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Newsletter TPS – February 2023

Transfer pricing developments around the world

 

  • Israeli tax authority issues guidelines for the preparation of country-by-country reports by large multinational groups

The Israel Tax Authority has issued guidelines for the practical implementation of country-by-country reporting by large multinational groups. The tax authority will require these groups to file an annual online report with financial data and information on the nature of the business, relating to all entities in the group. Entities resident in Israel that are part of a multinational group required to file the country-by-country report will submit a report to the ITA in the tax year in which the group filed its report. These entities must also declare the country in which the multinational group report was filed with identifying details of the multinational group.

 

  • Colombia sets fiscal calendar for 2023

The Colombian Ministry of Finance has updated its tax calendar for 2023. The new calendar includes updated dates for the submission of transfer pricing documentation:

  • Companies must file the transfer pricing informative return and supporting documentation between 7 September 2023 and 20 September 2023.
  • The Master File must be filed between 11 December 2023 and 22 December 2023.
  • The Country-by-Country report must be filed between 11 December 2023 and 15 December 2023.

 

  • Singapore publishes Indicative Margin for Related Party Loans in 2023

The Inland Revenue Authority of Singapore (IRAS) has published the indicative margin for related party loans not exceeding SGD 15 million obtained or provided during the period 1 January to 31 December 2023. The indicative margin for 2023 is +230 bps or 2.30%.

The IRAS’ indicative margin is added to the base reference rate to approximate an arm’s length interest rate for a related party loan. The SGD 15 million threshold is based on the loan committed and not the loan utilized.

The use of the indicative margin is optional. However, a taxpayer is exempt from preparing the transfer documentation for such related party loan on which the indicative margin is applied.

 

  • Serbia Sets Arm’s Length Interest on Deemed Income from Loans

The Ministry of Finance has approved the Regulation on the interest rates that are considered market interest rates for loans between related parties in 2022, regardless the year in which the loan was originally granted.

In accordance with the Corporate Income Tax Law, in order to determine the market interest rate, taxpayers may use the interest rates set forth in the Regulation or apply general methods for determining it. The selected option must be applied consistently to all loans granted or received from related parties.

 

  • Hungary amends transfer pricing documentation requirements

From tax year starting in 2023, the threshold for determining whether a related-party transaction must be documented has been increased from HUF 50 million to HUF 100 million. On the other hand, the master file and the local file will be treated as separate documents (until now they were together a single document), which affects the penalties for non-compliance with the documentation obligation, which may now be imposed several times per tax year.

In addition, there is a new obligation for companies subject to transfer pricing documentation requirements to provide transaction-level data on their transactions between related companies as part of the annual corporate income tax return. This new obligation will apply for the first time to 2022 tax returns due by May 31, 2023.

 

  • Ivory Coast Introduces Mandatory Filing of Master File and Local File

Côte d’Ivoire has introduced the obligation for taxpayers required to file the country-by-country report (CbCr) to prepare both a local file and a master file of their related-party transactions. The documentation, which will be applicable as of tax year 2023, must be in French and submitted no later than 30 days after request by the tax administration.

In case of non-compliance, a penalty of 0.5% of the amount of the related transactions may be applied, with a minimum penalty of 10 million FCFA.

 

  • Burkina Faso introduces country-by-country reporting (CbCr) and establishes a framework for the automatic exchange of information

The Government of Burkina Faso has introduced mandatory country-by-country reporting (CbCr) for taxpayers that are part of multinational enterprise groups that have reached a total turnover equal to or exceeding F.CFA 491 billion during the previous fiscal year. The Law has also introduced the possibility of automatic exchange of CbC information.

In order to avoid transfer pricing disputes that may arise from the determination of criteria for applying the arm’s length principle, Burkina Faso allows, as of January 1, 2023, companies operating in the country to enter into Advance Pricing Agreements (“APAs”) with the tax administration. Such Advance Pricing Agreement will be effective for a period not exceeding 4 years.

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