The Implementation of the 30% EBITDA Rule in Belgium: An Angle with a Twist

Transcription

1 Belgium David Ledure, Jean-Charles Paquot and Michaël Van der Velden* The Implementation of the 30% EBITDA Rule in Belgium: An Angle with a Twist This article examines the implementation of the new interest limitation rule. 1. Introduction Just before the end of 2017, the Belgian parliament voted in favour of the country s most important corporate tax reform of the last decades. One of the main novelties thereof was the implementation of a new interest limitation rule in line with the European Union s Anti-Tax Avoidance Directives (ATAD I) requirements. In this article, the authors will first give some background on the tax reform and will then point out the main choices the Belgian legislator made within the framework imposed by ATAD I when crafting the interest limitation rule. Afterwards, the key characteristics of this new interest limitation rule will be commented in a certain level of detail. Finally, the authors will comment on the interplay of the rule with other tax deduction rules in Belgium. 2. Setting the Scene 2.1. The Belgian corporate tax reform The Belgian tax reform has a number of objectives. These basically boil down to boosting the competitiveness of Belgium while making the system both more fair and in line with the latest international tax standards. At the same time, the reform aims to be budget neutral. Belgium s high nominal corporate tax rate was often a thorn in the view of foreign investors when making a heat map of investment locations. With a statutory corporate income tax rate of 34%, Belgium had one of the highest nominal tax rates in the European Union. Given the downward trend in corporate tax rates in other EU Member States, Belgium would soon be pointed out as the black sheep if it would have kept its nominal rate at 34%. For such an open economy as that of Belgium, this could have been devastating. However, many deductions and exemptions could be used by corporate taxpayers in order to reduce their effective tax rate. For instance, the use of the notional interest deduction and research and development (R&D) incentives often had a significant impact on the effective tax rate. However, the ability to benefit from them depended very much on the characteristics of the taxpayer and its activities. This is why some considered the system rather unfair. * David Ledure is Partner Transfer Pricing and International Tax, PwC Belgium, Jean-Charles Paquot is Senior Manager Transfer Pricing and International Tax, PwC Belgium and Michaël Van der Velden is Senior Consultant Transfer Pricing and International Tax, PwC Belgium. Because of the number and complexities of these rules, the entire Belgian corporate tax system has become particularly complicated, and this was often perceived as an additional obstacle to Belgium s competitiveness. On top of that, the tax landscape is rapidly changing following the OECD s base erosion and profit shifting (BEPS) initiative and the subsequent EU implementation measures. Therefore, Belgium s coalition government decided that it was time for a significant corporate income tax reform. An agreement on a significant reform was announced in July 2017 and was formally approved by the Belgian parliament in December There are currently indications that a new act may be voted on in the coming months to fix some cracks in the December 2017 reform. At the time of writing this article, 1 no publicly available drafts are yet available. It is, however, important that taxpayers monitor possible changes to the law, as these could impact their tax position. According to the Belgian government, the reform aims at simplifying the system and improving the level of fairness and tax certainty for all taxpayers. It is structured around three main pillars. First, the statutory rate will progressively decrease to 25% (20% for small to medium-sized enterprises (SMEs)). Second, compensatory measures are to be taken, as the reform aims at being neutral from a budgetary perspective. Third, it transposes ATAD I 2 and ATAD II into Belgian legislation. 3 The new Belgian interest limitation rule resulted from an obligation imposed by ATAD I, although it was a useful building block for the government s compensating measures. This article will focus on the transposition of article 4 of ATAD I (Interest limitation rule). This article is largely inspired by the Final Report on BEPS Action 4, Limiting Base Erosion Involving Interest Payments and Other Financial Payments, which aims at preventing base erosion through the use of interest payments. The key recommendation of this report was to introduce an interest barrier rule computed on the basis of a net-interest-to-ebitda ratio (10-30% range) Mar Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market, OJ L 193/1 (2016), EU Law IBFD [hereinafter ATAD I]. 3. Council Directive (EU) 2017/952 of 29 May 2017 amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries. 230 International Transfer Pricing Journal May/June 2018 IBFD

