The revised regime not only incorporated the substantial activity criterion, but also went a step further and provided for the determination of the income/gains from the intellectual property in accordance to the OECD Transfer Pricing Guidelines. Malta provided for the application of Transfer Pricing rules in its 2019 revised Patent Box Regime, following recommendations based on the BEPS initiative and the EU Rules. The OECD Transfer Pricing Guidelines provide guidance on the application of the arm’s length principle, which represents the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises. This 2017 edition of the OECD Transfer Pricing Guidelines incorporates the substantial revisions made in 2016 to reflect the clarifications and revisions agreed in the 2015 BEPS Reports on Actions 8-10 Aligning Transfer pricing Outcomes with Value Creation and on Action 13 Transfer Pricing Documentation and Country-by-Country Reporting. In recent years, Maltese law made specific reference to Transfer Pricing rules in its local and in particular, in its Special Tax Regime – The Patent Box. While details will be revealed when the rules are published, the enabling provision clearly states that the rules will provide for the determination of the arm’s length pricing of a transaction or a series of transactions, any adjustments in relation thereto and advance pricing agreements, known as APAs.Įven without formal Transfer Pricing requirements, it can be contended that adhering to the Arm’s Length Principle (“ALP”) would make sense, especially in the light of recent developments in Maltese law. While Malta has not yet formally adopted this recommendation, the current international practice and the recent developments, in particular the enabling provision in the Budget Implementation Measures Act 2021 indicates that Transfer Pricing rules are likely to be introduced in Maltese tax laws in the very near future. In general, Transfer Pricing refers to methods in determining the arm’s length price of intragroup transactions, by considering the pricing, terms and conditions underpinning such transactions. The importance of the Transfer Pricing rules is based on the need to counteract the base erosion and profit shifting, which can result in a distortion of governmental tax revenues. One of the most important initiatives of the OECD is the introduction of Transfer Pricing (“TP”) Guidelines, which was proposed through Action 8-10 of the BEPS project.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |