Transfer Pricing

February 2022

In this edition, we have covered the Transfer Pricing updates of Denmark, Thailand, Paraguay and OECD for the month of February 2022.

  1. Denmark - Updated guidance on Transfer Pricing Documentation

On 31st January 2022, Ministry of Finance, Denmark issued updated guidance on amendments to Transfer Pricing rules. which require the submission of transfer pricing documentation within 60 days of due date for filing tax return (unless extension is provided).

Recent guidance allowed the taxpayer to submit the prior year’s master file as preliminary master file when master file for the current fiscal year is not yet ready on submission deadline and when prior year’s master file is less than one year old. Having said this, taxpayer is required to broadly highlight significant changes concerning taxpayers that are not covered in the local file.

Crowe UAE’s comments:

It is a welcome move by Ministry of Finance, Denmark to provide relaxation to taxpayers. This would certainly help those taxpayers who are not able to complete the master file document on or before deadline. 

   2. Thailand - Additional Requirement for Country-by-Country Reporting Submission

Recently, Thailand Revenue Department provided additional requirement for country-by-country submission, vide Notification of Director General No. 419.

As per the above Notification,

  • "Reporting entity" must register for e-filing for CbC Reporting purpose via one of the two e-filing systems.
  • After receiving approval from one of the two e-filing systems, reporting entity can use the username and password provided by that system
  • CbC report will be considered as submitted successfully when the reporting entity receives the "acceptance confirmation" from the e-filing system.

Crowe UAE's comments:

Taxpayers having operations in Thailand are required to take note of afore-mentioned update on CbC process. While e-filing portal for CbC reporting are available for registration, Thai Revenue Department has provided guidance for registration and submission process.

   3. Paraguay - Transfer Pricing Disclosure require in Income Tax Return

Recently, Paraguayan Tax authorities released income-tax return format which includes certain disclosures required with respect to related party transactions.

Tax return form also includes separate section to disclose Transfer Pricing adjustments made by taxpayers to reflect arm’s length results.

Crowe UAE’s comments:

Paraguay has introduced Transfer Pricing regulations in 2019 in it’s domestic tax legislation and thereafter, also released certain guidance. Every Paraguayan who enters related party transactions is required to prepare local Transfer Pricing documentation and justify arm’ s length principles.

Therefore, multinational organisation operating in Paraguay are required to take note of this important update and advisable to take pro-active measures to maintain relevant transfer pricing documentation and inter-company agreement.

   4. OECD - Transfer Pricing country profiles updated

On 28th February 2022, Organisation for Economic Co-operation and Development (OECD) released third batch of updated/ new transfer pricing country profiles of 30 jurisdictions. These countries include the following: 























Papua New Guinea






United Kingdom

United States


The updated country profiles add new information on countries’ legislations and practices regarding the transfer pricing aspects of financial transactions and the application of the Authorised OECD Approach (AOA) on the attribution of profits to permanent establishments. In addition, the country profiles reflect updated information on a number of transfer pricing aspects such as methods, comparability, intra-group services, cost contribution agreements, transfer pricing documentation and administrative approaches to prevent and resolve disputes. 

Crowe UAE’s comments:

Recently, in August 2021 and December, OECD released the first and second batch of updated transfer pricing country profiles. Third release of updated/ new profile brings the total number of updated Transfer Pricing countries profile to 90+. OECD is also encouraging those countries who have not yet shared their profile to share in a manner/ format prescribed by OECD. It is learnt that further updates to the Transfer Pricing profile is expected in first half of 2022. 

January 2022

In this edition, we have covered the Transfer Pricing updates of United Arab Emirates, OECD, Cyrus, and Montenegro for the month of January 2022.

   1. United Arab Emirates - Introduction of Corporate Tax and Transfer Pricing

On 8th October 2021, the United Arab Emirates (UAE) (amongst 137 countries) agreed to implement the Organisation of Economic Co-Operation and Development's (OECD) Two-Pillar approach to reform its International Tax framework and to implement a minimum Corporate Tax rate starting 2023.

Following this development, on 31st January 2022, the Ministry of Finance of the UAE announced the introduction of a Federal Corporate Tax regime on business profits effective for Financial Years starting on or after 1st June 2023. Read our detailed insights on the topic.

