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Tax Agencies To Discuss TP Proactively With Willing MNEs

Wednesday, February 7, 2018

The OECD has recently launched a new program – the International Compliance Assurance Programme – being spearhead by the Forum on Tax Administration that is aimed at providing assurance to multinationals with regards to their transfer pricing (TP) affairs.

The pilot, which groups can join on a voluntary basis, will use country-by-country reports and other information to facilitate open and cooperative multilateral engagements between multinationals and tax administrations, with a view to providing early tax certainty and assurance for multinationals, the OECD said.

A pilot for ICAP, which includes eight FTA member tax administrations (Australia, Canada, Italy, Japan, the Netherlands, Spain, the United Kingdom, and the United States), was launched at the end of January.

"By co-ordinating conversations between an MNE group and tax administrations in several jurisdictions, the program should also ensure a more effective use of transfer pricing information (including that contained in a group's CbC report, master file, and local file), a more efficient use of resources both for the MNE group and for tax administrations and, in the longer term, fewer cases entering into mutual agreement proceedings (MAP). ICAP has been developed under the framework of the OECD Forum on Tax Administration (FTA) Large Business and International Programme, sponsored by the Canada Revenue Agency (CRA)."

A multilateral assessment of specific international tax risks posed by each MNE group in the pilot will commence during the first half of 2018 and is expected to be completed within a target timeframe of 12 months.

The OECD has also released a new handbook, which provides more detail on ICAP and the procedure for the pilot.