Transfer Pricing News Issue 38 - March 2022

Transfer pricing bytes

  • Australia: The government announced that it will review the advance pricing arrangement (APA) program in 2022, to focus on whether APAs continue to provide the right service for taxpayers. As part of the review, the tax authorities will consider how to tailor the APA process to better align to risk and taxpayer behavioural indicators. The review is expected to commence in early 2022 and will include a public consultation process.
  • Cyprus: On 24 January 2022, the Cyprus tax authorities issued a set of 14 “Frequently Asked Questions” regarding the tax treatment of intragroup back-to-back financing transactions, as set out in an Interpretive Circular dated 30 June 2017. The answers to the FAQs are applicable to all transactions that fall within the scope of the back-to-back circular and relate to loan agreements concluded as of the date of issue of the FAQs, as well as to those loan agreements that were concluded prior to that date that have not been examined by the Tax Department.
  • Malta: Malta’s Commissioner for Revenue sought feedback regarding draft transfer pricing rules that would implement legislation prescribing the application of the arm’s length principle to the pricing of transactions between associated enterprises that fall within the scope of the rules. The draft rules also include an APA program. The Commissioner invited interested parties to provide general tax policy comments in the area of transfer pricing, as well as specific views on the draft rules and possible alternative approaches. The consultation period ran through 28 February 2022, and the final transfer pricing rules are expected to be published during the last quarter of 2022.
  • OECD: The OECD on 28 February 2022 released the third batch of 2021/2022 updates to the transfer pricing country profiles of 28 jurisdictions, including Brazil, Canada, China, the UK and the U.S.. This release also includes new chapters for six countries -- Honduras, Iceland, Jamaica, Papua New Guinea, Senegal and Ukraine -- bringing the total number of countries covered to 91. The updated country profiles add new information on countries’ legislations and practices regarding the transfer pricing aspects of financial transactions and the application of the Authorised OECD Approach (AOA) on the attribution of profits to permanent establishments.
  • South Africa: The South Africa Revenue Service (SARS) on 11 February 2022 issued a draft interpretation note on intragroup loans for public comment, which must be submitted by 29 April 2022. SARS had previously issued similar draft notes in 2013 and 2017, but those drafts were never finalized. The new draft reflects changes in transfer pricing legislation and includes additional detail and new sections. The draft also takes into account the OECD’s Transfer Pricing Guidance on Financial Transactions released in 2020.