Consequently, Ministry of Finance UAE has also announced Introduction of Transfer Pricing in a country. It is announced that Transfer Pricing rules and documentation requirements will now be aligned with the OECD Transfer Pricing Guidelines i.e., Master File and Local File. Additionally, announcement mentions exemption for certain qualified intra-group transactions and other compliance requirement. Having said this, we wait for further details/clarifications on this aspect.

Crowe UAE's comments:

Undoubtedly, this is a historic tax reform in UAE's tax regime to introduce a Corporate Tax and Transfer Pricing for all businesses (subject to certain exceptions) in UAE. It is a welcome move by the UAE ministry of finance to provide ample time to taxpayers for preparing for tax regime before the effective date of applicability.

Moreover, multinational enterprises having intra-group transactions are required to re-assess their existing pricing policy to ensure it meets with the arm's length principles. In the absence of robust transfer pricing documentations, intra-group transactions can be considered to not meet arm's length price test and taxpayers may be subject to significant addition to their taxable income which may result in additional burden of taxes and penalties.

While we await the detailed law/regulation, businesses operating in UAE are recommended to proactively commence analysing the impact of Corporate Tax and Transfer Pricing on their business.

   2. OECD - New Transfer Pricing Guidelines 2022 Edition

On 20th January 2022, The Organisation of Economic Co-Operation and Development (OECD) has released 'Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration 2022'.

2022 edition of the guidelines consolidates into a single publication the changes to the 2017 edition resulting from:

  • Revised Guidance on the Transactional Profit Split Method
  • Guidance for Tax Administrations on the Application of the Approach to Hard-to-Value Intangibles 
  • Transfer Pricing Guidance on Financial Transactions

Crowe UAE's comments:

OECD Transfer Pricing Guidelines was first issued in 1995 and thereafter, it has regularly published updated guidance on important topics. Guidelines are intended to help both multinational enterprises as well as tax administrations in evaluating transfer pricing issues. In fact, many of the Countries have relied on OECD Transfer Pricing Guidelines while publishing their Transfer Pricing regulations. 

2022 edition of OECD Transfer Pricing Guidelines would be helpful to multinational enterprises and tax authority as a single report which has consolidated recent reports and guidance.

   3. Cyprus - FAQs released on back to back intra-group financing transactions

On 24th January 2022, the Cyprus Tax Department released frequently asked questions (FAQs) that clarify provisions of Circular 3 - "Tax treatment of intra-group back-to-back financing transactions" (Circular 3), which was published in June 2017.

Circular 3 is applicable to tax resident in Cyprus and to permanent establishments of foreign companies carrying out intra-group back-to-back financing transactions. This includes providing loans or finances to related parties that are financed through debt. Moreover, Circular 3 also sets requirements to transfer pricing analysis of such transactions. 

We have summarised key points that are clarified in FAQs as under:

  • It is clarified that transfer pricing study report should be prepared by a transfer pricing expert for companies undertaking back-to-back financing arrangements.
  • Taxpayer which opts to apply the simplification measure (2% after tax margin) for suck back-to-back financing arrangement is at least require to prepare a functional analysis.
  • Tax Department would require Transfer Pricing Study Report to assess such back-to-back financing transactions. However, in the absence of Transfer Pricing information and at its own discretion.
  • It is clarified that transfer pricing study report is required to be prepared when an intra-group financing arrangement is initiated and updated when:
    • New loans are provided or availed by the taxpayer, or
    • Significant terms of the existing loans change or amended, or 
    • Functional profile of the taxpayer changes, or
    • Market and economic conditions change significantly (if applicable).

Crowe UAE's comments:

Recently, Cyprus authority is taking active steps in publishing guidance and clarification on Transfer Pricing issues. Financial transactions are at a centre-stage for most tax authorities across the world and therefore, releasing on FAQs by Cyprus authority is a welcome move. Therefore, multinational organisation operating in Cyprus are required to take note of this important update and advisable to take pro-active measures to maintain relevant transfer pricing documentation and inter-company agreement.

