The OECD released on October 2015, the final report on Transfer Pricing Documentation and Country by Country Reporting, Action 13. The report emphasises, among others, on the importance for taxpayers to prepare contemporaneous transfer pricing documentation to support the prices of the international related party dealings. The report also confirms that is critical for taxpayers to periodically review and update the transfer pricing documentation in order to ensure that the information is accurate and reliable
We are hearing from many companies having trouble understanding what contemporaneous documentation really means and what are the practical implications. The following case study summarises our experience with the most common misunderstandings.
AusCo is a subsidiary of ForCo, a company located in the United States. AusCo main business is the distribution of electronic products in Australia; AusCo purchases finished goods from ForCo to sell in Australia.
AusCo has prepared transfer pricing documentation for the income year ended 30 June 2011. The transfer pricing documentation included a benchmarking analysis prepared by ForCo for 30 June 2011; the search included companies located in the United States engaged in the distribution activities with third parties in similar conditions to the distribution arrangement between AusCo and Forco.
AusCo will be submitting the 30 June 2015 income tax return and International Dealings Schedule (IDS) in the next month and has advised their tax agent to disclose that AusCo has 100% transfer pricing documentation (Code 6) to support the prices of its purchases of finished goods from its international related party ForCo.
If your company is facing any of the issues described above? If you require assistance please contact Transfer Pricing Solutions on 03 5911 7001 or email admin@
Singapore is often a preferred location for setting up headquarters as the door to conduct business in Asia. The IRAS has released its views on how Singapore HQ's should plan and implement their transfer pricing framework. Want to know more? Read our article with our views on IRAS TP Guidelines for Singapore HQs.
The Malaysian Finance Bill 2020 incorporates transfer pricing-related changes to the current Income Tax Act, 1967 (“ITA”). The changes permit significantly greater authority to the Malaysia Inland Revenue Board (“MIRB”) and re-emphasises the importance of transfer pricing compliance, with effect from 1 January 2021.
Thec Covid-19 pandemic has triggered the most severe recession and is causing enormous damage to the world economy. The economic downturn will impact a group’s transfer prices, analysis and documentation, more so with the BEPS Action Plans in place and the high level of transfer pricing scrutiny across the globe.