Thu, Jun 29, 2017

Andrew Cousins Quoted in Bloomberg BNA's Transfer Pricing Report

Transfer Pricing Practice Director Andrew Cousins was quoted in an article for Bloomberg BNA's  transfer pricing entitled Siemens Tax Official Sees New PE Compliance Burden. This article discusses the OECD's Multilateral Instrument ("MLI") where 27 jurisdictions adopted Article 12(1) on June 7, 2017. Specifically, the MLI's buffet of optional PE revisions, which includes Article 12. While 27 countries signed on to the MLI's agency PE provision, 40 jurisdictions did not.

Andrew Cousins commented, saying that despite that small number of treaties, the tax authorities in those 27 countries will likely claim that multinational groups have more dependent agency PEs in their jurisdictions. "Inevitably, jurisdictions adopting the modification will feel emboldened to assert PE status in situations where previously the absence of formal conclusion of contracts served as a deterrent". And the interplay of countries’ domestic legislation and the new dependent agent threshold has to be fully explored. Cousins said the fact that major countries with extensive tax treaty networks such as France, India, Japan, Mexico, and the Netherlands have signed on to Article 12(1), means that many multinational companies, particularly those operating close to the threshold of agency-like arrangements in these jurisdictions, will need to review their activities to ensure they aren't caught by the changes.

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