   4. Montenegro - Amendment in Transfer Pricing Rules

On 31st December 2021, The Montenegrin Parliament has announced certain amendments fin existing transfer pricing rules. We have summarised the key amendments as under:

  • Taxpayers who are classified as 'Large taxpayers' as per tax classification rules will be required to submit Transfer Pricing documentation along with Corporate tax return.
  • Taxpayers who are not classified as 'Large taxpayers' are obliged to prepare Transfer Pricing on or before preparing corporate tax return, however, it is required to be submitted only upon request from authority. Moreover, these taxpayers are given an option to may prepare Transfer Pricing documentation in condensed manner if the quantum of transactions with related parties do not exceed the value of EUR 75,000 for the year under consideration.
  • Deadline to prepare and/ or submit Transfer Pricing documentation up to 30th June of next year for the year under consideration. 
  • Bylaws for application of new transfer pricing rules are expected within one year from start of application of new rules.

Crowe UAE's comments:

It is a welcome move by Montenegro authority in providing relief to taxpayers not falling under category of 'Large taxpayers' for allowing condensed form of documentation subject to threshold. This would help many of the taxpayers to reduce their efforts and time. Moreover, clarification for 'Large taxpayers' to submit transfer pricing documentation along with corporate tax return shall also help them to take appropriate action in advance to comply with regulation.

December 2021

In this edition, we have covered the Transfer Pricing updates of Organisation of Economic Co-Operation and Development, Malta, South Africa and Portugal for the month of December 2021.

   1. OECD - Transfer Pricing country profiles updated

On 13th December 2021, Organisation for Economic Co-Operation and Development (OECD) announced the updated/ new transfer pricing country profiles of 21 jurisdictions. These countries included the following:





South Africa










Albania (New)





Kenya (New)

Maldives (New)





These country profile focuses on countries domestic regulation regarding transfer pricing principles, including the arm's length principle, transfer pricing methods, comparability analysis, intangible property, intra-group services, cost contribution agreements, transfer pricing documentation, administrative approaches to avoiding and resolving disputes, safe harbour, and other implementation measures.

Crowe UAE’s comments:

Recently, in August 2021, OECD released the first batch(20 countries) of updated transfer pricing country profiles. Second release of updated/ new profile brings the total number of Transfer Pricing countries profile to 63. OECD is also encouraging those countries who have not yet shared their profile to share in a manner/ format prescribed by OECD. It is learnt that further updates to the Transfer Pricing profile is expected in first half of 2022.

   2. Malta - Consults on draft Transfer Pricing Rules and APA Program

On 20th December 2021, Maltese government opened a consultation seeking feedback on draft transfer pricing rules. It is learned that Maltese government intends to finalise transfer pricing rules by late 2022 with an aim to implement by early 2024.

We have summarised the key points of draft regulations as under:

  • Rules shall be applicable to cross-border arrangements entered into between associated enterprises
  • Micro, small or medium-sized enterprises shall be excluded from scope.
  • The rules shall also not apply where the aggregate arm’s length value of all cross-border arrangement does not exceed a de minimis threshold that is yet to be determined.
  • The rules define the “arm’s length amount” and provide for the determination of such amount on the basis of methodologies designated by the Commissioner for Revenue in guidelines yet to be published.
  • Companies falling within scope must prepare and retain records for the purposes of determining whether, in relation to an arrangement, the total income of the company has been computed in accordance with the rules. Further details relating to such documentation will be included in guidelines.
  • The rules also provide a formal framework for the request and issue of Unilateral Transfer Pricing Rulings and APAs (bilateral and multilateral). These are intended to provide certainty in relation to the application of these rules to a transaction or a series of transactions.

Crowe UAE's comments:

This move of Maltese Government is in line with it’s commitment to implement OECD’s Base Erosion and Profit Shifting (BEPS) project. Implementation timeline from 1st January 2024 also seems to be reasonable. Therefore, multinational organisation operating in Malta are required to take note of this important update and advisable to take pro-active measures such as revisiting group pricing policy and preparation of inter-company agreement

   3. South Africa - Proposes model legislation to introduce APA Program

On 10th December2021, South African Revenue Service(SARS) published a high-level model and draft legislation for the introduction of an Advance Pricing Agreement (APA)program.

We have summarised the key points as under:

  • Model describes process flow for APA such as pre-application stage, APA application stage, APA processing stage and APA negotiation stage, finalisation stage, implementation and monitoring stage and final stage.
  • Presently, program will only accept bilateral APA applications.
  • It notes the importance of establishing an APA program to provide clarity and certainty to taxpayers.
  • Feedback will be accepted on the proposed model and draft legislation until January 31, 2022.

