Argentine transfer pricing rules apply to transactions between an Argentine party and a foreign related entity or any entity domiciled in a tax haven jurisdiction, a jurisdiction considered as non-cooperative, or that is subject to a privileged tax regime.
Argentine transfer pricing rules follow arm's-length rule and follow the OECD guidelines with some divergences.
"Arm's length" principles are applied to transactions between related parties under an international agreement. Australian rules are similar in many respects to the OECD guidelines, with certain material differences such as the Commissioner's reconstruction powers.
In addition to satisfying transfer pricing documentation requirements, multinational entities with an annual global income of AUD 1 billion or more are required to provide the ATO with three statements (a master file, a local file and a country-by-country (CbC) report) within 12 months after the end of their income tax year. These statements require multinationals to report details regarding their international related party dealings, revenues, profits and taxes paid by jurisdiction. These measures took effect from income years commencing on or after January 1, 2016.
Transfer pricing documentation based on the OECD Transfer Pricing Guidelines (Master file, local file, country-by-country report) must be prepared and submitted with the Austrian tax authorities according to the Austrian Transfer Pricing Documentation Law. The size of required documentation depends on the turnover of a corporate entity.
Belgium generally adheres to the OECD transfer pricing guidelines. The arm's length principle therefore constitutes a basic transfer pricing principle in Belgium. Advance pricing agreements (whether unilateral, bilateral or multilateral) may be obtained.
Brazilian transfer pricing rules apply to transactions between a Brazilian party and a foreign related entity or any entity domiciled in a tax haven jurisdiction or subject to privileged tax regime. In general, Brazilian transfer pricing rules follow arm's-length principles but deviate significantly from the OECD guidelines as it provides for only certain methods and fixed statutory margins. The legislation allows taxpayer to freely choose the method as there is no best method rule and no functional analysis required.
Arm's-length principles generally are applied under Canadian tax law to transactions between related entities. The applicable Canadian rules are similar in many respects to the OECD guidelines, with certain material differences.
Related party transactions must be conducted on an arm's-length basis. Otherwise, the Chinese tax authorities may make an adjustment within ten years.
Enterprises reaching certain thresholds must prepare contemporaneous transfer pricing documentation, including a country-by-country report as applicable.
Colombia's transfer pricing regime is based on the OECD guidelines and is applied to transactions between related companies. Taxpayers subject to the transfer pricing regime must consider and follow commercial standards, under which a transaction between related parties must satisfy the conditions that would have been used in comparable transactions with unrelated parties.
The Finnish transfer pricing rules are based on the “arm’s-length” principle and the OECD guidelines. Documentation requirements apply to cross-border transactions with affiliated companies.
The French legislation does not make any specific references to what are acceptable transfer pricing methodologies. In practice, however, the methodologies stated in the OECD guidelines are employed in most cases.
Transactions between affiliated parties will give rise to income adjustments to the extent that such transactions are not conducted at "arm's-length." Additionally, transactions with a foreign affiliated party are subject to extensive documentation requirements.
Hong Kong, SAR
Hong Kong has adopted the "arm's length" standard and follows the OECD guidelines generally. Hong Kong's tax treaties follow the OECD Model Tax Convention on Income and on Capital.
Recently, the Hong Kong government has gazetted the Inland Revenue (Amendment No.6) Bill to meet the international standards promulgated by OECD in BEPS Action Plan. The Bill also proposes significant legislative amendments to the transfer pricing rules in Hong Kong.
Transfer Pricing must be conducted on an arm's-length basis and computed using any of the following methods:
- Comparable uncontrolled price method
- Resale price method
- Cost plus method
- Profit split method
- Transactional net margin method or
- Any other method that takes into account the price which has been charged or paid, or would have been charged or paid, for the same or similar uncontrolled transaction, with or between non-associated enterprises, under similar circumstances, considering all the relevant facts
It is possible to enter into unilateral/bilateral advance pricing agreements with the tax authorities.
Transfer pricing rules are applied on an "arm's-length" basis to transactions involving Irish trading companies. Irish transfer pricing rules follow OECD principles. Arrangements concluded before July 1, 2010 are excluded from the transfer pricing rules under grandfathering provisions. The transfer pricing rules are currently under review and it is expected that under new rules they will extend to non-trading transactions.
Israel applies arm's-length principles to transactions between related entities. The Israeli rules correspond to the OECD guidelines.
"Arm's-length" principles generally apply to international transactions between related entities. Italian tax rules make reference to the OECD guidelines.
When a corporation sells to, purchases from, provides services for or carries on other transactions with a foreign related person with which it has a special relationship, and its taxable income is less than the amount calculated under “arm’s-length” principles, these transactions will be deemed to have been conducted at “arm’s-length” prices, and the differential amount either will be included in, or will not be deductible from, the taxable income of the corporation.
According to the Luxembourg transfer pricing legislation, transactions between related parties (both located in Luxembourg as well as where one party is taxed in a foreign jurisdiction) have to be governed by the "arm's length principle." This obliges the taxpayer to report in its tax return either an upward or downward adjustment of profits whenever transfer prices do not reflect the arm's length principle. The Luxembourg tax authorities may request from the taxpayer all facts relevant for verifying a tax liability. Therefore, the taxpayer should provide all necessary supporting documentation to facilitate the task of tax authorities.
The circular L.I.R. n° 56/1 – 56bis/1, published by the Luxembourg tax authorities on 27 December 2016, focuses on the transfer pricing requirements for intermediary, intra-group financing activities in Luxembourg. A strong emphasis is put on the analysis of the risks assumed by the companies performing intra-group financing transactions. Companies should perform an analysis to determine the necessary capital at risk using the accepted methodologies in this area. These companies must have the financial capacity to assume such risks. Furthermore, the Circular provides that in order to be able to control the risks, the company performing intra-group financing transactions should comply with specific substance requirements.
Moreover, a company may request an advance pricing agreement (APA) from the Luxembourg tax authorities. Fees apply, varying from EUR 3,000 to EUR 10,000 (depending on the complexity of the matter).
Mexico has transfer pricing rules. Acceptable transfer pricing methods include the comparable uncontrolled price method, the resale price method, the cost-plus method, the profit-split method, the residual profit-split method and the transactional net-margin method. In certain cases, specific appraisals are used. Transactions between related parties are subject to greater scrutiny, and there are several informative tax returns on related parties transaction that must be filed. It may be possible to reach transfer pricing agreements in advance with Hacienda. These agreements may apply for a period of up to five years.
Beginning in 2016, certain Mexican taxpayers must file additional transfer pricing documentation, including a Master File and Country-by-Country Reports, as recommended by Action 13 of the Base Erosion and Profit Shifting report.
Interest deductions may be disallowed if the debt to equity ratio exceeds 3 to 1 on loans with foreign related parties. There are some exceptions to these rules, based on the type of activities that would be funded in Mexico.
"Arm's-length" principles are applied under Dutch law to transactions between related entities. Dutch rules are in accordance with OECD guidelines.
The Norwegian transfer pricing rules are based on the arm's length principle and the OECD guidelines. Documentation requirements apply to cross-border transactions with affiliated companies.
Arm's-length principles are generally applied to transactions between related entities. The Polish rules generally follow the OECD guidelines.
"Arm's length" principles are applied to transactions between related entities. The Portuguese rules generally follow OECD principles.
Arm's-length principles generally are applied under Romanian law to transactions between related entities. The Romanian rules are similar in many respects to the OECD guidelines, with certain differences. Specific transfer pricing documentation should be prepared by Romanian corporate tax residents for transactions with related parties with annual values exceeding certain thresholds.
Related party and certain unrelated transactions must be conducted on an arm's-length basis. Russian rules are similar in many respects to the OECD guidelines, with certain differences.
The tax authorities may request transfer pricing documentation within the framework of a transfer pricing audit, but not earlier than June 1 of the calendar year following the year in which the controlled transaction was performed.
There are also reporting requirements for taxpayers who will be required to submit a notification on controlled transactions. Notifications are to be submitted by May 20 of the year following the reporting calendar year.
From January 1, 2019, only domestic transactions between Russian companies that apply different tax rates of corporate profits tax or special tax regimes shall be subject to the transfer pricing rules, and only if income earned (or cost incurred) from these related party transaction(-s) exceeds RUB 1 billion per year.
For cross-border related party transactions, a threshold of RUB 60 million was introduced for transfer pricing purposes. There was no threshold established for cross border operations in the period from January 1, 2014 until January 1, 2019.
In December 2017, Russia adopted the law on the tiered approach for transfer pricing documentation in accordance with OECD BEPS Action Plan 13.
This approach applies to multinational enterprises groups (MNE) with a consolidated income of or exceeding RUB 50 billion.
The arm's length principle should be adopted for transfer pricing between related parties. Taxpayers should prepare and keep contemporaneous transfer pricing documentation to demonstrate that their related party transactions are conducted on an arm's-length basis, if the value of transactions exceeds certain de minimis amounts.
Singapore has also adopted country-by-country reporting.
Arm's-length principles are generally applied under SA law for transactions between related parties. The SA rules follow the OECD guidelines.
SA is a signatory to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.
Where the price of an international transaction in which either party to the transaction is a foreign related party is lower or higher than the arm's length price, the tax authority may determine or rectify the tax base and tax amount of a resident (including a domestic corporation and a domestic place of business) based on the arm's length price.
Arm's-length principles generally are applied under Spanish law to transactions between related entities. The Spanish rules are in accordance with OECD guidelines.
The Swedish transfer pricing rules are based on the “arm’s-length” principle and the OECD guidelines. Documentation requirements apply to cross-border transactions with affiliated companies.
“Arm’s-length” principles generally apply. Switzerland uses the methods published in the OECD Transfer Pricing Guidelines and has no detailed transfer pricing legislation.
Certain transactions between related parties (eg, where there is direct or indirect "substantive management control," material influence or control over a board of directors) must be conducted on "arm's-length" terms.
Turkish tax regime generally adopts the "arm's-length" principles for transactions realized between related entities.
Ukrainian rules are based on OECD guidelines. Arm's length principles are generally applied under Ukrainian tax law to qualifying controlled transactions.
The following transactions may be qualified as controlled:
- With related non-residents
- With non-resident commission agents
- With non-residents registered in "low-tax" jurisdictions (the list of such jurisdictions is approved by the government)
- With non-residents of certain legal organizational forms (eg, pass-through entities such as UK LLP, Danish KS, etc.) which do not pay corporate income tax or are not tax residents in the country of incorporation (the list of legal forms is approved by the government)
United Arab Emirates
Not applicable for this jurisdiction.
Arm's-length principles generally are applied under UK law to transactions between related entities. The UK rules generally follow OECD principles.
Arm's-length principles generally are applied under US law to transactions between related entities. The US rules are similar in many respects to the OECD guidelines, with certain material differences.
The arm's-length principle is applied under Zimbabwean law to transactions between related entities. The Zimbabwean rules are similar in many respects to the OECD guidelines, with certain material differences, although the OECD guidelines are used to interpret Zimbabwean law as regards to transfer pricing.