The Bloomberg BNA International Tax Blog is a forum for practitioners and Bloomberg BNA editors to share ideas, raise issues, and network with colleagues. The ideas presented here are those of individuals, and Bloomberg BNA bears no responsibility for the appropriateness or accuracy of the communications between group members.
May 2, 2013
The District of Columbia Office of Tax and Revenue scored a significant victory April 23 in a long-running battle to defend its use of a controversial method of transfer pricing. [ BP Products...
April 18, 2013
In today’s issue of Transfer Pricing Report, practitioners from Mayer Brown LLP make a case for seeking a financial services advance pricing agreement, pointing to increased uncertainty under...
April 4, 2013
During Bloomberg BNA and Baker & McKenzie's transfer pricing conference in Paris last month, tax executives spoke about the growing problem of reputational risk and the tendency of the general...
March 21, 2013
Those who work in the transfer pricing area are used to thinking in terms of technical analysis: applying one of the five OECD-sanctioned pricing methods, calculating a range of results from...
February 7, 2013
U.S. double tax negotiations with India are at an impasse, according to IRS Deputy Commissioner (International) Michael Danilack. At the Pacific Rim Tax Institute in Palo Alto, Danilack—the U.S....
January 24, 2013
Today’s issue of Transfer Pricing Report had the following items on advance pricing agreements: 1. U.S. statistics from the Advance Pricing and Mutual Agreement Program director showing that in...
January 17, 2013
Frequently in transfer pricing, taxpayers must look to case law to answer questions not adequately addressed by either the OECD guidelines or the relevant country’s regulations. In the area of...
January 16, 2013
As noted recently by members of an American Bar Association committee, the pricing of related-party guarantee fees is an area of “tremendous uncertainty.” The adoption of the U.S. services...
January 10, 2013
Developments over the past year have done much to awaken public concern about the loss of tax revenue from companies' transfer pricing practices, with hearings in the U.S. Senate and in U.K....
December 13, 2012
In the lead section of today's Transfer Pricing Report, business practitioners and members of the Organization for Economic Cooperation and Development's Working Party No. 6 tackle the question of...
December 7, 2012
The OECD’s discussion draft on intangibles has generated more than 1,000 pages of comments from practitioners and business groups, and the debate over many of the positions taken in the draft...
November 30, 2012
In the Nov. 29 issue of Bloomberg BNA’s Transfer Pricing Report, Michael Danilack, the U.S. Competent Authority, confirmed that he is cautious about endorsing advance pricing agreements with...
October 3, 2012
“Taxmaggeden,” new reporting requirements under “Obamacare,” and competing tax reform initiatives are just some of the uncertainties that await corporate tax professionals after the November...
September 6, 2012
Safe harbors have become a big part of the transfer pricing debate over the past year. This is not surprising given the ever-greater need for certainty and the growing discomfort—from some sectors...
August 9, 2012
As reported in today’s issue of Transfer Pricing Report, two recent U.S. Tax Court petitions filed by Altera Corp. almost certainly represent the IRS’s chosen litigating vehicle for the issue of...
July 26, 2012
Almost exactly a year ago, the IRS announced that its Advance Pricing Agreement program would leave the Office of Associate Chief Counsel (International) and merge with the competent authority...
May 4, 2012
The June 6 panel on transfer pricing developments, rather than focusing
solely on the BRICS countries (Brazil, Russia, India, China, and South
Africa) will consider emerging economies overall.
April 27, 2012
Today, the world’s taxing authorities are looking for more revenue from
increasingly limited sources. Many developing nations, eager for their
fair share of the tax pie, are enacting transfer pricing rules. But what
form should those rules take?
April 19, 2012
Today’s issue of Transfer Pricing Report is a milestone for the publication: we’ve now been reporting on these issues for 20 years! So how have things changed?
April 10, 2012
Multinational companies operating in the BRIC countries face some
daunting challenges. In Brazil, government-imposed profit margins cause
frequent double taxation. In Russia, OECD-style transfer pricing rules
were adopted only last July.
