Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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UAE Flips the Valuation Problem Upside Down: A Top-Down Method for Costing Deemed Supplies of Services
The UAE has introduced a top-down valuation methodology for deemed supplies of services, addressing a longstanding challenge in VAT compliance. Rather than building up costs from scratch, businesses can work downward from a known market or retail value to determine the taxable amount for services provided without consideration. This approach simplifies compliance for multinational groups and related-party transactions where internal cost data may be difficult to isolate. The guidance has practical implications for businesses making intra-group or employee-related deemed supplies, offering a more pragmatic alternative to traditional cost-based valuation under UAE VAT rules.
2025 Transfer Pricing Year in Review
KPMG's 2025 Transfer Pricing Year in Review examines how multinational enterprises are navigating a rapidly evolving global transfer pricing landscape shaped by digital disruption and regulatory change. The report covers key developments including the continuing implementation of OECD Pillar Two rules, increased scrutiny from tax authorities worldwide, evolving documentation requirements, and the growing use of data and technology in transfer pricing audits. It highlights trends in advance pricing agreements, dispute resolution mechanisms, and the impact of geopolitical shifts on intercompany pricing strategies. The review serves as a comprehensive reference for tax professionals managing cross-border related-party transactions in an increasingly complex environment.
Bloomberg: Amgen Settles Investor Suit Over Tax Liability for $74 Million
Amgen has settled an investor lawsuit for $74 million related to disclosures about its tax liabilities. The case centered on allegations that the biopharmaceutical company misled shareholders regarding the extent of its tax exposure, particularly concerning transfer pricing disputes with the IRS. The settlement highlights the intersection of tax controversy and securities litigation, where large corporate tax positions can carry significant investor disclosure obligations. This case is notable for practitioners advising on tax risk disclosure and the potential downstream liability when transfer pricing or other tax disputes materialize into material financial exposures for publicly traded companies.
Avi-Yonah: Taxation and Deglobalization
Professor Reuven Avi-Yonah examines the intersection of taxation and deglobalization, exploring how the retreat from global economic integration is reshaping international tax frameworks. The analysis likely addresses how rising trade barriers, reshoring trends, and geopolitical fragmentation challenge established international tax norms, including transfer pricing rules and the OECD's Pillar Two framework. As supply chains restructure and multinational enterprises reconfigure their operations, tax policy must adapt to a world where cross-border activity is increasingly constrained by non-tax factors. The piece contributes to academic debate on whether current international tax rules remain fit for purpose in a deglobalizing environment.
Amgen To Pay $74M To End Investor Suit Over $10.7B Tax Bill
Amgen has agreed to pay $74 million to settle an investor lawsuit stemming from a $10.7 billion IRS tax bill dispute. The investor suit alleged that Amgen misled shareholders about its transfer pricing arrangements and the associated tax liabilities. The settlement resolves securities claims but does not address the underlying IRS transfer pricing dispute, which involves how Amgen allocated profits between its US operations and Puerto Rico subsidiary. The case highlights the compounding legal and financial risks pharmaceutical companies face when aggressive transfer pricing strategies attract major IRS scrutiny.
OECD Chapter VII Consultation: Is Cost Plus 5% Still Defensible for Headquarters Services?
The OECD's ongoing consultation on Chapter VII of the Transfer Pricing Guidelines is prompting fresh scrutiny of the cost plus 5% markup traditionally used for intragroup headquarters services. This article examines whether this longstanding benchmark remains defensible under evolving arm's length standards, particularly as tax authorities increasingly challenge low-value service arrangements. It explores the tension between administrative simplicity and accurate pricing, the role of benefit tests, and how multinationals should reassess their intercompany service documentation strategies in light of potential guideline revisions emerging from the OECD consultation process.
