The Australian Taxation Office (ATO) today, 22 January 2020, released a “taxpayer alert” that addresses international non-arm’s length arrangements involving intangible assets.
The ATO release—Taxpayer Alert TA 2020/1 Non-arm’s length arrangements and schemes connected with the development, enhancement, maintenance, protection and exploitation of intangible assets—addresses international arrangements that mischaracterise Australian activities connected with the development, enhancement, maintenance, protection, and exploitation (DEMPE) of intangible assets.
In releasing this alert, the ATO expressed concerns that the identified arrangements do not appropriately remunerate Australian entities for functions performed, assets used, and risks assumed in connection with intangible assets. The ATO also noted these arrangements may involve the migration of Australian intangible assets and associated rights to international related parties on non-arm’s length terms or in a manner intended to avoid tax in Australia. The alert includes three specific examples to illustrate its position.
According to tax professionals in Australia, there are reports the ATO is currently developing a Practical Compliance Guideline (PCG) to outline its compliance approach in respect of intangibles arrangements.
For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services practice in Australia:
Jane Rolfe | +61 3 9288 6341 | email@example.com
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.