Crowe UAE's comments:

Over the years, South Africa tax authority has adopted aggressive approach while scrutinizing the intra-group transactions and many of the taxpayers have also faced significant tax additions and penalties. Publishing of APA model legislation will certainly help many multinational corporations to opt for this program in order to get certainty and to reduce tax.

   4. Portugal - Updation in Transfer Pricing guidance on documentation and APA

Recently, Portugal issued detailed additional guidance to provide updates for 2 areas as under:

Transfer Pricing documentation requirement

  • Ministerial order no. 268/2021 reviews the regulatory framework of the Portugal transfer pricing regime and revokes ministerial order no. 1446-C/2001 (December 2001).
  • Most importantly, ministerial order has aligned the documentation process and content with the 2017 OECD guidelines and Action 13 of the base erosion and profit shifting (BEPS) project by introducing the two-tier documentation model such as master file and local file.
  • Compliance has been reduced by increasing the exemption threshold to taxpayers with
  • annual revenues less than EUR 10 million (previously EUR 3 million) and
  • an exemption from reporting for controlled transactions in an amount less than EUR 100,000 (per transaction, per counter-party) and, in aggregate, less than EUR 500,000.
  • The concept of a “simplified file” has also been introduced for small and medium companies, meeting certain requirements.
  • The transfer pricing documentation changes are effective for tax periods beginning on or after 1 January 2021.

APA Guidance

  • Ministerial Order no. 267/2021 (26 November) updates the rules for the process and procedures applicable for APA.
  • It is confirmed that maximum term of APA is 4 years. It also includes the possibility of retrospectively applying the APA to previous fiscal years.

Crowe UAE's comments:

Increase in exemption threshold is a welcome move by Portugal authority. Moreover, guidance provides additional tax certainty and clarity regarding transfer pricing matters. Taxpayers are recommended to review these updates to ensure compliance as per updated requirement.

November 2021

In this edition, we have covered the Transfer Pricing updates of Dominican Republic, European Union, OECD, Australia and Denmark for the month of November 2021.

   1. Dominican Republic – Updated Transfer Pricing Documentation and Compliance Requirement

In  October  2018,  Dominican  Republic  has  joined  Organisation  of  Economic  Co-Operation  and Development’s (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

As a signatory, recently, Tax Administration of Dominican Republic has published General Rule No. 08- 21 complementing Presidential Decree No. 256-21 to update the Transfer Pricing documentation and compliance requirement. We have summarised the updated requirement as under:

   a) Country by Country (CbC) Report

  • CbC Report is applicable to taxpayers who are Ultimate Parent Company or an Integrating Entity of  a  Multinational  Corporation  and  also  tax  residents  of  the  Dominican  Republic,  and  having consolidated income equal to or greater than RD$ 38,800,000,000 (apprx USD 682 Millions)
  • It is applicable from fiscal year 2022 and needs to be filed annually no later than 12 months from the end of fiscal year.

   b) Informative Declaration of Related Party Operations (DIOR)

  • We  understand  that  DIOR  is  required  to  be  filed  by  those  taxpayers  having  related  party, irrespective if transactions are entered with them in current fiscal year.
  • It is applicable from fiscal year 2022 and needs to be filed annually as a part of Form IR-2.

   c) Master File

  • Master file needs to be prepared and filed by those taxpayers who are part of multinational group and having transactions with related parties.
  • It is applicable from fiscal year 2021 and needs to be filed annually within 180 days of deadline of DIOR

   d) Local File

  • It is applicable from fiscal year 2021 and needs to be filed annually within 180 days of deadline of DIOR.

Exemption from local file and master file

Additionally,  following  taxpayers  are  provided  exemption  to  prepare  the  master  file  and  local  file documentations as under:

  • Taxpayers  whose  operations  with  related  parties,  for  a  given  fiscal  year,  do  not  exceed  RD $12,193,981.70 (apprx USD 215,000) and do not carry out transactions with residents in States or territories with preferential tax regimes with low/ no taxation, non-cooperative jurisdictions or tax havens.
  • Taxpayers who only carry out transactions with fiscal residents and the transaction does not result in a tax deferral or a lower taxation rate in the country.

