alfonso.Alfonso has 11 years of experience in devising trans-fer pricing policy and implementing, documenting,and defending cross-border transactions for multina-tional companies.

The firm, a boutique for integrated TP services,serves a range of industries, with many clients comingfrom sectors such as education, energy and utilitiesand healthcare. The firm also has many other officesacross the Americas, helping it work seamlessly oninternational cases. In addition, the firm has started touse TP principles for other economic services, includ-ing valuations and other areas of the tax code.

BaseFirma assisted Royal Caribbean Cruises withcreating a new solution based on TP techniques and

US



regulations in order to decrease the company’s taxburden significantly.

A client described the firm as “extremely reliableand professional” and said: “They have never failedme. I have been using this firm for over 10 years andwould absolutely recommend them.” Another client,Jodi Leonarczyk of GCP Applied Technologies, said:“The team has always been professional, knowl-edgeable and willing to go the extra mile. I woulddefinitely recommend them to others.”Clayton & McKervey is based in Michigan and run

by Alexander Martin. The firm is internationallyfocused and mainly serves middle-market clients,but also supports other accounting firms. The firm’sclients come from multiple industries including man-ufacturing, computers, digital, software and online,technology, media and telecommunications, trans-port, healthcare, and hospitality, amongst others.Martin is described as an “excellent leader whoseexplanations were very easy to understand” by GaryFrank of KNF Neuberger. “I cannot give any highermarks to Alexander Martin,” Frank said.

One client said their experience with the firm was“first in class”, while another said: “Clayton &McKervey is an outstanding value. Great service,great price, and great experts. They provide me thebest service for my dollar.”

Tim Reichert is the founder and president ofEconomics Partners. He is based in Denver, Coloradoand is experienced in assisting clients from the agri-culture, automotive, computer products, distributionand the gaming industries. Mark Madrian is a newpartner in the firm, bringing with him more than 20years of experience in transfer pricing. The firm offersits expertise to clients in areas such as internationalTP, controversy, design, co-development, documenta-tion and intangible asset valuation.

A competing firm said Economics Partners hadgrown stronger over the past year due to “a stronghold on intangible services and new partners likeMark Madrian”.Ron Creamer is the head of Sullivan & Cromwell’s

tax group, and also the group’s M&A practice.Creamer is an experienced practitioner, working inareas such as acquisitions and dispositions, particu-larly cross-border transactions. He also regularlyadvises clients on tax-efficient financing techniquesand capital markets strategies.

The team also has partners such as Donald Korb,who is a former chief counsel for the IRS. The TPgroup assists clients across a spectrum of industrieswith developing and evaluating TP strategies, docu-mentation, defence, and administrative solutionssuch as APAs and competent authority.

US


Fenwick & WestSilicon Valley Center801 California StreetMountain View, California 94041Tel: +1 650 988 8500Fax: +1 650 919 0942

Firm profile:Fenwick & West LLP has representedover 100 of the Fortune 500 largest cor-porations in tax planning, transfer pricing,acquisitions, joint ventures and tax dis-pute resolution, including litigation. Over50 are Fortune 100 companies.Our primary focus is in the internationaltax area. International Tax Review namedus in 2015 as having one of the world’sleading tax planning and tax transactionalpractices.Dispute resolution also is an importantpart of our tax practice. We have favor-ably resolved disputes in well over 100IRS appeals proceedings. We currentlyhave pending or resolved during the past12 months 17 large-corporation appealsproceedings. We also have been counselto corporate taxpayers in over 70 federaltax court cases. Many of these appealsproceedings and cases involve or haveinvolved transfer pricing.Seven Fenwick tax partners appear inEuromoney’s Tax Controversy Leaders(2015), and five have appeared inEuromoney’s World’s Leading TransferPricing Advisors (2015).Euromoney Legal Media Group hasnamed Jim Fuller, one of our tax partners,as one of the top 25 tax lawyers in theworld. Nine Fenwick partners, includingour tax practice group leader, David

Forst, Jim Fuller, Ron Schrotenboer,Jennifer Fuller, Michael Solomon, WaltRaineri, Andy Kim, Adam Halpern andLarissa Neumann have appeared inEuromoney’s World’s Leading TaxAdvisors.

Morgan, Lewis & Bockius LLP1111 Pennsylvania Ave., NWWashington, DC 20004

1400 Page Mill RoadPalo Alto, CA 94304

ContactsWilliam F. Colgin, [email protected]

John B. [email protected]

Sanford W. [email protected]

ProfileOur market-leading transfer pricing prac-tice includes a deep bench of transfer-pric-ing specialists with experience in allaspects of planning, controversy, and litiga-tion. We have approximately a dozen part-ners or other senior practitioners exclu-sively or heavily dedicated to transfer pric-ing, supported by a large team of youngerlawyers. A number of our lawyers are taxlitigators who specialize in large transfer-pricing cases, and we have represented

US






multinational enterprises based both in theUnited States and internationally in someof the largest and most complex transfer-pricing disputes in recent history.

Recent representations include:

• The Coca-Cola Company v.Commissioner (US Tax Court,pending)

• Amazon.com v. Commissioner (US TaxCourt, pending), and

• GlaxoSmithKline v. Commissioner (USTax Court, settled).

Our experience extends to the nonlitiga-tion aspects of our practice as well. Wehave worked on significant businessrestructurings and other planning issuesregarding the identification and valua-tion of intangible property. With respectto controversy and litigation, in additionto trial and appellate litigation, we regu-larly represent clients in InternalRevenue Service (IRS) audits and IRSappeals, and we have experience withAdvance Pricing Agreements andCompetent Authority proceedings. Wehave worked in a wide range of indus-tries and with virtually every significanttransfer-pricing expert in the UnitedStates, as well as many experts across abroad range of other disciplines.

