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Peters Advisors is an independent provider of transfer pricing and valuation services.
We have advised many of the world s leading companies on transfer pricing and valuation matters.

Transfer Pricing

Transfer Pricing

Our strength in transfer pricing lies in our committed advisors with specialized experience and expertise in transfer pricing compliance, planning, and disputes.
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Tax Valuation

Valuations can be a critical component of effective tax planning. The valuation professionals at Peters Advisors provide a full range of valuation services.
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Latest News

Treasury Official Indicates that IRS Not Planning to Alter Section 6662 Documentation Requirements in Near-Term
By Dan Peters
News:  BNA reported that Brian Jenn, attorney adviser in Treasury's Office of International Tax Counsel, told the ABA Section of Taxation at its May 8th meeting that “our hands are full” with the implementation of the Country-by-Country (“CbC”) reporting template for US-parented taxpayers with consolidated revenues greater than approximately $840M annually.  Jenn indicated that only after the implementation of CbC would the Treasury begin to evaluate the OECD “master-file/local-file” approach to documentation and its relation to Section 6662.

Views:  The multiple degrees of uncertainty regarding what will be required to satisfy tax authorities during the transition to a post-BEPS world can be confounding to both taxpayers and advisors.  This transition period will be highly volatile for taxpayers who need to be more transparent in disclosing new information in different ways to tax authorities.  Integration between results in the CbC report and the rationale for these outcomes in the transfer pricing documentation will be critical – even if current US documentation requirements don’t necessitate addressing these issues.

To read the full article, click here.

OECD’s Proposed Changes to Cost Contribution Arrangements Generate Controversy
By Kurt Wulfekuhler
News:  In a webcast update by the Organization for Economic Co-operation and Development (“OECD”) on its Base Erosion and Profit Shifting (“BEPS”) initiative on June 8, 2015, Andrew Hickman, Head of the Transfer Pricing Unit, acknowledged the numerous taxpayer comments received on the OECD’s Discussion Draft on Revisions to Chapter VIII of the Transfer Pricing Guidelines on Cost Contribution Arrangements (“Discussion Draft”).  The Discussion Draft proposes text for an updated Chapter VIII on cost contribution arrangements (“CCAs”) in the OECD’s Transfer Pricing Guidelines.   The proposed text would require contributions to be measured at value rather than at cost so that the outcomes for participants in a CCA do not differ significantly from those for parties outside a CCA.  While agreeing that any pre-existing intangible property should be transferred at value, a number of taxpayers raised concern about requiring ongoing payments to be made at value instead of cost, citing third-party examples of CCAs done at cost to support their case.

Views:  Tax administrations and taxpayers should be able to reach a compromise that preserves the commercial effectiveness of CCAs while addressing the OECD’s greatest concerns about BEPS.  One of the most important objectives of the BEPS initiative is to prevent the transfer of intangible property within a multinational enterprise at less than value.  Taxpayers concur that any pre-existing intangible property should only be contributed to a CCA at value, even though there may be some disagreement on the methods for valuing such intangible property.  Requiring ongoing contributions to be made at value instead of cost, though, removes the commercial efficiencies of a CCA without furthering one of the principal objectives of the BEPS initiative.  Greater emphasis should be placed on how to value the pre-existing intangible property instead of the ongoing development contributions.

To read the full article, click here.

India Proposes Changes to Arm’s-Length Price Evaluation
By Jared Walls
News:  On May 21, 2015, India’s Central Board of Direct Taxes (“CBDT”) issued a draft scheme for proposed rules that would change the way in which an “arm’s-length” price of an intercompany transaction is evaluated for Indian transfer pricing purposes.  The new framework, which was initially announced as part of India’s 2014 Finance Bill, would replace the single-year arithmetic mean with the concept of a multi-year average arm’s-length range.  

Views:  Most Organization for Economic Cooperation and Development (“OECD”) member countries, including the United States, allow the use of multi-year arm’s-length ranges to benchmark the results of a taxpayer against a set of comparable companies or transactions.  So the move by India is a noteworthy step toward international conformity. 

To read the full article, click here.

Australia Introduces Draft Anti-Avoidance Legislation
By Sean Faulkner
News:  On May 12, 2015, Australia’s Treasury Department released draft legislation aimed at targeting multinationals that are suspected of using artificial or contrived arrangements to avoid a taxable presence in Australia.  The Tax Laws Amendment (Tax Integrity Multinational Anti-avoidance Law) Bill 2015 stems from Australian Tax Office investigations which identified 30 multinationals as having tax schemes in place to avoid paying their full Australian tax liability.

Views:  The ATO continues to be aggressive and at the forefront of unilaterally drafting and implementing transfer pricing regulations that are designed to ensure that the Australian tax base is not artificially eroded.  According to BNA, Treasurer Joe Hockey stated that "under this new law, when we catch companies cheating, they will have to pay back double what they owe, plus interest."

