Country Tax Guides – Transfer Pricing better cover interaction between transfer pricing and indirect taxes

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Country Tax Guides – Transfer Pricing are online country guides available on the IBFD Tax Research Platform. They explain in detail all the possible tax technical aspects of transfer pricing and cover 66 jurisdictions across the globe.

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Section 18 of these extensive country tax guides, now called “18. Interaction between Transfer Pricing and Indirect Taxes”, has been expanded for all 66 jurisdictions. It now better covers the interaction between transfer pricing and indirect taxes, including VAT and customs duties.

Adjustments related to VAT and customs often impact transfer pricing. Conversely, transfer pricing adjustments can also have a direct impact on custom duties and import VAT.

COVID-19 has increased related risks. By disrupting global supply chains and product demand, it has affected financial flows, risk allocation and sometimes even staff allocation. All these activities may lead to additional or amended transfer pricing adjustments, which in turn may trigger VAT and customs duties consequences.

The enhanced section 18 reflects the latest trends on the topic. The distinctive features of the new outline are the specific sections focusing on:

  • The practical impact of transfer pricing and customs adjustments in each country. This section provides a practical approach to deal with adjustments in different countries, e.g.:
    • Transfer pricing adjustments resulting in an increase or decrease in the price paid by importers
    • Other practical implications due to transfer pricing adjustments, such as administrative procedures, forms and penalties
    • The impact of changes in customs value on transfer pricing
  • Cooperation between competent authorities. This section describes the tax, customs and VAT authorities in each country and how they cooperate in terms of exchanging information, undertaking joint audits, best practices and use of rulings.
  • Use of TP and customs documentation in each country. This section deals with how the authorities use transfer pricing and customs documentation during audits.
  • In as many jurisdictions as possible, Case Studies. The enhanced section 18 includes two case studies giving practical examples of how the interaction between transfer pricing and indirect taxes works in each country.