More generally, our full-service corporatetax practice provides companies and part-nerships of all sizes and structures with anintegrated approach to tax advice. Wefocus on four major disciplines: advisingon transactions, day-to-day counseling onsubstantive and tax-planning and compli-ance issues, resolving disputes with taxingauthorities and in court, and helpingclients obtain private or public guidance

from the IRS and the US Department ofthe Treasury.

Morgan Lewis is an international law firmwith more than 2,000 legal professionalsworldwide.

WTS LLC1776 on the Green67 Park Place East, 6th Floor MorristownNJ 07960USAwww.wtsus.com

Key contact:Francis J. [email protected] +1 973 401 1141

US


http://www.wtsus.com


LEADING FIRMS

1 Deloitte D’Empaire Reyna Abogados Mendoza, Delgado, Labrador & Asociados (EY)

2 BaseFirma KPMG Norton Rose Fulbright PwC

As Venezuela faces the worst economic crisis in itshistory, corporate transactions have almost come toa complete stop. Reports show that Venezuela’simports have plunged by around 40%, and that thereis nearly no oil being exported. For a country thatrelies heavily on this export, times are hard, and thegovernment’s focus is on repairing the economy. Thishas contributed to the transfer pricing marketremaining stable over the past year.“The market is pretty static because the economy

is very depressed,” said Carlos Fernández-Smith, co-head of tax at Norton Rose Fulbright. “There are nobig transactions in the market, and little investment,with a couple of exceptions.”While other countries are engaging heavily with

the OECD’s BEPS project, practitioners say that littlehas happened in Venezuela with regards to the proj-ect. Venezuela is not a member of the OECD, and thecountry has not committed to following the BEPSrecommendations. “My impression is that we willeventually adopt some of the guidelines, but we’renot actively engaging with them like some of theother countries,” said Fernández-Smith.

Venezuela’s tax authority, Servicio NacionalIntegrado de Administración Aduanera y Tributaria(SENIAT), has over the past few years been active inits auditing of transfer pricing policies, and this trendcontinued in 2016.“The tax authorities are aggressive because

Venezuela is facing problems and the government,including the treasury department, wants to raise thecountry’s revenue,” said Bernardo Solano, seniorpartner at BaseFirma.Fernández-Smith said that the overall attitude of

the authorities had not changed significantly overthe past year. However, two tax reforms in 2013 and2015 have contributed to making it easier for the taxauthorities to audit companies.“They [the tax reforms] tend to be more stringent

and give more power to the tax authority to increasetax collection,” said Fernández-Smith. “The tendencyis for the government to have legislation thatincreases tax collection and limits the rights of tax-payers rather than the other way around.”

Tier 1 Deloitte has around 10 professionals in its TP depart-ment in Venezuela, led by Iliana Salcedo. The practicehelps multinational companies in all their dealings withthe tax authorities including transfer pricing audits, doc-umentation and preparing defence files in case of anassessment. Its multidisciplinary team of partners,managers and seniors is experienced in preparing TPreports across industries such as energy, pharmaceuti-cal, automotive, consumer business and services. Alberto Benshimol leads the TP practice at

D'Empaire Reyna Abogados, a law firm with astrong reputation and presence in Venezuela.


VenezuelaTax authorities Servicio Nacional Integrado de Administración Aduanera y TributariaTorre Capriles, Plaza Venezuela, CaracasTel: +58 212 709 2888/709 2064/709 2027Website: www.seniat.gob.ve

http://www.seniat.gob.ve


D'Empaire's tax practice covers different areas suchas tax planning, litigation, transfer pricing, customs,accounting and consultancy regarding national, stateand municipal taxes, as well as matters with territo-rial and extraterritorial implications. The firm providesa wide range of tax planning for corporations andprivate clients and advises on the tax implications oflocal and cross-border transactions, and the taxgroup has represented corporations in essentiallyevery industry segment. The firm also has expertisein international tax matters.The firm is advising a company on tax and legal

consequences of the exclusion of banks and insur-ance companies from the adjustment for inflationsystem. It is the first time that banks have beenexcluded from the adjustment for inflation system,

and the consequences of such measures imply animportant increase in banks' income tax burden.Humberto Romero-Muci, Eduardo Meier and IsabelRada León are advising on this case.EY, known in Venezuela as Mendoza, Delgado,

Labrador & Asociados, does planning, documenta-tion, customs valuations and tax-efficient supplychain management for its clients. The team also per-forms design, business restructuring, direct and indi-rect taxes, and finance and accounting operatingmodel services. Maria Calvino is its main transferpricing contact in Venezuela.

Tier 2BaseFirma is headed by Jesús Pérez and has threepartners and three other TP professionals. The firm is

Venezuela



Corporate income tax rate 34% (a) Capital gains tax rate 34% (a) Branch tax rate 34% (a)

Withholding tax Dividends 34/50/60% Interest paid to residents Individuals 3% (b) Corporations 5% (c) Paid to non-residents Individuals 34% (d) Corporations 34% (e)

Net operating losses (years) Carryback 0 Carryforward 3 (f)

a) This is the maximum progressive rate, whichapplies to income exceeding 3,000 tax units.Effective from February 26 2015, the value of atax unit is VEF150. Petroleum companies andincome from petroleum-related activities aretaxed at a rate of 50%. Mining royalties andtransfers of such royalties are subject to tax ata rate of 60%.

