In recent times, the tax benefits associated with transfer pricing have featured prominently in the worldwide media. This has included examples of high profile multinationals such as Google, Apple, Starbucks and Amazon minimising their taxable income in high tax jurisdictions through the use of complex international structures and utilising transfer pricing as a major tax minimisation strategy.
This focus on reforming and refining transfer pricing and more broadly base erosion and profit shifting (“BEPS”) has also been occurring worldwide, with the Organisation for Economic Co-operation and Development (“OECD”) releasing its discussion paper and subsequent Action Plan, as part of its BEPS project. Furthermore, the G8, G20 and the OECD have all agreed to undertake substantive action to try to curtail this problem. With Australia chairing the G20 in 2014 it can be expected that the international agenda in relation to addressing these issues will continue to feature prominently in the coming year.
You work for a firm,International Tax Planners Galore, and your clients include a number of multinationals who are very interested in the recent transfer pricing reforms.
You need to write a letter of advice which addresses the following:
(1) Outline the mischief associated with transfer pricing and how transfer pricing could potentially impact the Australian revenue base.
(2) Outline and explain the current operation of Australia’s domestic transfer pricing rules. Please note this does notmean simply repeating the sections – it involves explaining how the sections operate and interact.
(3) Compare the new regime with the previous transfer pricing regimes and evaluate the major changes made in the new regime in terms of the traditional canons of taxation equity, neutrality, simplicity, certainty and efficiency.
The diagram below summarises the recent three-phased approach to Australia’s transfer pricing regime
1. The total length for this paper should not exceed 2000 words (A4, Arial 12 point font, single spacing, not including footnotes).
2. You must complete all parts of the question.
3. The format adopted must be a letter of advice (eg you must create a fictitious client, use appropriate formal business language, adopt a logical structure, outline the “scope of your advice” and ensure that you address your client’s queries.) There is no strict format on how to structure the letter of advice but it must address the above elements.
4. The Australian Guide to Legal Citation (AGLC) style of referencing must be used.
There are guidelines on how to use this style of referencing available under the Assignments Tab on Blackboard and on the library website.
5. Some beginning readings have been provided in a folder under the Assignment One tab on blackboard. Please note these resources arestarting points (ie, primers) ONLY. You are required to research beyond the references provided.
6. Ensure your discussion is analytical rather than descriptive and don’t be diffident about expressing your views (for/against) particular positions ensuring that you support these positions with relevant authorities.
7. This assignment is designed to test your critical thinking skills, your written skills and your ability to interpret the legislation.
8. It is very important you carefully proof read your work. You will be penalised for poor written expression.