April 3, 2012
The Internal Revenue Service’s annual statutory report on advance
pricing agreements for 2011, released April 2, shows a drop in both
completed APAs and new cases filed, with completions down to 43 from 69
from 2010 and applications down to 96 from an all-time high of 144 the
March 23, 2012
With little in the way of formal guidance from the IRS or the OECD on the issue, expert panelists at the June 6-7 Bloomberg BNA/Baker & McKenzie transfer pricing conference will consider intercompany pricing of management fees, guarantees, and intragroup financing. The discussion will focus on the stringent conditions that multinational companies face in many jurisdictions to deduct certain intercompany service charges and the best practices for minimizing the possibility of double taxation.
March 15, 2012
Multinational companies attempting to plan for the future face the
unprecedented challenges of a continuing global economic crisis and a
constantly changing tax law environment. The pressure for added tax
revenues and the perception that the present U.S. system needs reform
make long-term planning difficult.
March 12, 2012
In his article, “Challenging the Status Quo: The Case for Combined
Reporting,” Michael McIntyre, a professor at Wayne State University Law
School, makes the case for combined reporting with formulary
February 1, 2012
Pascal Saint-Amans, who takes office today as head of the Organization
for Economic Cooperation and Development's Center for Tax Policy and
Administration (CTPA), spoke with Bloomberg BNA correspondent Rick
Mitchell about his outlook on the current global tax scene and his plans
for the CTPA.
June 20, 2011
On June 9, 2011, the IRS announced that the duplicate filing requirement for Form 5472 will no longer be required. In T.D. 9529, 76 Fed. Reg. 33997 (6/10/11), the IRS explained that duplicate reporting in the Form 5472 context is no longer necessary due to technological advances in electronic p
June 17, 2011
At the kick-off to the BNA-Baker & McKenzie transfer pricing
conference June 8, keynote speaker Sam Maruca — the IRS's newly appointed
director of transfer pricing operations — indicated the Service may be
turning its back on the much-criticized September 2007 coordinated issue
paper on cost sharing buy-ins.
June 10, 2011
On May 11, a bipartisan group of six Congressmen introduced H.R. 1834, the Freedom to Invest Act of 2011. The bill, whose lead sponsors are Ways and Means Committee member Kevin Brady (R TX) and Jim Matheson (D UT), would
May 18, 2011
Recent consideration of a repatriation holiday in order to
encourage domestic investment and job creation has largely centered
on differentiation from the 2004 holiday, which, with the benefit
of hindsight, yielded mostly stock buybacks and dividends. The
proposal put forth by Rep. Kevin Brady (R-Texas), which has
As reported in today's Daily Tax Report, IRS Deputy Commissioner (International) Michael Danilack on February 25 discussed the implications of the recent reorganization that created the Large Business & International Division in the IRS.
On February 8 the IRS unveiled its second voluntary disclosure program for U.S. taxpayers with undisclosed foreign financial accounts. The program bears many similarities to the first disclosure program that ended on October 15, 2009, which resulted in approximately 15,000 taxpayers disclosing their offshore
Even as interest in a
U.S. territorial system of taxation finds new life amid
murmurs of comprehensive tax reform the IRS is occupied with
issuing guidance central to a hallmark of the infamous worldwide
system of taxation that the United States currently employs, i.e.
the foreign tax credit. In December 2010
Despite increased efforts to crack down on international tax
cheats, the IRS remains lacking in the use of some of the basic
tools at its disposal. As reported by BNA in the January 26
Daily Tax Report , Swedish broadcaster SVT recently
determined that the Swedish national tax agency
( Skatteverket ) has failed
With the holiday season in full swing and a gush of last-minute
Congressional activity, one would not be remiss for having
overlooked the adoption of T.D. 9508 (75 Fed. Reg.76262 (12/8/10)).