To read the full article, click here.

Transfer Pricing Implications of the BEPS Action Plan
By Dan Peters and Kurt Wulfekuhler
Determined to eliminate so-called double non-taxation as well as no or low taxation associated with practices that are perceived to segregate taxable income from the activities that generate them, the Group of Twenty (“G20”) and the Organization for Economic Co-operation and Development (“OECD”) released their Action Plan on Base Erosion and Profit Shifting (“BEPS Action Plan”) in 2013.  Included in the BEPS Action Plan are several provisions related to transfer pricing:

  • Action 4: Limit base erosion via interest deductions and other financial payments;
  • Action 8: Assure that transfer pricing outcomes are in line with value creation – Intangibles;
  • Action 9: Assure that transfer pricing outcomes are in line with value creation – Risks and capital;
  • Action 10: Assure that transfer pricing outcomes are in line with value creation – Other high-risk transactions; and
  • Action 13: Re-examine transfer pricing documentation.

To read the full article, click here.

CRA Addresses Use of Multiple-Year Data
By Sean Faulkner
News: On January 29, 2015, the Canada Revenue Agency published Transfer Pricing Memorandum (“TPM”)-16 pertaining to the role of multiple-year data in transfer pricing analyses.  TPM-16 concludes that while multiple years of data pertaining to potentially comparable transactions may be useful in selecting or rejecting comparables, or determining the degree of comparability, transfer prices for a given year should be set and evaluated using a single year of data.

View: CRA’s TPM-16 clarifies and reinforces its position that using a single year of data when benchmarking the profitability of the tested party against comparable transactions (typically through the application of the TNMM) is the most appropriate treatment.  Despite the general acceptance of 3 or 5-year averages of comparable financial results by other tax authorities, CRA’s position is that a proper analysis of the comparability of the selected companies will eliminate the need for averaging of financial results in benchmarking.  A similar point is made with regards to eliminating the need for statistical tools, such as the inter-quartile range.

To read the full article, click here.

U.S. Treasury Department Representatives Provide a Mixed Review of the BEPS Initiative
By Jared Walls
News:     During what has otherwise been a relatively quiet month for the Organization for Economic Cooperation and Development’s (“OECD”) Base Erosion and Profit Shifting (“BEPS”) initiative, representatives of the U.S. Treasury Department have managed to bring BEPS back into focus.  In an interview with Kevin Bell of Bloomberg BNA—published on April 16 (23 Transfer Pricing Report 1579)—Robert Stack (Deputy Assistant Secretary for International Affairs) and Michael McDonald (Financial Economist in the Office of Tax Analysis) provided a qualified, yet generally affirmative assessment of the OECD’s Country-by-Country (“CbC”) reporting initiative.  On April 16, however, Stack presented at the 15th Annual Tax Planning Strategies – U.S. and Europe conference in Munich, where he offered a less enthusiastic assessment of the broader tenor of the BEPS initiative.

Views:  In February, Brian Jenn, an Attorney-Adviser in the Treasury Office of International Tax Counsel, announced with little fanfare that U.S. multinationals would be required to comply with the OECD’s CbC reporting requirements for fiscal years ending on or after December 31, 2016.  The comments by Stack and McDonald provide some additional insight into the process and reveal a certain level of support and optimism for the CbC reporting template within the U.S. Treasury Department. 

To read the full article, click here.

Modified Nexus Approach for IP Regimes:
What It Means and What Happens Next

By Kurt Wulfekuhler
News:  The Group of Twenty (“G20”) Leaders’ Summit in Brisbane in November 2014 may be best remembered for a forlorn President Putin of Russia dining alone during lunch.  But the leaders did reach important agreement on a number of issues relating to base erosion and profit shifting (“BEPS”).  Among them was the endorsement of a compromise solution under BEPS Action 5, which is intended to counter harmful tax practices by requiring substantial activity for any preferential regime, among other steps.  The compromise, known as the Modified Nexus Approach, requires nexus between the location of the activities generating the income eligible for preferential tax treatment and the jurisdiction offering the preferential regime, provides a grandfathering clause of five years, and prohibits new entrants to regimes not meeting the approach after June 2016.

Views:  Taxpayers should not necessarily rush into existing preferential regimes for intangible property (“IP”), such as patent boxes, by June 2016.  The Forum on Harmful Tax Practices (“FHTP”) of the Organization for Economic Co-operation and Development (“OECD”) is considering measures to discourage new entrants intent on benefiting from grandfathering.  Additionally, regimes that do not meet the Modified Nexus Approach will have an abolition date five years after the closing date for new entrants, or June 2021, so any benefits from grandfathering will be limited.

To read the full article, click here.

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