b) The withholding tax applies to payments overVEF12,500.01. The tax is imposed on thepayment minus VEF375.

c) This withholding tax applies to payments overVEF25.

d) For interest associated with a loan invested inan income-generating activity, the withholdingtax is imposed on 95% of the gross payment.Consequently, the effective withholding tax rateis 32.3% (95% × 34%). For other cases, thetax base is the gross interest payment.

e) In general, the withholding tax rate is determinedunder Tariff No. 2, which provides for a maximumtax rate of 34%. It is applied to 95% of the grossinterest payment associated with a loan investedin an income-generating activity. For other cases,the tax base is the gross interest payment.Interest paid to foreign financial institutions thatare not domiciled in Venezuela is subject towithholding tax at a flat rate of 4.95%.

f) Losses may be carried forward three tax years,but they may not offset more than 25% of theincome obtained in such tax years.


part of an international group, specialised and expe-rienced in transfer pricing, with offices in citiesincluding Caracas, Amsterdam, Miami and Santiago.BaseFirma assists major multinational companiesfrom sectors such as manufacturing, healthcare andhospitality in dealing with complex local TP rules.During the last year, the firm advised a chemical

company on its transfer pricing structure. The firmchanged the structure of the company’s intercompa-ny transactions to satisfy both the arm’s-length stan-dard and customs requirements.KPMG’s Venezuelan branch advises its clients on

developing and implementing transfer prices, docu-mentation policies and outcomes and helping com-panies respond to challenges from the tax authority.Carlos Adrianza leads the tax team.Norton Rose Fulbright’s tax and TP teams are co-

headed by Carlos Fernández Smith and Fernando

Fernández Barroso. With its three partners and fourother professionals it is the second largest law firmin Venezuela. The firm provides TP litigation servicesto clients in the infrastructure, commodities, miningand finance industries. The team has experience inplanning, advisory and cross-border work.“We have had an excellent experience with them,”

said a client.Fernández-Smith specialises in tax planning and

advisory, tax diligence, international double taxation,service agreements, cross-border leasing and financ-ing structures. Partner Fernández has more than 35years of experience in tax consulting and planning.Elys Aray leads PwC’s TP practice in Venezuela. The

firm helps clients with TP documentation, preparingtax returns for information purposes, assessmentstudies, and consulting on transactions with relatedparties.

Venezuela



Tel: +58 212 264 6244Website: www.dra.com.ve

D’Empaire Reyna Abogados is one of thetop tier Venezuelan law firms and enjoysa reputation as the leading tax firm inVenezuela. D’Empaire is the law firm ofchoice for complex tax matters inVenezuela. Led by Alberto Benshimol andHumberto Romero-Muci, D’EmpaireReyna Abogados Transfer Pricing Practicehas taken part in several of the most rele-vant Transfer Pricing litigations of recentyears. D’Empaire provides a wide range ofTransfer Pricing planning for our clientsand advice on the implications of localand cross-border transactions. We haverepresented corporations in essentiallyevery industry segment with significanttransfer pricing problems. We recentlyrepresented Coca-Cola FEMSA andBrightstar Corporation in two multimil-lion dollar transfer pricing disputes.

Venezuela


http://www.dra.com.ve

LEADING FIRMS


2 Grant Thornton

The transfer pricing regime has matured and grownin Vietnam over the past decade but it is only inrecent years, and especially the past year, that trans-fer pricing has become a key focus area of the taxauthorities in Vietnam. “Over the year, there has beenan increase in the education of tax authorities anddeveloping knowledge which is giving them betterskills in enforcing transfer pricing regulations,” saidWarrick Cleine of KPMG. A recent change to transfer pricing documentation

in Vietnam has created a self-assessment obligationon taxpayers for audit risk, demonstrating a changein focus for the authorities for transfer pricing audits. Transfer pricing audits have generally been handled

by the tax team of the revenue authorities as a widerpart of tax audits, but the shifting transfer pricinglandscape has led to the establishment of four spe-cial TP audit teams, one at the General Department ofTaxation and a further three in key provinces. “These changes will undoubtedly lead to a greater

number of transfer pricing audits and extensions inthe breadth of coverage. The tax authority has indi-cated what they see as the likely profile of

companies that would be targeted for transfer pricingaudits in the coming years including those in realestate and the garment industry,” said MonikaMindszenti, head of transfer pricing at PwC. Advance pricing agreements (APAs) continue to be

an area of focus for both taxpayers and authoritiesalike. While there have been many applicationshowever, none have been concluded. “The combination of better education from the tax

authorities and risk-based audit selection means thatcompanies who were not transfer pricing compliantare going to be in a lot more trouble than they havebeen in the past. There is going to be a big trendtowards compliance and companies getting theirtransfer pricing right,” said Cleine.

Tier 1Thomas McClelland is the national tax leader atDeloitte. He regularly engages with tax officials ontransfer pricing issues and also prepares positionpapers to the government, including the tax chapterof the EuroCham Whitebook on investment issues.He’s been a tax adviser since 1998, advising a widespectrum of businesses on different areas of Vietnamtaxation. The transfer pricing team includes two partners

and 23 professionals working on TP documentation,APA, transfer pricing audit and disputes, and other TP-related projects. The firm is at the forefront of theapplication of the APA system, working with strongknowledge of other taxes and duties in solving trans-fer pricing issues as well experience of the practicalapproach of the tax authorities.