However, the temporary/proposed rules represent welcome news for
foreign holders of U.S. Treasuries. More specifically
There is good news on two fronts for taxpayers considering (or
already seeking) an advance pricing agreement between the United
States in Canada. First, arbitration will apply broadly to the
agreements, and second, more involvement by the U.S. Competent
Authority in cases should help relieve the current backlog in
As editor of BNA's Transfer Pricing Report, I have mixed
feelings whenever transfer pricing news makes it into more
mainstream media outlets, as has been happening more and more
lately. (For recent examples, see a succint and fairly accurate
summary of the Veritas Software case by
After lying low for some time, interest in a U.S. territorial
tax system is reviving. On November 10, Erskine Bowles and Alan
Simpson, the co-chairmen of the President's deficit reduction
commission, released their draft proposal for cutting the deficit
and remaking the income tax. Their plan assumes that tackling
Ireland's low corporate tax rate is under sharp scrutiny
as speculation abounds that the EU is informally pressing for a
rate hike to cut the country's budget deficit and massive debt,
brought on by the 2008 global recession, subsequent bank bailouts,
and years of excessive borrowing. EU Economic Affairs Commissi
governments fairly assess taxes on a multinational company's
cross-border transactions involving highly valuable intangibles for
which no third-party comparables exist? U.S. and Canadian
government officials will provide their views on this topic in the
context of recent changes to the Organization for
and Canadian officials' recent comments that procedures for
arbitration of double tax disputes are nearly finished, a big
question is how those procedures, due out Dec. 15, will cover
advance pricing agreements. When he announced that the guidelines
were close to done in late September, IRS Deputy
With increased governmental audit resources, new regulations,
and better access to information by fiscal authorities worldwide,
the incidence of transfer pricing controversy is expected to
increase substantially in coming years. Despite a growing array of
dispute resolution alternatives, it is likely that the
Microsoft, the U.S. software developer, generates large amounts of cash from the sale of its products. In its fiscal year ending June 30, 2010, it generated more than $24 billion in free cash flow. On the same date, it sat on almost $37 billion in cash and short-term investments.
In today's issue of BNA Tax Management's Transfer Pricing Report, François Vincent, national leader of KPMG Canada's global transfer pricing services, discusses the result in the Tax Court of Canada's decision in the General Electric Capital case.
Although most nations lack the necessary regulatory authority,
they are nonetheless stretching the arm's-length concept under
their transfer pricing regulations to impute related-party exit
charges when multinational enterprises restructure operations to
shift assets, risks, and functions to lower tax jurisdiction
Where to put the
Advance Pricing Agreement Program at the IRS has been an issue
since the program was created over 20 years ago. In fact, the tug
of war over the program between Chief Counsel and what was then the
office of the Assistant Commissioner (International) was what led
to the creation of the Deputy
As nations claw their way out of the global economic crisis,
revenue-seeking governments have an increasing interest in erasing
national borders--at least when it comes to shedding some light on
the activities of large multinational corporations--through more
robust exchange of information.
International enforcement. The Internal Revenue Service
announcement August 4 indicates it is taking the
matter seriously--reorganizing its forces to add 875 to the 600
already considered part of its International program. It also is
renaming the Large and Midsize Business (LMSB) division the Large
With August recess and the campaign season looming, Senate
Democrats and Republicans are hurriedly attempting to negotiate
final amendments to advance the Small Business Jobs
Act (H.R. 5297; S. Amdt. 4519). For international tax
professionals, the bill likely will not raise an eyebrow but for
Practitioners in 27 countries examined the use of comparable
data in their jurisdictions and revealed several global trends,
some of them—for example, the growing use of the transactional net
margin method—reflecting a divergence between common practice and
The survey, by BNA International's
Transfer pricing doesn't rise to the attention of Congress all
that often--at least, not so much that there have been any hearings
on it since 2002, when then-Acting Assistant Treasury Secretary for
Tax Policy Pamela Olson testified before the House Ways and Means
Committee on plans to rewrite the cost sharing
The OECD is about to tackle a law professor's dream assignment--updating how the organization's 1995 transfer pricing tax guidelines treat intangibles.
While Senate Finance Committee Chairman Sen. Max. Baucus (D-
Montana) announced June 30 that his committee is opening an
investigation on the tax practices of Transocean Ltd., the
Switzerland-based offshore drilling contractor embroiled in the
Gulf of Mexico oil spill, it seems that the Internal Revenue
Tax Management Transfer Pricing Report 's Molly Moses: Canada's
June 3 policy release on acquiring information from taxpayers was a
good excuse to explore the state of disclosure law in that country,
especially given recent U.S. developments like the Supreme Court's
refusal to consider Textron's case
Trying to determine when restructuring of a multinational gives
rise to compensation for the loss of functions? A new Special Report by BNA Tax Management Transfer Pricing
Report examines contractual provisions in third-party
automotive and industrial supply agreements to illustrate when the
restructuring of a
IRS Chief Counsel William Wilkins answered a host of questions
about the agency's proposed disclosure schedule for uncertain tax
positions during a BNA webinar June 9, where he and international
tax experts from the private sector engaged in a broad-ranging
discussion of the many unanswered questions surroundin
The United States and Switzerland signed a protocol March 31 allowing for the provisional application of their Aug. 19 agreement requiring Swiss bank UBS to hand over details on 4,450 secret bank accounts held by U.S. taxpayers.
On February 26, Treasury's Financial Crimes Enforcement Network
(FinCEN) published in the Federal Register proposed regulations
that would clarify who is required annually to file the FBAR. For
those not in the know, "FBAR" is shorthand for Treasury Form TD F
90-22.1 , Report of Foreign Bank and Financial Accounts
India's 2010 finance bill, released Feb. 26, seeks to raise
additional revenue by broadening the number of technical services
transactions by nonresidents subject to tax in India , and proposes the changes retroactive to
1976. In the new budget, the explanation to Section 9 of
the Income Tax Act would be
February 5, 2010
The Obama administration's fiscal year 2011 budget unveiled Feb. 1 contained a broad-ranging package of international tax provisions estimated to raise $122 billion over 10 years, including provisions to prevent shifting of high-value intangibles income out of the United States.
BNA Tax & Accounting Transfer Pricing Report has released two Special Reports on the tax treatment of business restructurings--one on Germany and one on China.
January 29, 2010
Internal Revenue Commissioner Douglas Shulman Jan. 26 unveiled a proposal to require large business taxpayers to report their uncertain tax positions and the associated dollar amounts when filing their annual tax returns. Shulman called the proposal “a major step toward
January 27, 2010
The Swiss government is facing a legal and political dilemma in how to respond to a Jan. 22 ruling by a Swiss federal court backing an appeal against the hand over of details on secret bank accounts to U.S. tax
January 15, 2010
Tax authorities in 2010 will continue their heightened scrutiny of intercompany transactions and after successes with cooperating through the Joint International Tax Shelter Information Centre, governments are expected to exchange information about companies transfer pricing and begin simultaneous audits. Other trends
December 7, 2009
On December 3, Michael DiFronzo, Deputy Associate Chief Counsel (International) at IRS, spoke at a Practicing Law Institute conference in Los Angeles. While addressing forthcoming projects on Subpart F, DiFronzo noted that the Service has received many requests from practitioners and taxpayers
The Organization for Economic Cooperation and Development's draft revision of transfer pricing guildelines is hailed by one of the arm's length standard's fiercest critics as a step toward formulary apportionment. University of Michigan law school professor Reuven Avi Yonah argues that once
November 16, 2009
Mundaca Hearing Emphasizes International Enforcement On November 4, Michael F. Mundaca appeared before the U.S. Senate Finance Committee for the hearing on his nomination as Treasury Assistant Secretary for Tax Policy. Mundaca has a strong background in international tax policy,
November 10, 2009
KPMG practitioners Hareesh Dhawale and David Crosswy examine the potential impact of transitioning to international financial reporting standards on a company's intercompany pricing policies and on the methods used to test whether policies comply with the international arm's length standard.
November 9, 2009
Elvin Hedgpeth, who was with the U.S. Competent Authority office for more than 28 years before joining Ernst & Young, and Arjo van Eijsden, head of the firm's Dutch tax litigation group, describe how tax officials' recent pronouncements indicate that they likely will participate in
October 27, 2009
The U.S. continues to increase its focus on high-wealth individuals operating accounts abroad. At the American Institute of Certified Public Accountants fall meeting here in Washington this week, several IRS officials, including the IRS Commissioner himself, spent time discussing the new IRS focus on high-wealth in
October 23, 2009
The Joint Committee on Taxation staff recommends Congess consider legislation that would effectively prohibit the use o f the comparable uncontrolled transaction method in measuring intercompany transfer prices. Practitioners are wary, saying it is difficult to find exact
October 22, 2009
Transfer pricing, and tax treaty issues are three of the areas identified as a priority for a newly formed initiative focused on strengthing the tax regimes of African nations. Jeffrey Owens, director of the Organization for Economic Cooperation and
Routine Transfer Pricing Is Not Tax Evasion, Company Executives Say
D.C. Transfer Pricing Challenge Moves Toward Trial
Uncertainty in the Financial Services Area
Chinese Official Speaks to Human Cost of Location Savings