In 2019, many countries experienced a reduction in tax base and a decline in tax revenues due to economic developments. As a consequence, the pressure has never been higher on tax authorities to protect domestic tax revenues. It is not just a coincidence that the advent of 2020 being the year of the Rat, calls for new beginnings and brings with it a lot of expectations for prosperity and peace. Policymakers worldwide are refining local laws, and new fields of guidance aimed in that direction are underway.
There has been a surge of developments in the transfer pricing space - taxation of increasing digitalized businesses, clarity on financial transactions, etc. This transition of global business and constant transformation is now having a perceptible effect on the transfer pricing policy as well. While the international tax community observed an immense load of guidelines from OECD on the Tax front in recent times, on the other hand, the judiciary from around the world also provided beneficial guidance on critical matters surrounding this highly 'artistic' subject called 'Transfer Pricing.'
They say great learnings also come from the experiences of others.
With this backdrop, we at Nexdigm (SKP) have put together 10 important rulings of 2019, from the judiciary of different parts of the world, on various issues including – incidental benefits under intra-group arrangement, implementation of APA, economic characterization, valuation, treatment of ESOP expenses, and more. In this inaugural edition, we have attempted to analyze the key principles emanating out of these judgments which may be applied by the taxpayers while a) formulating transfer pricing policy, b) creating defense strategy during the audit stage.
We hope that this is an interesting read and would love to hear your take on these significant judgments that continue to shape the global transfer pricing landscape.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.