Summary This intermediate-level five-day course introduces participants to transfer pricing principles and methodologies and then covers the application of these principles and methodologies to specific categories of intra-group dealings. Overview and Learning Objectives It is often said that transfer pricing is not an exact science. Hence, in order to develop an understanding of transfer pricing principles and methodologies, consideration of their practical application is regarded as paramount. This five-day intermediate-level course acquaints participants with the principles and methodologies of transfer pricing and then explores the application of these principles and methodologies to specific categories of intra-group dealings. The theoretical sessions are complemented by case studies that deal with the use of the principles and methodologies in practice. The focus of this practically orientated course is on the requirements of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and the issues that can arise in the application of these requirements, including the latest developments following the OECD BEPS Action Plan. This course serves as good preparation for the CIOT's ADIT Paper III Option F and Transfer Pricing certificate. For more information about the Advanced Diploma in International Taxation, you can visit the CIOT s website. This is an interactive course with a limited number of participants. Prior to the course, participants will be given access to online supplementary materials (e.g. legal documentation, case law and related articles/literature). During the course, participants will be provided with a course binder containing documents relevant to the course. Participants will also receive a complimentary copy of the IBFD Tax Travel Companion OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and Transfer Pricing Features of Selected Countries. Who Should Attend? The course is suitable for finance and tax personnel of multinational enterprises, tax accountants, economists and lawyers, in-house tax managers, tax and transfer pricing advisers, and government officials and tax officers. Course Level and Prerequisites This is an intermediate-level course, containing some introductory sessions. Whilst prior experience of transfer pricing is desirable, it is not a prerequisite to satisfactorily participate in this course.
Day 1 09.00-11.00 Introduction to Transfer Pricing What is transfer pricing? The importance of transfer pricing Art. 9 OECD and UN Models The OECD Transfer Pricing Guidelines for Multinational Enterprises Associated enterprises Applying the arm s length principle Selected examples of domestic transfer pricing law Transfer pricing implications of BEPS - Actions 8, 9 and 10 - country-by-country reporting 11.00-11.20 Break Refreshments 11.20-12.45 Comparability Analysis Comparability factors Impact of OECD BEPS Action Plan - non-recognition - recharacterization Establishing search criteria Conducting a comparability study Sources of information and utilizing databases Practical examples/case studies 14.00-15.20 Transfer Pricing Methods Transaction-based methods - comparable uncontrolled price (CUP) - cost-plus method - resale price method Profit-based and other methods - profit split method - transactional net margin method (TNMM) - other methods Compensating adjustments Practical examples Case study 15.20-15.40 Break Refreshments 15.40-17.00 Case Study
Day 2 09.00-10.30 Managing the Customs-Transfer Pricing Nexus Does the arm s length price equate to the customs value? Valuation in tax and customs: similarities and differences Developments 10.30-10.50 Break Refreshments 10.50-12.15 Transfer Pricing and Intangibles 12.15-13.30 Lunch New OECD guidelines on intangibles following Action 8 Defining intangibles Entitlement to intangible-related returns Transactions involving intangibles - royalty determination - pricing intangible transfers Cost contribution arrangements Valuation method 13.30-15.00 Transfer Pricing and Intangibles (continued) 15.00-15.20 Break Refreshments 15.20-17.00 Case Study
Day 3 09.00-10.40 Intra-Group Services Introduction - business models - OECD approach - relationship between ICS and CCA Types of intra-group services/common services - shareholder activities and genuine intra-group services - allocation keys - choice of transfer pricing method Funding of the services and activities at arm s length - direct charge - indirect charge Transfer pricing method - service charge computation - documentation 10.40-11.00 Break Refreshments 11.00-12.45 Intra-Group Finance Transactions Importance of intra-group finance transactions Types of intra-group finance transactions Transfer pricing risks and planning opportunities Establishing an arm s length loan amount Establishing an arm s length interest rate - comparability factors to consider - importance of a stand-alone credit rating - base rates and credit spreads Guarantee fees - when to charge a guarantee fee - how to establish a guarantee fee - implicit parent guarantee Developing a loan pricing policy - consistent approach on interest rates - meeting transfer pricing documentation requirements 14.00-15.20 Intra-Group Finance Transactions (continued) 15.20-15.40 Break Refreshments 15.40-17.00 Case Study
Day 4 09.00-10.40 Business Restructuring Motivations for restructuring Common types of business restructuring - distribution activities - manufacturing activities - intellectual property - services The OECD theoretical framework Ch. 9 OECD Transfer Pricing Guidelines 2010 - importance of anti-avoidance rules - the concept of transfer of functions - risk and migration of risk - factoring location savings - importance of documentation UN TP Manual 10.40-11.00 Break Refreshments 11.00-12.45 Business Restructuring (continued) 14.00-15.30 Specific Issues in Supply Chain Structures Location-specific advantages Market characteristics Synergies Assembled workforce Development India, China and other countries - tax authorities assertion - taxpayers assertion UN TP Manual and OECD Guidelines Examples and case law 15.30-15.50 Break Refreshments 15.50-17.00 Case Study
Day 5 09.00-10.40 Permanent Establishments Art. 7 OECD Model The PE concept: art. 5 OECD and UN Models Fixed place of business PE Agency PE Developments in BEPS Action 7 Attribution of profits to PEs Profit attribution to agency PE 10.40-11.00 Break Refreshments 11.00-12.45 Permanent Establishments (continued) 14.00-15.40 Transfer Pricing Risk Management What is risk management? Sources of transfer pricing risk Risk embedded in transfer pricing Role of transfer pricing within an MNE Transfer pricing and tax effect accounting issues A framework for transfer pricing risk management Transfer pricing documentation - country-by-country reporting 15.40-16.00 Break Refreshments 16.00-17.00 Administrative Approaches to Avoiding and Resolving Transfer Pricing Disputes Economic double taxation Corresponding adjustments - art. 9 OECD Model Secondary adjustments Mutual agreement procedure - art. 25 OECD Model Penalties Advance pricing arrangements