I’ll be the first to admit that a document with the word ‘compliance’ in its title is unlikely to make it to the top of my reading pile. Perhaps Inland Revenue’s Multinational Enterprises, Compliance Focus 2019 should have come with the tag line ‘Comes with pictures and we think you’ll find it an interesting read’, as this report is certainly worth making some time for.
In a very digestible way (I wasn’t kidding about the pictures) this report outlines Inland Revenue’s priorities for Multinationals and provides some very clear guidance on Inland Revenue’s expectations of these taxpayers.
Transfer pricing, tax governance by the Board, the new Deemed Permanent Establishment and anti-hybrid rules, and the OECD’s ongoing digital economy work programme all get good coverage in the report.
So, spoiler alert, here are some of the highlights:
In terms of transfer pricing risk assessment, Inland Revenue will be looking at taxpayers with two or more consecutive years of losses, high rates of royalties, high interest rates and debt levels, and low operating profits;
o Distributors with EBITE less than 3%
o Retailers with EBITE less than 5%; and
o Manufacturers with EBITE less than 7%.
Tempted and want to read more?