2 The Implementation of the 30% EBITDA Rule in Belgium: An Angle with a Twist By introducing a 30% fixed ratio rule, the European Union has therefore implemented a best practice rule while using the upper boundary of the range recommended by the OECD Article 4 of ATAD I: Interest limitation rule Generally speaking, implementing BEPS measures into European legislations is a challenge, as one must balance the willingness to create a level playing field throughout the European Union and the flexibility that is necessary because of the specificities of each Member State s corporate income tax system. As will be seen further in this section, there is quite a significant number of options available to Member States to implement article 4; hence, it is key to closely monitor the implementation on a country-by-country basis. According to the European Council, groups of companies have increasingly used excessive interest payments as a means to reduce their tax liability: The interest limitation rule is necessary to discourage such practices by limiting the deductibility of taxpayers exceeding borrowing costs. It is therefore necessary to fix a ratio for deductibility which refers to a taxpayer s taxable earnings before interest, tax, depreciation and amortisation (EBITDA). 4 The authors highlight below the main characteristics of the interest limitation system introduced by ATAD I and compare them with the various implementation options and specificities of Belgium in this regard. This will pave the way for a more detailed analysis of the Belgian transposition that will be presented in section 3. The core rule of the new limitation system described in article 4(1) states that net interest (including economically equivalent payments) is deductible in the tax period in which it is incurred only up to 30% of the taxpayer s EBITDA. As there is no full tax consolidation system in Belgium, the rule in principle applies to each Belgian corporate income taxpayer separately. According to article 4(2), the deductibility ratio is computed specifically for tax purposes, and the computation details of the ratio are therefore dependent on each national tax law. This is an important point to keep in mind when comparing implementation across countries. In this respect, Belgium opted to derive the EBITDA from the taxpayer s tax return, which, in some cases, will fundamentally deviate from the accounting EBITDA. Article 4(3) provides for two optional derogations from article 4(1): taxpayers may be given the right to deduct net interest up to EUR 3 million for the entire group, and stand-alone entities may be excluded from the scope of limitation. As will be seen in more detail, Belgium did not opt to lower the EUR 3 million threshold and did exclude stand-alone entities. According to the so-called group escape rule of article 5 of ATAD I, a subsidiary from a multinational enterprise (MNE) could have a higher interest deduction capacity 4. ATAD I. compared to the 30% if it was part of a more highly leveraged group. In such a case, the subsidiary could have a tax-deductible debt leverage in line with the group s leverage. Belgium has not included this option, which is a pity, as the OECD itself recognized that some groups are highly leveraged for non-tax reasons, and therefore clearly recommended the implementation of group escape rules. A very important question is that of what happens with the net interest that surpasses the limitation threshold(s). ATAD I provides three options to potentially use excess interest, namely (i) carry-forward, (ii) carry-forward and carry-back, and (iii) carry-forward and transfer of unused capacity. Belgium has opted for the carrying forward of the excess without a time limit. Alternatively, Belgium has also introduced a system to transfer non-deductible exceeding borrowing costs to Belgian group affiliates, as there is no full tax consolidation system in place. As will be seen, this is an important tool to remedy unintended consequences of the interest limitation rule on a legal entity basis. Given the specificities of interest payments to their businesses, article 4(6) provides that financial undertakings, as defined by ATAD I, may be out of scope. Belgium selected this option, and there is a long list of regulated financial undertakings (credit institutions, insurance companies, investment funds, etc.) that are out of scope. The OECD itself noted in BEPS Action 4 that the financial sector has specific features that must be taken into account and that therefore, there is a need for specific rules for this industry. As a general rule, EU Member States have until 31 December 2018 to implement the interest limitation rule of ATAD I and, in principle, they should apply the new system from 1 January However, by way of derogation from article 4, Member States that already have rules that are equally effective may apply these rules until the end of the first full fiscal year following the date of publication on the official website of the agreement between the OECD member countries on a minimum standard with regard to BEPS Action 4, but at the latest until 1 January Belgium opted to keep its existing debt/equity rule until financial year 2019 and apply the EBITDA-based rule as from financial year Table 1 shows the various implementation options foreseen in article 4 of ATAD I and the choices made by Belgium. 3. Transposition of the EBITDA Rule into Belgian Law In essence, the application of the 30% EBITDA rule can be broken down into different steps, as depicted in the process flow in Figure 1. In the following sections, the different steps will be discussed in detail Entities in scope The 30% EBITDA rule in principle applies to all entities subject to corporate income tax. However, some of those entities are considered to have a low risk of eroding their taxable base through funding. Belgium has, therefore, IBFD International Transfer Pricing Journal May/June

