Global Transfer Pricing Conference

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Silvester Hubbard
5 years ago
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1 Global Transfer Pricing Conference Regulatory developments in Canada October 2016 The new normal full TransParency

2 Today s presenters Gord Jans Canada Lav Chadha Canada Olivier Paul-Hus Canada Shiraj Keshvani Canada PwC 2

3 Agenda 1 Introduction 4 TP dispute resolution 2 TPM 17 and Revenu Québec audit 5 Panel Q&A 3 BEPS in action PwC 3

4 In-session polling When requested, select the current session from the Agenda (main menu), tap on Participate and Polling. PwC 4

5 TPM 17 and Revenu Québec audit 1

6 TPM 17 and Revenu Québec audit Impact of government assistance on a transfer pricing analysis Released March 2, 2016 Provide guidance on the treatment of government assistance when using a cost based method to determine the transfer prices CRA presumes that the Canadian taxpayer will keep the government assistance unless it can be proven that arm's length enterprises would effectively share all or part of that assistance Revenu Québec transfer pricing audit New audit area for Revenu Québec Possibility of economic double taxation PwC 6

7 Example of a transfer price per accounting treatment and CRA guidance PwC 7

8 Polling question 1 How is your company treating governmental assistance under a cost plus transfer pricing policy? A. Reduce the cost base by the amount of governmental assistance B. Do not reduce the cost base by the amount of governmental assistance. C. This situation does not apply to us D. PwC participant PwC 8

9 Polling question 2 Has your company ever faced a provincial transfer pricing audit? A. Yes B. No C. PwC participant PwC 9

10 BEPS in action 2

11 BEPS in action Canada s influence seen in BEPS Guidelines The OECD developed a responsible response with its 15- point action plan to combat BEPS. [However] much of what it contains is heavily influenced by Canadian practice. For us very much we see the [new] OECD guidelines as a clarification and extension of what has always existed in Canada to other jurisdictions Assistant Commissioner, Large Business and Investigation Branch, CRA. PwC 11

12 BEPS in action Recent tax court case for Marzen Artistic Aluminium Great example of accurate delineation of the actual transaction approach The logic in the Marzen decision closely resembles the OECD s recommended six steps to accurately delineate the actual transaction: Use of contractual agreements as a starting point for delineating the actual transaction Use of functional analysis and evidence to determine party(ies) performing control and management of risks vs. assumption of risks, and financial capacity to assume risks. (Re)allocation of risks where functional analysis was not consistent with the contractual arrangement. Pricing the accurately delineated transaction. PwC 12

13 Polling question 3 What degree of changes have you made to your TP arrangements in light of the BEPS guidelines? A. Significant B. Limited C. None D. PwC participant PwC 13

14 TP dispute resolution 3

15 TP dispute resolution MAP / APA process CRA audits Current statistics Arbitration process CRA personnel Recent experiences Recent experiences PwC 15

16 Polling question 4 How comfortable are you that your business documents (i.e. evidence) aligns to your TP documentation? A. Very comfortable B. Somewhat comfortable C. Not at all comfortable D. PwC participant PwC 16

17 In-session Q&A To submit questions electronically, select the current session from the agenda (on the main menu), and tap on Participate and Q&A. PwC 17

18 Panel Q&A PwC 18

19 Taking action Consider impact of TPM-17 on your cost plus TP arrangements Review your TP arrangements in light of BEPS guidelines Proactive dispute prevention vs. reactive dispute resolution strategies PwC 19

20 What did you think? At the end of the session, tap Session Survey and provide your rating on any or all survey questions. Tap submit response. PwC 20

21 Thank you This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. Design services 30335_PRES_09/16

Global Transfer Pricing Conference

www.pwc.com/transferpricing Global Transfer Pricing Conference Financial transactions the centre of attention October 2016 The new normal full TransParency Today s presenters Jeff Rogers Canada Nick Houseman