VietnamTax authorities General Department of Taxation, Ministry of Finance123 Lo Duc St, HanoiTel: +84 4 3971 2310Fax: +84 4 3971 2286Email: [email protected]: www.gdt.gov.vn


http://www.gdt.gov.vn


EY’s transfer pricing practice is led by Phat TanNguyen focusing his expertise in the Vietnamesemarket. The firm provides essential transfer pricingservices from documentation to risk management. Hoang Thuy Duong is head of the Vietnamese

tax practice of KPMG, assisted by 37 professionalsin both transfer pricing disputes and compliance.The firm hired a senior manager and a manager inthe past year. Professionals at the firm offer a wide range of

transfer pricing expertise and skills to provide com-prehensive support to clients including effectiveand compliant transfer pricing strategies. The practice’s transfer pricing services include

risk assessment reviews, documentation and com-pliance services, audit defence advice, APAs, com-petent authority procedures, TP planning, due dili-gence, and supply chain analysis. In July 2015, Duong and Tran Thi Thuy Ha

advised a multinational corporation, providingtechnical design services in Vietnam, on the reso-lution of a transfer pricing audit dispute. Theyassisted the client with negotiating TP adjustmentswith local tax authorities during an audit and suc-cessfully reduced the additional company income

tax liabilities to one tenth of the original amountproposed by the inspection team, resulting in amaterial positive impact for the client.

PwC’s transfer pricing group provides all kinds ofpreparation and support in dealing with the shift-ing transfer pricing landscape. It is capable ofassisting clients in reviewing the statutory annualtransfer pricing returns to ensure comprehensive-ness and stability in the preparation of documen-tation. It also conducts full evaluation of transferpricing positions and offers feasible suggestions toreduce transfer pricing risks. The team developsefficient transfer pricing strategies to fit businessoperations. Further, the team facilitates negotia-tions with competent authorities during the courseof audits and supports companies during disputeresolution. Monika Mindszenti oversees the practice. She

was hired in June 2015 and brings internationalinsights to the practice with more than 15 years ofexperience working in Europe. Seven partners lookafter both tax and legal services, including transferpricing, and there are 35 dedicated professionalsproviding seamless and pragmatic solutions acrossa variety of industries.

Vietnam



Corporate income tax rate 20% (a)Capital gains tax rate 20% (b)Branch tax rate 20%

Withholding tax Dividends n.a. Interest 5% Royalties 10% Branch remittance tax n.a.

Net operating losses (years) Carryback 0 Carryforward 5 (c)

a) The standard corporate income tax rate is 20%.However, tax incentives are available.

Enterprises operating in the oil and gas industryare subject to corporate income tax ratesranging from 32% to 50%, depending on thelocation and specific project conditions.Enterprises engaging in prospecting, explorationand exploitation of mineral resources (forexample, silver, gold and gemstones) aresubject to corporate income tax rates of 40% to50%, depending on the project’s location.

b) Gains derived from sales of capital or shares inentities are subject to tax at a rate of 20%.Transfers of securities by foreign investors aresubject to presumptive tax of 0.1% on totalsales proceeds, regardless of whether thetransfer is profitable.


Tier 2Hoang Khoi, as the head of tax services, leads thetax and transfer pricing practice at Grant Thornton.Nguyen Chi Trung is a managing partner specialisingin financial law and auditing.

The transfer pricing practice serves multinationalcompanies on TP documentation, reporting related-party transactions, transfer pricing compliance, devel-oping tax-efficient supply chains, transfer pricingstudies and structuring projects.

Vietnam



INDEX OF ADVERTISERSFirm Country PageARCO Spain 236Ashok Maheshwary & Associates India 114ATOZ Tax Advisers, Taxand Luxembourg Luxembourg 166Baker & McKenzie UK 256Belluzzo & Partners Italy 145Bjørnholm Denmark 71Castro, Barros, Sobral, Gomes Advogados Brazil 39Cragus Group Gulf Cooperation Council 100D’Empaire Reyna Abogados Venezuela 281Deloitte Brazil 39Deloitte France 82Deloitte Germany 90Deloitte Ireland 132Deloitte Italy 145Deloitte Luxembourg 165Deloitte Norway 189Deloitte South Korea 230Deloitte Spain 236Deloitte Switzerland 243Deloitte Anjin South Korea 230Deloitte Tohmatsu Tax Japan 156Dhruva Advisors India 115Du-Baladad and Associates Philippines 197EY Germany 90Fenwick & West US 276Flick Gocke Schaumburg Germany 91Gowling WLG Canada 48Grant Thornton Japan 156Hager & Partners Italy 146KPMG Italy 147KPMG Luxembourg 166KPMG Netherlands 179KPMG Russia 219KPMG South Korea 231KPMG Switzerland 243KPMG Meijburg Netherlands 179Loyens & Loeff Belgium 32

Loyens & Loeff Luxembourg 166Loyens & Loeff Netherlands 179Loyens & Loeff Switzerland 243Luna Requena & Fernandez Borzese Argentina 14Abogados (WTS Argentina)Machado Meyer Sendacz e Opice Advogados Brazil 39Morgan US 276MUC Consulting Indonesia 122Nangia & Co India 115NERA Economic Consulting Germany 91Osler, Hoskin & Harcourt Canada 49PwC Chile 53PwC Germany 92PwC Sweden 240Samjong KPMG South Korea 231SF Consulting Indonesia 122Skeppsbron Skatt Sweden 240Steenstrup Stordrange Norway 189Taj France 82Tokyo Kyodo Accounting Office Japan 157Valente Associati GEB Partners Italy 147WTS Argentina 14WTS China 58WTS Czech Republic 66WTS Germany 92WTS Hungary 107WTS Italy 148WTS Netherlands 179WTS Norway 189WTS Philippines 197WTS Poland 201WTS Spain 236WTS Turkey 250WTS US 277WTS Alfery Czech Republic 66WTS Çelen Turkey 250WTS R&A Studio Tributario Associato Italy 148WTS Tax Legal Consulting Ukraine 261Yulchon South Korea 231

Index



INDEX OF FIRMSFirm Country PageA&L Goodbody Ireland 128, 130AB Taxand, Taxand Belgium Belgium 29Abreu Advogados Portugal 202-203Advaita Legal India 108, 111Alder & Sound Finland 72, 74Aleksey Pukha and Partners Ukraine 257, 260Allen & Overy Italy 140, 143Alston & Bird US 270, 272Alvarez & Marsal, Taxand UK UK 251, 253Arena Tax Poland 198, 200Arendt & Medernach Luxembourg 161, 163Arntzen de Besche Norway 186, 188Arsene Taxand, Taxand France France 78Ashok Maheshwary & Associates India 108-109Ashurst Australia 15, 18Aspect Advisory Switzerland 241-242ATOZ Tax Advisers, Taxand Luxembourg Luxembourg 161, 163August & Debouzy France 78, 80Avellum Partners Ukraine 257, 259BA-HR Norway 186-188Bae, Kim & Lee South Korea 226, 229Baker & McKenzie Australia 15-16Baker & McKenzie Belgium 29-31Baker & McKenzie Brazil 33, 35-36Baker & McKenzie Canada 43-44Baker & McKenzie China 54, 56Baker & McKenzie Colombia 59Baker & McKenzie France 78-79Baker & McKenzie Germany 84, 87, 89Baker & McKenzie Hong Kong 101, 103Baker & McKenzie Hungary 104, 106Baker & McKenzie Italy 140, 143Baker & McKenzie Japan 152Baker & McKenzie Luxembourg 161, 163Baker & McKenzie Mexico 171Baker & McKenzie Netherlands 175-176Baker & McKenzie Peru 190, 192Baker & McKenzie Russia 216, 218Baker & McKenzie Singapore 220-221Baker & McKenzie Spain 232-233Baker & McKenzie UK 251-252Baker & McKenzie Ukraine 257, 259Baker & McKenzie US 270Baker & McKenzie.Wong & Leow Singapore 220-221Baker Tilly Portugal 202-203Baker Tilly Romania 206-207Baker Tilly Klitou Bulgaria 40-41Barbosa, Müssnich & Aragão Brazil 33-34, 37BaseFirma Argentina 10-11Basefirma Chile 50-51BaseFirma Colombia 59-60BaseFirma Mexico 171, 173BaseFirma Peru 190, 192BaseFirma US 270, 274BaseFirma Venezuela 278-280

Basham, Ringe y Correa Mexico 171-172BDO Netherlands 175, 178BDO Spain 232, 235BDO US 270, 272BDO Consulting Romania 206-207BDO Denet Turkey 247, 249BDO India India 108, 110BDO Israel Israel 133-134BDO Magarorszag Hungary 104-105BDO Unicon Russia 215, 217Bech-Bruun, Taxand Denmark Denmark 67, 69Bell Gully New Zealand 180Belluzzo & Partners Italy 140-141Bergstein Abogados Uruguay 262-263Bernoni Grant Thornton Italy 140, 143Bichara Advogados Brazil 33, 37Bird & Bird Finland 72, 75Bjørnholm Law Denmark 67-68, 70Blake, Cassels & Graydon Canada 43-44BMR Advisors, Taxand India India 108, 110BonelliErede Italy 140Borenius, Taxand Finland Finland 72, 74Bowman Gilfillan South Africa 223-224BPV Hügel Rechtsanwälte Austria 20, 22BRATAX – Brazuna, Ruschmann e Soriano Brazil 33, 36Brigard & Urrutia Abogados Colombia 59-60Bruchou, Fernández Madero & Argentina 10Lombardi, Taxand ArgentinaCaplin & Drysdale US 270, 273Castro, Barros, Sobral, Gomes Advogados Brazil 33, 37Chapman Tripp New Zealand 180, 183Chevez Ruiz Zamarripa Mexico 171, 173Chiomenti Studio Legale Italy 140, 143Clayton & McKervey US 270, 275Clayton Utz Australia 15, 19Cliffe Dekker Hofmeyr South Africa 223-224Clifford Chance UK 251, 254CMS Bureau Francis Lefebvre France 78-79CMS Reich-Rohrwig Hainz Bulgaria 40-41CMS Russia Russia 215, 217Cobalt Baltic States 23, 26Collins Barrow Canada 43-44, 46CORIT Advisory Denmark 67, 69Crido Taxand, Taxand Poland Poland 198-199Cuatrecasas, Gonçalves Pereira Spain 232-233D’Empaire Reyna Abogados Venezuela 278DANNY DARUSSALAM Tax Center Indonesia 117, 119Delchev & Partners Bulgaria 40-41Deloitte Argentina 10-11Deloitte Australia 15-16Deloitte Austria 20-21Deloitte Baltic States 23-24Deloitte Belgium 29-30Deloitte Brazil 33-34Deloitte Bulgaria 40Deloitte Canada 43-44Deloitte Chile 50-51