3 David Ledure, Jean-Charles Paquot and Michaël Van der Velden Table 1 Options given in ATAD I Limit up to 30% of 30% of EBITDA Alternative limit up to EUR 3 million Exclusion for: stand-alone entities (25% threshold) Yes financial institutions Yes public-private cooperation projects Yes Grandfathering clause (loans granted before 17 June 2016 but not substantially modified) Group escape clause (equity/total assets or interest-to-ebitda tests) Carry/transfer mechanism: carry-forward of non-deductible borrowing costs (no time limit) carry-forward of non-deductible borrowing costs (no time limit) + carry-back (max. three years) carry-forward without limitation + carry-forward of unused interest capacity (max. five years) Option to apply on the level of a tax-consolidated group Application by Belgium 30% fiscal EBITDA EUR 3 million Yes No Yes No No On an entity-by-entity basis, but possible to transfer nondeductible exceeding borrowing costs between Belgian group entities made full use of the tolerance to exclude certain types of entities from the scope of the 30% EBITDA rule. In particular, the Belgian legislator excluded financial undertakings such as regulated investment institutions, insurance companies and pension institutions. 5 Furthermore, the Belgian legislator included the tolerance to exclude stand-alone entities from the scope of the 30% EBITDA rule. Although a quite complex double rule has been implemented, in practice, an entity should be considered as stand-alone if three conditions are met, namely that (i) they are not part of a group, (ii) they have no foreign permanent establishments (PEs) and (iii) they have a maximum of 25% ownership threshold downwards or a common shareholder Calculation of exceeding borrowing costs If an entity is subject to the 30% EBITDA rule, its exceeding borrowing costs will be deductible up to the higher amount of (i) a EUR 3 million de minimis threshold or (ii) 30% of the taxpayer s fiscal EBITDA. Hence, one should know what are to be considered exceeding borrowing costs. In essence, exceeding borrowing costs should be considered a netting of an entity s financial income and expenses. However, the calculation will be more complex, considering some specific gimmicks that are currently included in the approved reform. The Belgian legislator intends to align the definition of interest expenses and equivalent expenses with the definition included in ATAD I, which is much broader than the definition of interest currently embedded in Belgian 5. BE: Belgian Corporate Income Tax Code (CIT) (Code des impôts sur les revenus 1992/Wetboek van de inkomstenbelastingen 1992), new art. 198/1, para. 4. Figure 1 tax legislation. To date, this has not yet been defined by the Belgian legislator, and the Belgian government is entrusted with the assignment of implementing a definition via a Royal Decree. The preparatory works for tax reform explicitly use the ATAD I definition as the starting point. Hence, it is expected that costs related to loans, such as costs from hedging instruments covering financial transactions, arrangement fees, foreign exchange losses on debt instruments, etc., should be included in the calculation of the exceeding borrowing costs. A similar reasoning applies to the interest income to be included in the calculation of the exceeding borrowing 232 International Transfer Pricing Journal May/June 2018 IBFD

4 The Implementation of the 30% EBITDA Rule in Belgium: An Angle with a Twist costs. Again, income that is economically equivalent to interest income is not yet defined, but would be largely brought into line with the ATAD I definition. The difficulty of this computation lies in the costs of certain loans that fall outside the scope of the exceeding borrowing costs. Again, the current Act largely aligns with ATAD I by excluding certain types of loans from the scope of the rule namely (i) loans that were concluded before 17 June 2016 and were not substantially modified afterwards and (ii) loans used to fund public infrastructure projects for which the project operator, borrowing costs, assets and income are all in the European Union. In addition, the Belgian legislator added an exclusion for loans between Belgium-based group entities. According to the preparatory works, the underlying reasoning behind this exclusion is that the Belgian legislator aims at simulating the effects of a tax consolidation. Some concerns arise regarding this exclusion. First of all, such exclusion imposes an additional administrative burden. Whereas financial expenses and income could be easily retrieved from a group s accounting system, this is often more complex at the level of one transaction and might require updates to the enterprise resource planning system. Second, this exclusion might result in adverse consequences that do not fit the overall purpose of the law. This concern will be further explained in section 3.4., together