OECD Consultation on Intra-Group Services Guidelines
The OECD has launched a public consultation on updated guidelines governing intra-group services, a key area of transfer pricing that determines how charges between related entities for shared services are priced and documented. The consultation seeks stakeholder input on proposed revisions that could affect the application of the arm's length principle to low-value-adding services, benefit tests, and markup standards. Multinationals and tax advisers are encouraged to submit comments as the outcome will influence international transfer pricing standards and compliance requirements globally, potentially reshaping how intercompany service arrangements are structured and defended before tax authorities.
Form: International Tax: UK-USA Double Taxation Convention (form US-Company UK-REIT)
This HMRC form relates to the UK-USA Double Taxation Convention, specifically for US companies receiving income from UK Real Estate Investment Trusts (REITs). It enables eligible US corporate entities to claim treaty relief on property income dividends distributed by UK REITs, reducing or eliminating UK withholding tax obligations. The form is part of the bilateral tax treaty framework designed to prevent double taxation on cross-border income flows between the UK and the United States, ensuring US investors in UK REITs are taxed appropriately under the convention's provisions.
Guidance: Country-by-country: service availability and issues
HMRC guidance on the availability and known issues with the Country-by-Country (CbC) reporting service, used by large multinational enterprises to submit CbC reports to HMRC. CbC reporting is a key OECD BEPS transparency measure requiring multinationals to disclose revenue, profits, taxes paid, and other indicators across jurisdictions. This service update page helps businesses and tax professionals monitor system status and plan submissions accordingly.
Outdated Transfer Pricing Policies Create New Risks
Outdated transfer pricing policies pose significant risks for multinational companies as global tax environments evolve rapidly. Policies drafted years ago may no longer reflect current business operations, supply chain structures, or regulatory expectations. With increased scrutiny from tax authorities worldwide and the rollout of Pillar Two rules, companies relying on stale intercompany agreements risk audits, penalties, and double taxation. Regular reviews of transfer pricing documentation are essential to ensure alignment with the arm's length principle, updated functional analyses, and current economic conditions. Proactive policy updates help mitigate controversy risk and demonstrate compliance readiness to tax authorities.
The End of the Cost-Plus 5% Regime for Headquarters? OECD Consultation Paper on Value-Based Pricing of Intercompany Services
The OECD has released a consultation paper proposing a shift away from the traditional cost-plus 5% pricing method for intercompany headquarters services toward value-based pricing approaches. This represents a potentially significant change to how multinational enterprises price and charge for shared services and HQ functions between related entities. The proposal challenges the longstanding simplified cost-plus methodology that has been widely used for low-value-adding intragroup services under the OECD Transfer Pricing Guidelines, with implications for compliance costs, documentation requirements, and tax exposure for multinationals globally.
Webinar: Navigating transfer pricing audits in Southeast Asia
PKF is hosting a webinar focused on navigating transfer pricing audits across Southeast Asia. The session is designed to help businesses understand the audit landscape, compliance requirements, and risk management strategies in the region. Southeast Asian tax authorities have been increasingly aggressive in scrutinizing intercompany transactions, making it critical for multinationals to be well-prepared. The webinar likely covers documentation standards, common audit triggers, dispute resolution mechanisms, and country-specific practices across key jurisdictions such as Indonesia, Thailand, Vietnam, Malaysia, and the Philippines.
N.Y. Times: Microsoft Disclosure Provides Rare Glimpse of Tax Haven Tactics
The New York Times reports on a rare Microsoft disclosure revealing the company's use of tax haven strategies to minimize its global tax burden. The disclosure offers an unusual window into how multinational corporations structure operations across low-tax jurisdictions to reduce corporate income tax liabilities. Microsoft's arrangements reportedly involve routing profits through subsidiaries in favorable tax jurisdictions, raising questions about transfer pricing practices and the effectiveness of international tax reform efforts including Pillar Two. The case highlights ongoing tensions between aggressive tax planning by large multinationals and government efforts to ensure fair taxation.
