COMTAX UPDATE NEWS

TRANSFER PRICING NEWS     ​

Colombia – transfer pricing as part of tax reform
Colombia’s most recent tax bill significantly modified the existing tax system. Amendments also include changes to the current transfer pricing regime. The most important changes cover sections 260-3, 260-5 and 260-7. Section 260-3 introduces CUP method as the most appropriate (but not mandatory) for establishing AL prices for transactions involving raw materials and basic products. Further, section 260-5 aligns Colombian transfer pricing documentation with BEPS Action 13 on local and master file. Lastly, section 260-7 modifies the meaning of tax haven for transfer pricing purposes to include non-cooperative jurisdictions and special regimes.

India – introduction of secondary adjustments for transfer pricing purposes
India seeks to implement secondary adjustments for transfer pricing purposes in order to comply with OECD Guidelines. Secondary adjustments which may take form of constructive dividend, equity contributions or constructive loans constitute a follow up to primary adjustments of profits allocation.  According to the draft, secondary adjustment will not be necessary if the primary adjustments does not exceed Rs 1 crore (INR 10 million). The amendments are expected to become effective from 1 April 2018. ​

TREATY NEWS

Austria and Japan signed tax treaty on 30th January 2017.

Azerbaijan and Denmark signed tax treaty on 17th February 2017.

Hong Kong and Pakistan signed tax treaty on 17th February 2017.

LOCAL TAX NEWS

Greece – publication of non-cooperative jurisdictions
Greek Ministry of Finance published a list of non-cooperative states which include: Andorra, Antigua and Barbuda, Bahamas, Bahrain, Barbados, Brunei, Cook Islands, Dominica, Grenada, Guatemala, Hong Kong, Lebanon, Liberia, Liechtenstein, Former Yugoslav Republic of Macedonia (FYROM), Malaysia, Marshall Islands, Monaco, Nauru, Niue, Philippines, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Samoa, Uruguay, US Virgin Islands and Vanuatu.

The list impacts substance requirements for tax payers who wish to deduct expenses from transactions with residents registered in the above-listed territories. Otherwise, the corporate income tax withheld in order to deduct relevant expenses, will not be refunded.

Uruguay – changed criteria for low and no-taxation jurisdictions
Ministry of Finance published modified criteria for determining low and no tax jurisdictions:

• Effective tax rate in respective jurisdictions is below 12%; and
• No exchange of information has been signed with Uruguay.
  ​

Taxpayers conducting transactions with non-residents located in the low or no tax jurisdictions will be subject to transfer pricing regime.