with the calculation of the fiscal EBITDA De minimis threshold: All or nothing? Once the exceeding borrowing costs are known, one can assess the deductibility of those costs under the 30% EBITDA rule. Exceeding borrowing costs will be deductible up to the higher amount of (i) the EUR 3 million de minimis threshold, or (ii) 30% of the taxpayer s fiscal EBITDA. The ATAD I provisions lay down a tolerance for entities to deduct all qualifying interest payments up to a certain threshold. EU Member States are free to determine whether this tolerance will be implemented in their domestic legislation. The Belgian legislator makes use of this threshold in a business-friendly way by implementing the maximum threshold as put forward in ATAD I, i.e. EUR 3 million. It should be noted that this de minimis threshold as proposed in ATAD I is independent from market interest conditions. This means that in a high-interest-rate environment, this threshold might be surpassed much faster compared to the current low-interest-rate environment. If a domestic company or Belgian PE is part of a group, the EUR 3 million threshold will need to be proportionally allocated amongst the different Belgian entities. However, no allocation should be done to entities that are excluded (e.g. regulated financial undertakings). The underlying reasoning of this allocation is that the Belgian legislator once again had the intention to simulate the effects of a consolidation. However, no guidance has yet been published on how the de minimis threshold should be allocated. This will be determined later on by the government through a Royal Decree. Hence, irrespective of the number of Belgian entities, the minimum deductible interest expense will be EUR 3 million on a Belgian group level. This basically implies that for groups with a large number of Belgian entities, the minimum threshold might lose its relevance. Indeed, for these groups, the deductibility of the exceeding interest expenses will almost only depend on the 30% EBITDA, as Belgium has not opted for the group escape rule as included in ATAD I. In other words, groups with a considerable number of Belgian entities might face a significant disallowance of interest deductibility on an entity-by-entity basis, as well as an increased administrative burden Calculation of fiscal EBITDA: More than an accounting EBITDA As mentioned in section 3.2., exceeding borrowing costs are deductible up to 30% of a taxpayer s fiscal EBITDA. The notion of fiscal already demonstrates that the EBITDA to be used in this respect differs fundamentally from the accounting EBITDA. Indeed, the calculation of the fiscal EBITDA starts from the taxable profit after the first operation as reflected in the tax return (increase in taxable reserves, disallowed expenses and dividends paid). After that, a number of tax-technical corrections should be made, which can basically be divided into two groups. The first group of corrections aims at adding back to the taxable profit amortizations, depreciations and the amount of exceeding borrowing costs. Contrary to an accounting EBITDA, some other non-cash costs should not be reintegrated (e.g. provisions). The second group of corrections aims at deducting tax-exempt profits from the fiscal EBITDA (e.g. dividends-received deductions and innovation deductions). The reasoning behind these corrections is to avoid tax-exempt income being used to generate additional interest deductibility capacity. Furthermore, similar to the calculation of the exceeding borrowing costs, transactions between Belgian group affiliates should be excluded from the fiscal EBITDA. Hence, as mentioned in section 3.2., this might give rise to a significant administrative burden for many groups. In addition, this exclusion might result in some absurd consequences that are against the spirit of the law. This concern can be explained by the simplified example in Table 2. The Belgian production entity sources its raw materials from third party suppliers. All the finished goods are sold to a related Belgian distribution entity. Hence, the two entities accounting EBITDAs are, to a large extent, dependent on Belgian intra-group transactions. Considering that these transactions should be excluded from the fiscal EBITDA, the production entity s turnover should be IBFD International Transfer Pricing Journal May/June

5 David Ledure, Jean-Charles Paquot and Michaël Van der Velden Table 2 taken out in order to determine its fiscal EBITDA, and this ends up with a negative fiscal EBITDA. Consequently, its deductibility capacity is limited to the allocation of the de minimis threshold. On the other hand, the Belgian distributor that sells all the finished goods to third parties generates a fiscal EBITDA that is significantly higher than its accounting EBITDA, as it cannot take into account its costs of goods sold for the fiscal EBITDA. Hence, this might result in a significant mismatch between a taxpayer s interest deductibility from a tax point of view and from an economic point of view. In essence, the attempt to simulate a tax consolidation, in the authors opinion, missed its goal. Luckily, the adverse consequences for the production company can be remediated by transferring the non-deductible exceeding borrowing costs to other group entities. However, both the intercompany eliminations and subsequent possible transfers create some additional layers of red tape rather than combat any form of abuse Non-deductible borrowing costs: Lost forever? ATAD I identifies three large options open for EU Member States in the case where an entity remains with non-deductible exceeding borrowing costs. Belgium has opted for an unlimited carry-forward in time of the excess borrowing costs that could not be deducted in the current taxable period. Alternatively, taxpayers belonging to the same group also have a possibility to transfer any non-deductible exceeding borrowing costs to another affiliated Belgian entity with unused EBITDA capacity. 