Multinational companies are facing an increasingly complex and adversarial transfer pricing environment, according to a recent survey of more than 30 countries’ revenue authorities conducted by Ernst & Young.
Key findings from the survey include:
- A ‘new wave’ of countries including China, Colombia, Israel and Turkey are entering the transfer pricing enforcement field, while the ‘old guard’ – countries such as Canada, New Zealand and the UK with established transfer pricing regimes – are stepping up resources, levels of sophistication and focus in their transfer pricing efforts.
- Three significant trends emerged about tax authorities around the world that are important for multinationals to consider:
- They are more knowledgeable and attentive
- They view global tax positions, so corporate activity in one country may have implications throughout the organisation
- Transfer pricing implementation and penalties vary, but all countries are becoming more intensely focused on transfer pricing policy and compliance.
In New Zealand there continues to be a lot of audit activity focusing on loss-making companies, management service fees, royalties, interest rates, guarantee fees and limited risk conversions, says Matthew Andrew, Tax Director with Ernst & Young in New Zealand.
The full report can be downloaded from Ernst & Young’s website: www.ey.com/nz