Tue, Sep 15, 2020

Duff & Phelps Featured in Bloomberg BNA Transfer Pricing Forum: Transfer Pricing Practice During COVID-19

Managing directors Fabian Alfonso and Justin Radziewicz and directors Andrew Cousins and Benedicte Olrik in Duff & Phelps global Transfer Pricing practice provide Australia, UK and U.S. perspectives in the August 2020 issue of Bloomberg BNA’s Transfer Pricing Forum. 

In this issue, international transfer pricing practitioners explore whether and how countries are reacting to the transfer pricing tax effects of an uncertain economic environment. 

Read our individual country responses here

The topic on “transfer pricing practice during COVID-19” included commentary in response to the following questions:

  • Per the OECD, the impact of the COVID-19 pandemic on economic activity would far outweigh anything experienced during the global financial crisis in 2008-09. What similarities and differences do you see between the 2008 crisis and the current pandemic so far on the practice of transfer pricing in your jurisdiction?
  • Business performance as a result of the COVID-19 pandemic:
    • What do you see as the impact of the COVID-19 pandemic on low-risk entities (which typically bear limited risks and record limited profit margin when the principal entity incurs a loss) in your jurisdiction? Do you see your jurisdiction accepting that such entities can lose money during this unusual economic downturn?
    • Are there MNEs in your country who are experiencing or likely to experience increased or expanded business opportunities despite the current pandemic? What strategies should these entities be mindful of with regards to their transfer pricing models?
    • How are MNEs in your jurisdiction addressing comparability issues, or how would you advise them to address comparability issues? How should they treat loss-making comparables, to ensure that any adjustments factor in the current global epidemic and adequately reflect economic reality?
    • How likely are the tax authorities in your jurisdiction to consider ‘‘economic circumstances’’ as a relevant comparability factor?
  • How do you see the pandemic affecting APAs? What adjustments are MNEs making–or what adjustments should they make–to ensure that they will be considered to be in compliance with their agreements? Are companies looking to amend (or should they look to amend) their APAs, or are they just documenting changes in anticipation of possible future amendments?
  • Do you think there is a ‘‘silver lining’’ or bright spot about this economic situation that MNEs should be mindful of? What are possible opportunities that otherwise would not be sustainable in the absence of an economic crisis? Reset possibilities? Location-specific advantage?

Reproduced with permission from Copyright 2020 The Bureau of National Affairs, Inc. (800-372-1033) www.bna.com.

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