The ATO is currently focusing on reviewing arrangements involving the use of offshore procurement hubs that source goods on behalf of Australian resident multinational enterprises (MNEs).
In the most recent Tax Payer Alert TA 2015/5, the ATO announced that is focusing on structures where the procurement hub offshore is sourcing goods on behalf of the Australian MNE and is also receiving services from another related party entity located offshore (Service hub).
The main concern of the ATO is that Australian resident MNEs are entering into offshore procurement structures where there is no commercial justification for performing the procurement function into two separate entities offshore.
The ATO is concerned about the implementation of this type of arrangements and application of the controlled foreign company (CFC) rules, the transfer pricing rules and Part IVA of the Income Tax Assessment Act 1936. Arrangements involving the outbound supply of goods by offshore hubs are also likely to attract some attention.
If you are currently considering entering into procurement hubs arrangements, it is recommended:
If you are considering implementing procurement hubs please contact Transfer Pricing Solutions for assistance on +61 (3) 5911 7001 or admin@transferpricingsolutions.com.au www.transferpricingsolutions.com.au
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.
