Inside Intelligence
Transfer Pricing in Oil and Gas
London, 30-31 March 2015
The BEPS Country by Country
Reporting and Transfer Pricing
Documentation Templates
Sol Picciotto
Emeritus Professor, Lancaster University
Senior Adviser, Tax Justice Network
31/03/2015
Country-by-Country Reports & TP Documentation

Purposes
(i) overview & (ii) details of intra-firm transactions
consistent application by all countries

Three Tiers:
CbCR: if consolidated revenues > €750m
TP Master File
TP Local File

Filing & Dissemination
CbCR: tax authority of Parent’s
country of residence
Shared through treaty-based
automatic information exchange
TPMF & TPLF: direct to each country
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CbCR Template: Table One: Overview of allocation of income,
taxes and business activities by tax jurisdiction
Tax
Jurisdn
Each
entity
included
in
consold
financial
report
(no excl.)
Incl. PEs
Reve
nues
Pre-tax
Profit/
Loss
Inc Tax
Paid
(cash)
Inc Tax
Accrued
(in year)
Stated
Capital
Accumltd
Earnings
Employ
ees
Related
unreld
Total
Incl.
extraordinary
items
To all
jurisns
incl. WTs
on
receipts
Not incl
deferred
taxes or
provision
Incl.
capital of
PEs
Sum of all FTEs
entities
year-end/
in jurisn
average/
other;
may incl.
contractors
Tangible
Assets
Net book
value
NOT
cash/
intangs/
financial
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Table Two: List of all the Constituent Entities of the MNE
group included in each aggregation per tax jurisdiction
Tax Jurisdiction
MNE Name &
Fiscal Year
Main business activity/ies
Entities Resident
(list each one)
Tax Jurisdiction
of formation
(if different)
R&D/IP Management/
Purchasing - Procurement
Production-manufacturing
Sales-marketing-distribution
Admin./Services to 3rd parties
Internal Group Finance
Regulated Financial Services
Insurance
Holding (shares/equity)
Dormant
Other (specify)
Tick box or specify
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Table Three: Additional Information
Name of MNE Group & Fiscal Year
Please include any further brief information or explanation you consider necessary
or that would facilitate the understanding of thecompulsory information provided
in the country-by-country report.
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Transfer Pricing Master File

Organisational Structure
chart of ownership & geographical location

Description of business(es)
profit drivers
supply chains for main (>5%) products/services
internal services & transfer pricing for them
functional analysis + important restructuring in year

Intangibles
Description of strategy & location of R&D activities & management
List of intra-firm agreements/licences
description of TP policies on intangibles
important internal transfers during year incl. price paid

Intra-firm financial activities
description of financing
name financial affiliate(s) & place of formation / effective management
description of TP policies on finance

Financial & Tax positions
annual consolidated financial statement (if prepared for other purposes)
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List & description of APAs & tax rulings
31/03/2015
Transfer Pricing Local File

Local Entity
management structure, organisation chart, reporting lines abroad
description of business, strategy, restructurings, transfers
key competitors

Controlled transactions (i.e. related party)
description (e.g. goods, services, loans) & context
payments & receipts by jurisdiction
copies of all material agreements
comparability & functional analysis of parties
full details of TP methods & relevant data
copy of all APAs related to such transactions

Financial Information
annual accounts (audited if available)
information linking financial data with TP methods
schedules of financial data for comparables used in TP,
including sources
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CbCR Filing & Dissemination

Filing
in residence jurisdiction of ‘ultimate parent entity’ of MNE group
secondary mechanism:
next tier parent, or
local filing
for fiscal years after 2016, filing in subsequent year
UK Finance Bill 2015: powers to issue Regulations
covering UK-headed MNEs (1400), estimated costs ‘negligible’

Dissemination
Treaty: DTT, TIEA, or (most likely) MCMATM
accession process for MCMATM – Global Forum on Transparency
Competent Authority Agreement (due in April)
‘Automatic’ exchange, but subject to

Conditions of Participation
Confidentiality: legal rules, adequately enforced
Consistency: use specified template ‘no more and no less’
Appropriate Use:
assessing high-level transfer pricing risk & other BEPS-related risks
not to propose any adjustments using ‘an income allocation formula’
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Implementation

OECD Transfer Pricing Guidelines
New Chapter V
= international soft law
often incorporated into national law

Proposed Multilateral Convention on BEPS
may be included?
to be open to all states
package deal?

Existing MC on Mutual Assistance in Taxation
open to all states (approval?)
to obtain information from other states
conditional on `appropriate use’ of information?

National Laws
states already demand transfer pricing documentation
power to compel production of documents held abroad?
OECD to develop Model Laws
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Comparison with other CbC reporting

Extractive Industries
EITI: in countries where adopted
Dodd-Frank: s.1504
EU Accounting & Transparency Directive: ch. 10
payments to governments
taxes, royalties, license fees, bonus payments

EU Capital Requirements Directive IV
Credit Institutions & Investment Firms, data by country
name(s), nature of activities and geographical location
turnover
FTE employees
profit/loss before tax
tax on profit/loss
public subsidies received

Comparison
Less information required, but
Published

Will CbCRs remain confidential to tax authorities?
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Thank You
Muchas Gracias
Obrigado
Merci
Asante Sana
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31/03/2015