Index


Deloitte China 54-55Deloitte Colombia 59-60Deloitte Czech Republic 63Deloitte Denmark 67-68Deloitte Finland 72Deloitte France 76, 78, 80Deloitte Germany 84-85, 88-89Deloitte Greece 93Deloitte Hong Kong 101-102Deloitte Hungary 104Deloitte India 108-109Deloitte Indonesia 117-118Deloitte Ireland 123, 128-129Deloitte Israel 133-134Deloitte Italy 136, 140-141Deloitte Luxembourg 161-162Deloitte Malaysia 167-168Deloitte Mexico 171, 173Deloitte Netherlands 175-177Deloitte New Zealand 180Deloitte Norway 186-187Deloitte Peru 190-191Deloitte Portugal 202Deloitte Romania 206-207Deloitte Russia 215Deloitte Singapore 220-221Deloitte South Africa 223-225Deloitte South Korea 226-227Deloitte Spain 232-233Deloitte Sweden 237-239Deloitte Switzerland 241Deloitte Taiwan 244-245Deloitte Turkey 247-248Deloitte UK 251, 253Deloitte Ukraine 257-258Deloitte Uruguay 262-263Deloitte US 265, 270-271Deloitte Venezuela 278Deloitte Vietnam 282Deloitte Anjin South Korea 226-227Deloitte Doradztwo Podatkowe Poland 198Deloitte Tohmatsu Tax Japan 149, 152-153Demarest Advogados Brazil 33, 37Dentons Germany 84, 88Dentons Poland 198, 200Dhruva Advisors India 108-110Di Tanno e Associati Italy 140, 143DLA Piper Australia 15-16, 19DLA Piper China 54, 56DLA Piper France 78, 80-81DLA Piper Hong Kong 101, 103DLA Piper Italy 140, 144DLA Piper Japan 152, 155DLA Piper Netherlands 175-177DLA Piper Poland 198-199DLA Piper Ukraine 257-259DLA Piper US 270, 273

DLA Piper Horváth & Partners Law Firm Hungary 104-105DLA Piper Wiater Poland 198-199Dryllerakis & Associates Greece 93, 95Du-Baladad and Associates Philippines 194, 196Duff & Phelps UK 251, 254Duff & Phelps US 270, 273Economic Laws Practice India 108, 111Economics Partners US 270, 275ENSafrica, Taxand South Africa South Africa 223-224Erdikler, Taxand Turkey Turkey 247-248Estudio Echecopar Peru 190, 192Estudio O’Farrell Argentina 10, 12Estudio Olaechea Peru 190, 192Eurofast Global Bulgaria 42EY Argentina 10-12EY Australia 15-17EY Austria 20-21EY Baltic States 23-25, 27-28EY Belgium 29-30EY Brazil 33-34EY Bulgaria 40-41EY Canada 43-45EY Chile 50-52EY China 54-55EY Colombia 59, 61-62EY Czech Republic 63-65EY Denmark 67-69EY Finland 72-74EY France 78-80EY Germany 84-87EY Greece 93-94EY Gulf Cooperation Council 96-99EY Hong Kong 101-102EY Hungary 104-105EY India 108-109, 113EY Indonesia 117-118, 121EY Ireland 128-130EY Israel 133-134EY Italy 140-142EY Luxembourg 161, 163EY Malaysia 167-168, 170EY Mexico 171-173EY Netherlands 175, 177EY New Zealand 180-182EY Norway 186-187EY Peru 190-191EY Philippines 195EY Poland 198-199EY Portugal 202, 204EY Romania 206-207EY Russia 215-216EY Singapore 220-222EY South Africa 223-225EY South Korea 226, 228-229EY Spain 232-233EY Sweden 237-239EY Switzerland 241

Index



EY Taiwan 244-245EY Turkey 247-248EY UK 251-255EY Ukraine 257-258EY Uruguay 262-264EY US 270-271EY Venezuela 278-279EY Vietnam 282-283EY Shinnihon Tax Japan 152, 154EY Terco Brazil 33-34Fahn Kanne & Co – Grant Thornton Israel 133, 135Fantozzi & Associati, Taxand Italy Italy 140, 143Fava & Partners Italy 140, 144FBK Legal Russia 215, 217Felsberg Advogados Brazil 33, 37Fenwick & West Global transfer pricing introduction 5Fenwick & West US 270-271Ferrere Uruguay 262Fidal France 78, 80Finexpertiza Russia 215, 218Flick Gocke Schaumburg Germany 84-85, 87-88Freshfields Bruckhaus Deringer Austria 20, 22Freshfields Bruckhaus Deringer France 78, 80Freshfields Bruckhaus Deringer Germany 84, 88Freshfields Bruckhaus Deringer Spain 232, 234Freshfields Bruckhaus Deringer UK 251, 254FTI Consulting UK 251, 255G.M. Kapadia & Co India 108, 111Garrigues – Taxand, Taxand Portugal Portugal 202, 204Garrigues, Taxand Spain Spain 232-234Gencs Valters Law Firm Baltic States 23, 26Godoy & Hoyos Abogados Colombia 59, 62Goldemberg & Asociados Argentina 10, 12Goltsblat BLP Russia 215, 217Gornitzky & Co Israel 133, 135Gowling WLG Canada 43, 45Grant Thornton Australia 15, 18Grant Thornton Bulgaria 40-41Grant Thornton Canada 43, 46Grant Thornton Chile 50-51Grant Thornton China 54, 56Grant Thornton India 108, 110Grant Thornton Ireland 128, 130Grant Thornton Israel 133, 135Grant Thornton Italy 140, 143Grant Thornton Japan 152, 155Grant Thornton Mexico 171, 174Grant Thornton New Zealand 180, 182Grant Thornton Peru 190, 192Grant Thornton Poland 198-199Grant Thornton Portugal 202-203Grant Thornton Spain 232, 234Grant Thornton Sweden 237-238Grant Thornton Taiwan 244, 246Grant Thornton UK 251, 253Grant Thornton Uruguay 262-263Grant Thornton US 270, 273