Register Now: Taxand Asia Webinar: Interest-Free Loans: Current Positions and Evolving Treatment Under TP Rules
Taxand Asia is hosting a webinar focused on interest-free loans and their treatment under transfer pricing rules. The session will cover current positions across Asian jurisdictions and the evolving regulatory landscape governing intercompany financing arrangements. Interest-free loans between related parties are a key transfer pricing concern, as tax authorities increasingly scrutinize whether such arrangements reflect arm's length terms. The webinar aims to provide practitioners and multinational businesses with updated guidance on how different countries in the Asia-Pacific region are approaching this issue, including recent developments in local TP regulations and administrative practices affecting intercompany loan structures.
Tax Inspectors Without Borders strengthening tax systems through new South-South co-operation
Tax Inspectors Without Borders (TIWB), a joint OECD and UNDP initiative, is expanding its South-South cooperation model to strengthen tax systems in developing countries. The programme deploys experienced tax officials from one developing country to assist another, building local audit capacity and improving tax administration. This approach enhances skills in areas such as transfer pricing, international tax, and tax audit practices. By fostering peer-to-peer knowledge sharing among Global South nations, TIWB aims to boost domestic revenue mobilisation, reduce illicit financial flows, and help countries meet sustainable development funding needs through more effective tax enforcement.
UK: HMRC Consults on International Controlled Transactions Schedule
HMRC has launched a consultation on a new International Controlled Transactions Schedule, which would require UK businesses to report detailed information about cross-border transactions with related parties. The proposal aims to enhance transparency and improve HMRC's ability to assess transfer pricing risks. The schedule would capture data on intercompany dealings including loans, services, and goods transfers between connected entities. This initiative aligns with broader international efforts to strengthen transfer pricing compliance and could significantly increase reporting obligations for multinational groups with UK operations, affecting how businesses document and disclose controlled transactions to UK tax authorities.
The UAE’s New Transfer Pricing Regime: From a Tax-Free Reputation to Arm’s Length Compliance
The UAE has introduced a formal transfer pricing regime following the implementation of corporate tax in 2023, marking a significant shift from its historically tax-free environment. The new framework requires businesses to comply with arm's length principles, maintain transfer pricing documentation, and align intercompany transactions with OECD guidelines. Companies operating in the UAE must now prepare master files, local files, and country-by-country reports where applicable. This development signals the UAE's commitment to international tax standards and poses compliance challenges for multinationals and family-owned groups previously unaccustomed to such requirements.
Comments on ECJ C-603/24 (Stellantis Portugal) – Transfer pricing and VAT: Court confirms in Stellantis that not every true-up constitutes a service
The European Court of Justice ruled in case C-603/24 (Stellantis Portugal) that not every transfer pricing true-up payment constitutes a taxable service for VAT purposes. The court confirmed that intercompany price adjustments made to align profits with arm's length principles do not automatically create a VAT-liable supply of services. This decision clarifies the intersection of transfer pricing and VAT, providing important guidance for multinationals managing intragroup transactions in the EU, particularly regarding when true-up payments trigger VAT obligations versus when they remain outside the scope of VAT entirely.
Herzfeld: “SpaceX Speculation: Who Bears the Risk?”
This article by Herzfeld examines transfer pricing and risk allocation issues related to SpaceX, analyzing who bears economic risk in the company's structure. The piece explores how speculative valuations and intercompany arrangements may affect tax outcomes, particularly regarding which entities bear financial risk for tax purposes. Transfer pricing rules require that risk allocation in intercompany agreements reflect actual economic substance, and SpaceX's unique business model raises questions about whether its corporate structure properly allocates risk in a manner consistent with arm's length principles and IRS scrutiny.
Coca-Cola Meets Sympathetic Judges in $20 Billion IRS Case
Coca-Cola's long-running $20 billion tax dispute with the IRS received a potentially favorable reception from appellate judges, signaling possible relief for the beverage giant. The case centers on transfer pricing methodology used by Coca-Cola to allocate income from its foreign licensees. The IRS challenged the company's pricing arrangements, resulting in a massive tax deficiency assessment. The appellate court's apparent sympathy toward Coca-Cola's arguments could have significant implications for how multinational corporations structure intercompany royalty and licensing arrangements and how the IRS applies transfer pricing rules.
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