As we welcome 2016, transfer pricing remains in the eye of the Australian Taxation Office (ATO) with further developments on the enforcement of Australia’s multinational anti-avoidance law (MAAL). Likewise, transfer pricing remains in the headlines of newspapers. Both The Age and the Financial Review have featured articles about the MAAL. The spotlight on the anti-avoidance law affirms Australia’s commitment to enforcing tax transparency and the implementation of BEPS Action plan.
On 12 January 2016, the ATO released the ‘MAAL Client Experience Roadmap’. The roadmap outlines the ATO’s views on the engagement process, legacy issues, penalties and settlements for taxpayers that potentially are subject to the MAAL. The MAAL was passed as law on 3 December 2015 and applies to income on or after 1 January 2016. For further information about the MAAL please read our December newsletter in the following link new-legislation-introduces-new-transfer-pricing-documentation-standards-and-other-anti-avoidance-measures/
The ATO has stated that it will allocate multinational groups that fall within the scope of the MAAL, into categories that will be subject to different enforcement processes and penalties. The ATO has divided taxpayers into the following five categories:
Category A: Under an existing review or audit
Category B: Approached by the ATO
Category C: Voluntary disclosure before 31 March 2016
Category D: Subsequently identified
Category E: Outside the scope of the MAAL
The ATO already has started sending letters to multinationals potentially falling within the scope of the MAAL (mainly “Category A” multinationals). The letters advise taxpayers to consider their MAAL position and to expect further contact from the ATO in early 2016. Similar letters will be sent to other multinationals by 31 March 2016, based on risk profiling carried out by the ATO.
For more information about new measures and how the MAAL may affect your company please contact Transfer Pricing Solutions on +61 3 5911 7001 or firstname.lastname@example.org.
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.