Grant Thornton Vietnam 282, 284Greenwoods & Herbert Smith Freehills Australia 15, 18Grupo GNB Argentina 10, 12GTA Villamagna Spain 232, 235Guyer & Regules Uruguay 262-263Hadiputranto, Hadinoto & Partners Indonesia 117, 119Hager & Partners Italy 140, 143Hendersen Taxand China 54, 57Herzog Fox and Neeman Israel 133, 135Hogan Lovells UK 251, 254International Legal Center EUCON Ukraine 257, 260Isla Lipana Philippines 194Jalsovsky Law Firm Hungary 104, 106Jurimex Ukraine 257, 260Katjár Takács Hegymegi-Barakonyi Baker & McKenzie Hungary 104, 106Kim & Chang South Korea 226-227King & Wood Mallesons China 54, 57Kojima Law, Taxand Japan Japan 152, 155KPMG Argentina 10, 13KPMG Australia 15-16KPMG Austria 20, 22KPMG Baltic States 23-24KPMG Belgium 29-30KPMG Brazil 33, 35KPMG Bulgaria 40-41KPMG Canada 43-44KPMG Chile 50-51KPMG China 54-55KPMG Colombia 59, 62KPMG Czech Republic 63-64KPMG Denmark 67, 69KPMG Finland 72, 74KPMG Germany 84, 87KPMG Greece 93-95KPMG Hong Kong 101-102KPMG Hungary 104-105KPMG India 108-109KPMG Indonesia 117-118KPMG Ireland 128-129KPMG Israel 133, 135KPMG Italy 140-141KPMG Japan 152, 154KPMG Luxembourg 158, 161-162KPMG Malaysia 167-168KPMG Mexico 171, 174KPMG Netherlands 175, 177KPMG New Zealand 180, 182KPMG Norway 186-187KPMG Peru 190, 193KPMG Poland 198-199KPMG Portugal 202-203KPMG Romania 206-207KPMG Russia 210, 215-216KPMG Singapore 220-221KPMG South Africa 223-224KPMG South Korea 226-227KPMG Spain 232-233

Index


KPMG Sweden 237, 239KPMG Switzerland 241-242KPMG Taiwan 244, 246KPMG Turkey 247-248KPMG UK 251, 253KPMG Ukraine 257-258KPMG Uruguay 262-263KPMG US 270, 272KPMG Venezuela 278, 280KPMG Vietnam 282-283KPMG Acor Tax Denmark 67, 69KPMG Meijburg Netherlands 175, 177Lacaz Martins, Pereira Neto, Gurevich & Brazil 33, 35Schoueri AdvogadosLakshmikumaran & Sridharan India 108, 112Landwell (PwC) Spain 232-233Landwell et Associes (PwC) France 78, 80Lee & Ko South Korea 226, 229Lee and Li Taiwan 244, 246Lee Hishammuddin Allen & Gledhill Malaysia 167-169Lefosse Advogados Brazil 33, 37Legance – Avvocati Associati Italy 140, 144LeitnerLeitner Austria 20, 22LexCase France 78, 81Liedekerke Belgium 29, 31Lilla, Huck, Otranto, Camargo Advogados Brazil 33, 35Linklaters Poland 198, 200Litvak & Asociados Argentina 10, 13Loyens & Loeff Belgium 29, 31Loyens & Loeff Luxembourg 161, 164Loyens & Loeff Netherlands 175-177Luna Requena & Fernandez Borzese Argentina 10, 13Abogados (WTS Argentina)Luther Germany 84, 88LW Tax Lemaitre Wittkowski Germany 84, 88Macfarlanes UK 251, 255Machado Associados Brazil 33-34, 36Machado Meyer Sendacz e Opice Advogados Brazil 33, 36Maisto e Associati Italy 140-141Mancera (EY) Mexico 171, 173Marchant TP Brazil 33, 38Mason Hayes & Curran Ireland 128, 130Matheson Ireland 128-129Mattos Filho, Veiga Filho, Marrey Jr. e Brazil 33, 36Quiroga AdvogadosMayer Brown Belgium 29, 31Mayer Brown France 78, 81Mayer Brown US 270, 272Mazars Hungary 104-105Mazars Romania 206-207Mazars Spain 232, 235Mazars Denge Turkey 247-248McCarthy Tétrault Canada 43, 46McDermott Will & Emery Italy 140, 144McDermott Will & Emery UK 251, 255McDermott Will & Emery US 270, 273McMillan Canada 43, 46MDDP Poland 198-200

Mendoza, Delgado, Labrador & Asociados (EY) Venezuela 278-279Miller & Chevalier US 270, 273Morgan Lewis & Bockius US 270, 274MUC Consulting Indonesia 117-119Nagashima Ohno & Tsunematsu Japan 152, 154Nangia & Co India 108, 112Natera Mexico 171, 174NautaDutilh Luxembourg 161, 164Navarro Amper Philippines 194NCTM Studio Legale Associato Italy 140, 144NERA Economic Consulting China 54, 57NERA Economic Consulting Germany 84, 88Norton Rose Fulbright Venezuela 278, 280Oppenhoff & Partners Germany 84, 88Orientax Consulting Hungary 104, 106Osler, Hoskin & Harcourt Canada 43-44PB Taxand, Taxand Indonesia Indonesia 117, 119Pekin & Pekin Turkey 247, 249Pepeliaev Group, Taxand Russia Russia 215, 217Philippi Prietocarrizosa Ferrero DU & Uría Colombia 59, 62Pinheiro Neto Advogados Brazil 33, 38Pistrelli, Henry Martin y Asociados (EY) Argentina 10-11PKF Finconta Romania 206, 209Plesner Denmark 67, 70PwC Argentina 10-11PwC Australia 15, 17PwC Austria 20, 22PwC Baltic States 23-24PwC Belgium 29, 31PwC Brazil 33, 36PwC Bulgaria 40-41PwC Canada 43, 45PwC Chile 50-51PwC China 54, 56PwC Colombia 59-60PwC Czech Republic 63-64PwC Denmark 67, 69PwC Finland 72, 74PwC France 78, 80PwC Germany 84-85, 87, 89PwC Greece 93, 95PwC Hong Kong 101, 103PwC Hungary 104-105PwC India 108-109PwC Indonesia 117-118PwC Ireland 128-130PwC Israel 133-134PwC Japan 152, 154PwC Luxembourg 161-162PwC Malaysia 167-168PwC Mexico 171, 173PwC Netherlands 175, 177PwC New Zealand 180, 182PwC Norway 184, 186-188PwC Peru 190, 192PwC Poland 198-199PwC Portugal 202-203

