In February 2021, the Organisation for Economic Co-operation and Development (“OECD”) issued a handbook linked with the official roll-out of its International Compliance Assurance Programme (“ICAP”). ICAP was first  introduced as a pilot in January 2018 (“ICAP 1.0”) as a voluntary program where MNE groups may receive “comfort and assurance” from multiple tax administrations as to the veracity of the MNE group’s transfer pricing allocations and numerous types of international transactions. While some notable countries did not participate in ICAP 1.0 (for example, Germany), the pilot program received positive reviews by a number of MNE groups. In March 2020, the OECD enhanced the pilot program (“ICAP 2.0”) to encourage more countries to join. On March 22, 2021, the OECD announced an initial list of twenty countries that are participating in the official program.[1]

Continue Reading ICAP, a New Tool in the Multiverse of Multinational Tax Dispute Management

The Inland Revenue Authority of Singapore (“IRAS”) has issued transfer pricing guidance for centralized activities of multinational enterprise (“MNE”) groups in Singapore to assist taxpayers in analysing such activities between related parties and identifying factors that may affect transfer prices for these activities and the transfer pricing methods that may be appropriate.

The guidance (in the form of a so called e-Tax Guide, which the IRAS issues from time to time in order to express its views and policies on certain matters to taxpayers) is important considering that Singapore is being adopted as a destination by a significant number of MNEs for housing their global as well as regional headquarters (“HQ”). The e-Tax Guide aims to analyse potential inter-company transactions that may be carried out by MNEs through their Singapore-based HQ and discusses the approach to determine the arm’s length price in respect of such transactions.


Continue Reading Singapore’s Transfer Pricing Guidance for Centralized Activities of MNEs

In the U.S., transfer pricing benchmarking under the Comparable Profits Method (“CPM”) or Transactional Net Margin Method (“TNMM”) depends on the availability of public company financial data. In recent years, the decreasing number of U.S. listed and non-exchange traded companies has made this benchmarking more challenging, not only due to the smaller population from which the comparable can be selected: Many of the remaining listed and non-exchange traded companies are either large companies that own intangibles or small companies that often operate at a loss. This trend should prompt transfer pricing practitioners to consider new, creative approaches in selecting comparable companies for purposes of CPM/TNMM, and in appropriate cases, to re-consider transactional or other methods that do not rely on publicly available profitability data. Further, an APA might now be a prudent choice to obtain certainty, even if APAs had not been considered necessary or worthwhile from a cost-benefit perspective in the past to mitigate tax risk.

Continue Reading The Vanishing U.S. Comparable

On March 23, 2021, the United States’ Advance Pricing and Mutual Agreement Program (“APMA Program”) released its 2020 annual report (“2020 Annual Report”) to the public concerning advance pricing agreements (“APAs”). COVID-19 has caused unprecedented disruptions  to taxpayers and tax administrations alike, but the 2020 Annual Report shows that the APMA Program remained highly productive in 2020. Last year taxpayers filed 121 APA requests—the same amount as in 2019. And in 2020, APMA executed 127 APAs—seven more than the prior year.

Continue Reading APMA to COVID-19: Don’t Stop Me Now

The Mutual Agreement Procedure (“MAP”) is a useful dispute resolution mechanism for multinational companies facing a transfer pricing or other assessment resulting in double tax, whether in the U.S. or abroad. In order to fully avail themselves of the advantages of the MAP process, taxpayers should pay careful attention to the applicable procedures to optimize their chances of a successful resolution.

Continue Reading The Mutual Agreement Procedure (“MAP”): Advantages and Potential Pitfalls for Resolution of Double Tax Issues

Last week, the IRS issued new guidance that addresses “telescoping” in mutual agreement procedure (“MAP”) and advance pricing agreement (“APA”) cases. Very generally, the guidance disallows (subject to a $10 million materiality exception) telescoping for tax years starting in 2018, when the Tax Cuts and Jobs Act (“TCJA”) came into effect, while continuing to allow telescoping for pre-2018 years in appropriate cases. According to the IRS’s Advance Pricing and Mutual Agreement (“APMA”) program, the new guidance was needed to address the impact of the TCJA “and its many interlocking provisions that require careful determination (and redetermination, as needed) of a U.S. taxpayer’s taxable income and tax attributes.” The new guidance has the potential to drive up compliance costs by increasing the number of tax returns that taxpayers must file to resolve MAP and APA resolutions for post-TCJA years (and resolutions spanning both pre- and post-TCJA years).

Continue Reading Telescoping into the Void

The Inland Revenue Authority of Singapore (“IRAS”) has issued transfer pricing guidelines for companies affected by the COVID-19 pandemic, which includes guidance on documentation requirements, term-testing for related party transactions and Advance Pricing Arrangements (“APA”).

Continue Reading Singapore’s Transfer Pricing Guidelines for COVID-Affected Businesses

Responding to the potential disruption created by COVID-19 for transfer pricing arrangements, the Advance Pricing & Mutual Agreement (“APMA”) Program on May 11, 2020, issued informal guidance related to the pandemic. The guidance makes clear that APMA will consider the impact of COVID-19 on both pending requests and completed agreements. It also reveals that APMA is already discussing COVID-19 issues with treaty partners.

Continue Reading COVID-19 and APAs: APMA Signals Flexible Case-by-Case Approach to Address Special 2020 Transfer Pricing Challenges in APAs