The current health emergency with the unprecedented lock down measures adopted by Governments have disrupted the regular business and supply chain of multinational groups. All countries, supported by the OECD, are trying to implement tools and legislation aimed at sustaining the cash flow of taxpayers, by offering long terms loan and postponing the payment of taxes.
The operational and financial disruption may affect intercompany arrangements and the transfer pricing policy adopted. It would be, therefore, essential to address the consequences and opportunities that extraordinary events may have on intercompany transactions and the relevant remuneration in order to manage the negative impact of the current crisis and prevent risks in future years.
Indeed, it may be foreseen that after the suspension from their activities and the reduction of tax collections experienced following the COVID-19 emergency, tax authorities will start again their audit activity with even a more aggressive approach.
Without claiming to be exhaustive and among the various issues that international groups may face in this area, they should pay particular attention to the following subjects:
Opportunity to rethink part of the supply-chain performing stripping of functions and/or business restructuring (including e.g. transfers of Intellectual Property).
Please note that the current challenges and opportunities would need to be viewed in the light of the changes that were already being implemented in view of the anti-tax avoidance measures as proposed by OECD (BEPs) and the European Union (ATAD). The time is right to have a holistic approach on the opportunities and challenges.
Our team of specialists in transfer pricing and international taxation is at your disposal to support your group through the systematic and global approach they specifically developed, aiming at securing your transfer pricing policy or adapting it in a tax efficient way by: