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Transfer Pricing News for the Week of March 8, 2021

8th March 2021

Spanish Tax Agency Announces Tax Scrutiny Agenda 

The Spanish Tax Agency announced that it will be cracking down on tax-avoidance, tax havens, and permanent establishments in 2021. Where will it be looking exactly? Corporate restructuring, financial transactions, transfer of assets (particularly intangibles), tax of new digitalized business models, and profits provided to permanent establishments. Transfer pricing documentation is also an area of increased concern, with special attention paid to information obligations and the FAR analysis. While it’s full steam ahead on tax enforcement, the government must consider an unexpected disruption: COVID-19. The government plans to follow the OECD’s guidance on transfer pricing implications of the pandemic and will direct attention to multinational groups in areas least impacted by the virus. Tax authorities arealso  planning to implement an automated transfer pricing risk analysis system, which will use information from country-by-country reports, automatic exchanges, unilateral agreements, and mutual agreement procedures.   

 Thailand Revenue Department Issues Online Filing Requirements  

The Thailand Revenue Department is now requiring companies to submit transfer pricing disclosures online. It applies to accounting periods beginning on or after January 1st, 2020. The disclosure is required by companies who make 200 million baht ($6.7 million), in revenue a year. If a company finds itself unable to file online, it’s required to provide a letter with the paper file explaining its course of action. The online submission is a win-win for the Thai Revenue Department and trees. It allows the revenue department to take a closer look at disclosed information and make swifter selections on which companies to audit.  

Ireland Releases New Transfer Pricing Guidance  

Ireland’s extended lockdown isn’t the only thing making headlines this week—transfer pricing changes are newsworthy, too. The Irish Revenue released an updated version of Tax and Duty Manual (TDM) Part 35A-01-01, Monitoring Compliance with Transfer Pricing Rules Contained in Part 35A Taxes Consolidation Act (TCA) 1997. Part 35A of the TCA was recently updated by Finance Act 2019, which widened the transfer pricing rules to extend to capital transactions and capital allowances. The guidance addresses the OECD’s 2017 guidelines adoption in law, and covers benchmarking analysis, penalty protection, types of transactions excluded from transfer pricing rules, and specific guidance for analyzing financial transactions. As for the specifics—the guidance emphasizes the mandatory preparation of a master and local file and increased penalties for failure to do so.