Anton Hume and Andrew Stewart (BDO) examine a range of transfer pricing financing arrangements used within groups.
The OECD/G20 BEPS programme acknowledged the potential impact of financing arrangements on multinational groups with a potential for the erosion of tax bases resulting in the Action 4 recommendations to introduce limitations on interest deductibility. This action specifically sidestepped the question of transfer pricing. However in doing so it highlights some views that transfer pricing can be relatively hard to understand and police.
Even in the face of the prevalence of mechanical interest barriers such as the UK’s corporate interest restriction transfer pricing remains a potent tool and at the heart of how tax treaties allocate taxing rights on related party interest amounts.
With this in mind it is critical to understand the financing arrangements of a group and its interaction with the transfer pricing rules. This...
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Anton Hume and Andrew Stewart (BDO) examine a range of transfer pricing financing arrangements used within groups.
The OECD/G20 BEPS programme acknowledged the potential impact of financing arrangements on multinational groups with a potential for the erosion of tax bases resulting in the Action 4 recommendations to introduce limitations on interest deductibility. This action specifically sidestepped the question of transfer pricing. However in doing so it highlights some views that transfer pricing can be relatively hard to understand and police.
Even in the face of the prevalence of mechanical interest barriers such as the UK’s corporate interest restriction transfer pricing remains a potent tool and at the heart of how tax treaties allocate taxing rights on related party interest amounts.
With this in mind it is critical to understand the financing arrangements of a group and its interaction with the transfer pricing rules. This...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