Index



PwC Romania 206-207PwC Russia 215, 217PwC Singapore 220-221PwC South Africa 223-224PwC South Korea 226-227, 229PwC Spain 232-233PwC Sweden 237-239PwC Switzerland 241-242PwC Taiwan 244, 246PwC Turkey 247-248PwC UK 251, 253, 255PwC Ukraine 257-259PwC Uruguay 262-263PwC US 270, 272PwC Venezuela 278, 280PwC Vietnam 282-283Quantera Global Hong Kong 101, 103Quantera Global Netherlands 175, 178Raja, Darryl & Loh Malaysia 167, 169Ramón y Cajol Abogados Spain 232, 235RG Manabat & Co Philippines 194-195Ricardo da Palma Borges & Associados Portugal 202, 205Rodrigo, Elías & Medrano Abogados Peru 190, 193Rolim, Viotti & Leite Campos Advogados Brazil 33, 36Roschier Finland 72, 74Rosso Alba, Francia & Asociados Argentina 10-11RSM Singapore 220, 222Russell McVeagh New Zealand 180, 183Ryan Hungary 104, 106Ryan Netherlands 175, 177Salcedo & Cia Chile 50-51Salles, Sainz – Grant Thornton Mexico 171, 174Samil PwC South Korea 226-227Samjong KPMG South Korea 226-227Sayenko Kharenko Ukraine 257, 259Sendero, Taxexperience Poland 198, 200SF Consulting Indonesia 117, 120Shearman & Sterling UK 251, 255Shearn Delamore & Co Malaysia 167, 169Siqueira Castro Advogados Brazil 33, 38Skadden, Arps, Slate, Meagher & Flom US 270, 272SKATT International Tax Firm Mexico 171, 174Skeppsbron Skatt, Taxand Sweden Sweden 237, 239SKP Group India 108, 111SORAINEN Baltic States 23-24Stibbe Belgium 29-31Stikeman Elliott Canada 43, 46Studio Associato (KPMG) Italy 140Studio Legale e Tributario (EY) Italy 140Studio Musselli Italy 140, 144Studio Tributario e Societario (Deloitte) Italy 140-141Studio Uckmar Italy 140, 144Sullivan & Cromwell US 270, 275SyCip Gorres Velayo & Co Philippines 194, 196

Taj, Société d’Avocats (Deloitte) France 76, 78, 80Tandax Advisory Hungary 104-105Tark Grunte Sutkiene Baltic States 23, 26Tax & Financial Solutions Bulgaria 40-41Tax Expert International Switzerland 241-242Tax Partner, Taxand Switzerland Switzerland 242Taxand Malaysia Malaysia 167, 169Taxand Netherlands Netherlands 175, 178Taxexperience Russia 215, 218Taxhouse, Taxand Romania 206-208Taxonity Poland 198, 200Teijeiro & Ballone Argentina 10, 13Thommessen Norway 186, 188Thompson & Knight US 270, 274Tokyo Kyodo Accounting Office Japan 152, 155TP Equilibrium Australia 15-16, 18TP Equilibrium New Zealand 180, 182TP Ostwal & Associates India 108, 112TPA Global Netherlands 175, 178TPA Horwath Romania 206, 209TPHC Associés France 78, 81TPricing Consultores Portugal 202-203Transfer Pricing Services Romania 206-207Transfer Pricing Services Spain 232, 235Transfer Pricing Solutions UK 251, 254Trench, Rossi e Watanabe Advogados Brazil 33, 35UnityFour Greece 93, 95Uría Menéndez – Proença de Carvalho Portugal 202-203Valdani Vicari & Associati Italy 140, 144Valente Associati GEB Partners Italy 140-141Varul Baltic States 26Vinson & Elkins US 270, 274Vistisen Tax Attorneys Denmark 67, 70Warth & Klein Grant Thornton Germany 84, 89Webber Wentzel South Africa 223, 225White & Case US 270, 274Wiersholm Norway 186, 188William Fry, Taxand Ireland Ireland 128-129Wong & Partners Malaysia 167, 169WTS Argentina 10, 13WTS China 54, 57WTS Czech Republic 63-64WTS Germany 84-85, 89WTS Italy 140, 144WTS Turkey 247-248WTS Alfery Czech Republic 63-64WTS Çelen Turkey 247-248WTS R&A Studio Tributario Associato Italy 140, 144WTS Tax Legal Consulting Ukraine 257, 259Yoon & Yang South Korea 226, 229YükselKarkinKücük Turkey 247, 249Yulchon South Korea 226, 228-229Zepos & Yannopoulos, Taxand Greece Greece 93, 95

Index
