New challenges for companies in terms of transfer pricing

March 2016.- Catalonia Trade & Investment, within the framework of its yearly seminars, organised together with the professional services firm, KPMG, a session on “New challenges for companies in terms of transfer pricing”, which brought together 94 attendants.

During the session the importance of the international BEPS environment (base erosion and profit shifting) was analysed, specifically looking at the recent measures introduced in corporate tax and in the area of documentation in transfer pricing. José María Luis de Odriozola, head of the state inspection team of the Delegation for Major Contributors in Barcelona explained in his presentation different actions implemented by the Package of BEPS reports, looking at the problems which this initiative tries to alleviate from a Spanish perspective (i.e. restructuring of multinationals with abandonment of subsidiaries, conversion to permanent establishments and intragroup borrowing, among others). These actions seek improved alignment between localisation of taxable benefits and the localisation of economic activities and value creation. Furthermore, he explained some of the correcting actions which already have been implemented in the new Spanish corporate income tax law, in anticipation of the BEPS actions.

Carlos Heredia, partner of the department of International Tax and Transfer Pricing of KPMG Abogados Barcelona explained the rest of the actions of the BEPS report Package, dividing them into four main blocks: (i) the first block of actions which aims for coherence (actions 2 to 5 – hybrid mechanisms, international tax transparency, deductibility of financial costs and preferential arrangements), (ii) a second block of actions which seek substance (actions 6 to 10 – abuse of agreements, permanent establishments, intangibles, risk and capital and other risk transactions), (iii) a third block of actions which seek transparency (actions 11 to 14) – methodology of BEPS measurement, transparency in aggressive tax planning, country by country reporting and friendly procedures and arbitration), and (iv) a fourth block of transversal actions (actions 1-15 – digital economy and multilateral instrument).

Finally, Elisenda Monforte, partner of the department of International Tax and Transfer Pricing of KPMG Abogados Barcelona, explained the different types of documentation which the taxpayer must prepare in terms of transfer pricing as of January 1, 2016 (i.e. Master File, Local File and country by country information).

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