6 This can be further explained by the example in which Group A has four Belgian entities, of which the exceeding borrowing costs and fiscal EBITDA are depicted in Table In this respect, it is important to note that amendments to the current draft reform might still take place in the coming months. Table 3 Net exceeding borrowing costs Fiscal EBITDA Deductible borrowing costs Nondeductible borrowing costs Excess capacity Consolidated ,250 1, ,000 3, According to the 30% EBITDA, part of the exceeding borrowing costs of Entities 2 and 4 is not deductible. In order to arrive at a consolidated non-deductibility of 290, these entities have to transfer part of their non-deductible exceeding interest expenses to Entities 1 and 3. In order to do so, the necessary administrative procedures and requirements have to be followed. Indeed, this intragroup transfer is only possible insofar as some conditions are met (e.g. an upfront agreement should be put in place and the transfer should be recorded in the tax return of both parties). Furthermore, in order to ensure tax neutrality and safeguard the corporate interests of minority shareholders and creditors, a compensation should be paid in favour of the taxpayer transferring its non-deductible exceeding borrowing costs. Such compensation should be equal to the surplus of tax that would have been due if the excess borrowing cost surplus would not have been exempt from the profit in the current taxable period. In line with the principle of tax neutrality, such compensation will not be tax deductible in the hands of the taxpayer transferring its non-deductible exceeding borrowing costs and will not be considered as taxable income in the hands of the recipient. 234 International Transfer Pricing Journal May/June 2018 IBFD

6 The Implementation of the 30% EBITDA Rule in Belgium: An Angle with a Twist Considering the above, Belgium has implemented the 30% EBITDA rule in a favourable way that will generally not result in a definite loss of non-deductible borrowing costs Part of the group? The notion of group affiliation plays a key role in different aspects of the 30% EBITDA rule. In particular, group affiliation is referred to for (i) the allocation of the de minimis threshold, (ii) the scope of taxpayers subject to the rule (i.e. the definition of stand-alone entities ), (iii) the computation of exceeding borrowing costs and fiscal EBITDA and (iv) the transfer of non-deductible exceeding borrowing costs. Nevertheless, there is currently no clear definition of what should be considered group affiliation in Belgian tax law, although it is defined in Belgian corporate law (e.g. a control relationship with a 50% threshold). A definition of this notion was initially included in the proposed reform, although it was excluded from the final version approved in December However, in the framework of another draft bill, a definition of group affiliation might be added to the Belgian Income Tax Code, in line with the corporate law definition. 7 As far as ATAD I is concerned, it refers to groups consolidated for financial accounting purposes. Hence, to date, it is not clear which definition should be considered the prevailing one in the framework of the 30% EBITDA rule. Further guidance in this respect would be highly welcome to avoid any confusion in this regard. 4. Interplay with Other Rules Besides the more mechanical 30% EBITDA rule, the Belgian tax authorities can scrutinize the deductibility of interest costs also under other existing rules. First of all, there is the general deductibility rule. As all other expenses, interest expenses are only deductible if they were made or incurred in order to acquire or maintain taxable income (see article 49 of the CIT). This core rule remains applicable. In some very specific cases, this article has been put forward by tax authorities to challenge the deductibility of interest costs. The deductibility of interest paid to tax havens will also remain subject to a much more stringent burden of proof. Indeed, in such cases, the taxpayer must prove that interest payments correspond to real and sincere operations and do not exceed normal limits (see article 54 of the CIT). Interest payments that exceed market levels are explicitly treated as non-deductible (see article 55 of the CIT). Hereto, the law indicates that one should, amongst other things, take into account the credit risk of the borrower and maturity. This rule has given rise to some uncertainty, typically in the context of interest outstanding on current accounts. This is why this rule has been completed with 7. BE: Art. 11 Code des Sociétés/Wetboek