One minute with Chloë Fletcher, founder of Abaris Transfer Pricing.
You set up Abaris five years ago. What do you hope to achieve in the next five years?
The first five years have been about establishing ourselves in the market as hands-on transfer pricing specialists. We now are in the fortunate position of having clients knocking on our door. As we grow the team to meet demand, we want to ensure we maintain what makes us special – true TP specialists delivering excellent advice with the sort of practical approach which comes from time spent in-house. It may not be world domination, but as we grow I’ll be delighted if our clients identify those same traits in us in five years’ time.
Is there a recent tax development which has caught your eye?
Divergent approaches to the taxation of digital business has raised a few eyebrows lately. Both the OECD and the European Commission published separate reports on the tax challenges of digital business in March 2018. The challenge is that these two papers present very different solutions. The OECD proposes a detailed review of the issues over two years with a long term aim for consensus, while the EC recommends that EU countries take unilateral action to assert the right to tax, at least until other measures are agreed. If countries do proceed with unilateral actions, there is a significant risk of multiple taxation, which would itself generate cross-border disputes.
If you could make one change to a tax law or practice, what would it be?
For the OECD to bang heads together even more on TP to get countries to harmonise. A particular example is the ‘new’ TP documentation standards. For the most part, BEPS Action 13 has brought us a long way to harmonise the previously disparate documentation requirements of individual territories across the world. However, surprisingly few territories seem to be implementing the recommendations on master file, local file and country by country report in a straightforward manner. For example, some countries require much of the same content, but on a special form. Several others have adopted a local file ‘plus’, with additional modifications or information requirements. And whether you have an (unnecessary, in my view) obligation to file a ‘local subset’ of your CBC report or leave the tax authorities to share the global report among themselves under a multilateral competent authority agreement is another step still. Taxpayers are still left with the burden of navigating multiple nuances. For all territories to play nicely may still be too much to hope for. Surely tax authorities have bigger TP fish to fry than tinkering with an already relatively comprehensive risk assessment tool?
Is there anything you know now that you wish you’d known at the start of your career?
In the words of Henry Ford: ‘Whether you think you can, or think you can’t – you’re right.’
Can you share a practical tip on how to handle tax in practice?
The fact pattern is critical in TP. However, how something is written makes more difference than is often acknowledged. In TP defence work I spend a lot of my time writing, trying to craft a response clearly. Disappointingly, it is surprisingly easy for all the effort to get lost in translation. In a meeting with the German tax authorities, they produced their own written translation of our original English document. We were at a loss as to why we were being met with quite such a frosty reception, when the inspector said: ‘I don’t like your tone.’ Human nature dictates that the language style we use is not to be underestimated.
You might not know this about me but…
My first graduate job was in the Herbarium at the Royal Botanic Gardens, Kew, classifying plant species (taxonomy). Specimens collected by Darwin himself used to pass over my desk. Taxonomy… tax… it was the obvious next step.
One minute with Chloë Fletcher, founder of Abaris Transfer Pricing.
You set up Abaris five years ago. What do you hope to achieve in the next five years?
The first five years have been about establishing ourselves in the market as hands-on transfer pricing specialists. We now are in the fortunate position of having clients knocking on our door. As we grow the team to meet demand, we want to ensure we maintain what makes us special – true TP specialists delivering excellent advice with the sort of practical approach which comes from time spent in-house. It may not be world domination, but as we grow I’ll be delighted if our clients identify those same traits in us in five years’ time.
Is there a recent tax development which has caught your eye?
Divergent approaches to the taxation of digital business has raised a few eyebrows lately. Both the OECD and the European Commission published separate reports on the tax challenges of digital business in March 2018. The challenge is that these two papers present very different solutions. The OECD proposes a detailed review of the issues over two years with a long term aim for consensus, while the EC recommends that EU countries take unilateral action to assert the right to tax, at least until other measures are agreed. If countries do proceed with unilateral actions, there is a significant risk of multiple taxation, which would itself generate cross-border disputes.
If you could make one change to a tax law or practice, what would it be?
For the OECD to bang heads together even more on TP to get countries to harmonise. A particular example is the ‘new’ TP documentation standards. For the most part, BEPS Action 13 has brought us a long way to harmonise the previously disparate documentation requirements of individual territories across the world. However, surprisingly few territories seem to be implementing the recommendations on master file, local file and country by country report in a straightforward manner. For example, some countries require much of the same content, but on a special form. Several others have adopted a local file ‘plus’, with additional modifications or information requirements. And whether you have an (unnecessary, in my view) obligation to file a ‘local subset’ of your CBC report or leave the tax authorities to share the global report among themselves under a multilateral competent authority agreement is another step still. Taxpayers are still left with the burden of navigating multiple nuances. For all territories to play nicely may still be too much to hope for. Surely tax authorities have bigger TP fish to fry than tinkering with an already relatively comprehensive risk assessment tool?
Is there anything you know now that you wish you’d known at the start of your career?
In the words of Henry Ford: ‘Whether you think you can, or think you can’t – you’re right.’
Can you share a practical tip on how to handle tax in practice?
The fact pattern is critical in TP. However, how something is written makes more difference than is often acknowledged. In TP defence work I spend a lot of my time writing, trying to craft a response clearly. Disappointingly, it is surprisingly easy for all the effort to get lost in translation. In a meeting with the German tax authorities, they produced their own written translation of our original English document. We were at a loss as to why we were being met with quite such a frosty reception, when the inspector said: ‘I don’t like your tone.’ Human nature dictates that the language style we use is not to be underestimated.
You might not know this about me but…
My first graduate job was in the Herbarium at the Royal Botanic Gardens, Kew, classifying plant species (taxonomy). Specimens collected by Darwin himself used to pass over my desk. Taxonomy… tax… it was the obvious next step.