van vennootschappen. a particular reference (monetary financial institutions rate published by the National Bank of Belgium + 2.5%) that should be used for non-mortgaged loans that have no fixed maturity and are not linked to centralized treasury management activities within a group. For loans falling within the scope of the new rule, interest levels exceeding this limit will not be tax deductible. Finally, it goes without saying that the usual Belgian transfer pricing articles remain applicable in the context of intercompany interest payments (see articles 26, 79, 207 and 185 paragraph 2 of the CIT. In this context, tax authorities cannot only scrutinize the arm s length nature of the interest rate, but also look at all terms and conditions of the funding. As a reminder, there is no full tax consolidation in Belgium, and intercompany transactions between Belgian entities must also be done at market prices in order to avoid an additional tax assessment. A change is that the new EBITDA rule will partially replace the old thin capitalization rule. Under the former system, interest expenses were not deductible to the extent that the debt-to-equity ratio was above 5:1 when the beneficiaries of interest payments were related parties or were located in tax havens. This thin capitalization rule will still be applicable for interest payments to tax havens. Concerning interest payments to related parties, the thin capitalization rule will be replaced by the new system, unless the grandfathering rule is applicable. It is important to note that the thin capitalization rule had no impact on interest payments made to third-party lenders that were not located in tax havens, while the new rule targets intercompany as well as external debt. 5. In Summary, a Fair but Complex System The Belgian EBITDA rule had to be carved within the framework imposed by ATAD I. However, this directive provided some flexibility on certain clearly defined items so as to enable countries to seamlessly integrate the EBITDA rule into their broader tax systems. The options that Belgium adopted reflect its stance that it wants to remain an investment-friendly country that is fully compliant with the rules and spirit of the international tax environment. More in particular, it did not lower the EUR 3 million threshold, as it can be fairly assumed that there is no active tax planning if the Belgian operations of a group have a lower net financing burden. If the threshold would nevertheless be exceeded, there is the possibility to either transfer the excess to other Belgian entities of the group or carry it forward without limitation in time. This should enable, for example, activities with a more cyclical nature to smoothen the impact over time. Finally, it allows grandfathering of certain loans so as to foster legal certainty. It is, however, a pity that the Belgian legislator did not opt for the group s carve-out rule. In line with the rationale of this carve-out, it would allow entities of a highly leveraged group to deduct their interest cost at least once. This will especially have severe consequences for groups heading into choppy waters resulting in decreasing EBITDAs. The Belgian operations of such a group will be hit a second IBFD International Transfer Pricing Journal May/June

7 David Ledure, Jean-Charles Paquot and Michaël Van der Velden time by having non-deductible finance costs, and thus an increased tax bill. While ATAD I uses a fairly neutral tone with regard to the possibility of adopting the carve-out, BEPS Action 4 clearly recommends adopting such rule. The authors fundamental concern about the new reform relates to the complexity of the rules and high compliance burden this will entail for groups. To a large extent, this is triggered by the obligation to eliminate intercompany transactions between Belgian group entities, while the authors do not see which type of abuse this would counter. On the contrary, the eliminations may result in unrealistic levels of EBITDA, triggering a too high or too low interest deduction capacity. Afterwards, they will have to implement transfers of their non-deductible exceeding borrowing costs so as to come back to a reasonable allocation of these costs over the group s Belgian entities. All of this will require quite some resources to collect the source information to make these eliminations, to monitor the tax-adjusted financing position of each of these entities and to implement transfers of excess borrowing costs. The latter will require the implementation of specific contracts covering these transfers in order to make compensating payments to neutralize the tax impact of the transfer and file additional enclosures in the tax return. The spirit of Kafka seems to have sneaked into the law. It is likely that, at the time of writing, some items of the current reform will already be adjusted in the coming weeks. While there is no public information on the scope of the planned changes, it is likely that these will be limited to more technical aspects so as to make some additional clarifications and avoid some undesired consequences. It is the authors wish that the Belgian legislator will grasp the opportunity to cut the red tape created by the new EBITDA rule. 236 International Transfer Pricing Journal May/June 2018 IBFD