Crowe UAE’s comments:


It  is  interesting  to  witness  that  more  and  more  countries  who  have  signed  OECD’s  BEPS  Inclusive Framework are adopting Transfer Pricing documentation and compliance requirement. Multinational corporations having operations in Dominican Republic are recommended to revisit transfer pricing policy to comply with regulations

   2. European Union – Formally adopts ‘public’ country by country reporting

On  11th  November  2021, European Parliament  adopted  a  directive  for  ‘public’ country  by  country (CbC) reporting. Reporting is applicable to multinational groups operating in the EU with consolidated group revenue of at least Euro 750 million.


Adoption of directive by European Parliament was the last step in the directive’s adoption process and it is expected that the directive could be published in December 2021. Subsequently, European Union Member States will have 18 months to  implement the  directive  into domestic law and thereafter, public CbC rules will be effective.


If  the  afore-mentioned  directive  is  published  in  Journal  in  December  2021,  the  implementation deadline for EU Member States would be 30th  June 2023 and the rules may be applicable from June



Crowe UAE’s comments:


The Council of EU makes continuous efforts to increase tax transparency and eliminate base erosion and  profit  shifting.  The  afore-mentioned  directive  may  entail  many  of  the  large  multinational corporation to publicly disclose tax related information and therefore, it is advisable to be cautious while preparing/ disclosing the requisite information.


   3. Australia – Extension of timelimit to submit Transfer Pricing documentation


On 18th November 2021, Australian Taxation Office (ATO) announced that taxpayers who are required to submit country-by-country (CbC) reporting on or before 31st December 2021 can submit the same upto 4th February 2022.


This extended time limit is applicable not only for CbC Reporting but allos applicable for filing Master file and Local file which was due on or before by 31st December 2021.


Crowe UAE’s comments:


It is a welcome move by ATO to provide relaxation to the taxpayers in extending the time-limit on account  of on-going  COVID-19  pandemic.  This  would  help  the  taxpayers  to  get  additional  time  to prepare the transfer pricing documentation.


   4. Denmark - Amendment to Transfer Pricing documentation requirement


On 25th  November 2021, Danish Tax authority updated the legislation supplementing transfer pricing documentation rules. We have summarised the key points of updated rules as under:

  • As per updation, transfer pricing documentation must be mandatorily submitted to the Danish tax authority within 60 days of the due date for filing tax return. This is applicable to those group with (a) 250 or more employees; or (b) revenue exceeding DKK 250 million (apprx USD 38 millions) and balance sheet total exceeding DKK 125 millions (apprx USD 19 millions).
  • While the above thresholds are considered at group level, taxpayers not forming part of a group but still meeting these criteria could be subject to limited documentation requirements.
  • However,  rules  have  provided  an  exemption  to  those  taxpayers  who  have   related  party transactions only with domestic related parties and are covered subject to Danish corporate tax regime.
  • Updated rules are applicable for financial years starting on or after 1st  January 2021.
  • Additionally, rules required to include detailed benchmarking search process as a part of local file documentation  that  needs  to  be  filed  with  tax  authority.  This  is  applicable  for  FY  2022  and onwards.
  • It is provided that non-compliance of above rules such as late filings or inaccurate filings could lead to penalty of DKK 250,000 (apprx USD 38,000) per company per year plus 10% of a potential income adjustment.

Crowe UAE’s comments:

In last few years, it is experienced that Denmark tax authority is aggressively scrutinizing the past intra- group transactions of the taxpayers and cases are heard upto Supreme Court level frequently.

Those taxpayers who are not preparing robust documentation or benchmarking search analysis are facing stringent penalties and tax addition.

With the updated  rules, many  of the taxpayers would  be  mandatorily  required to  submit transfer pricing  documentation  within  prescribed  time.  Moreover,  rules  have  also  prescribed  stringent penalties for non-compliance and therefore, it is recommended to taxpayers operating in Denmark to keep note of this update and undertake timely compliance in accurate manner.

October 2021

In this edition, we have covered the Transfer Pricing updates of OECD, Thailand, Serbia and Austria for the month of October 2021.

   1. OECD – Statement on Two-Pillar Solution to address tax challenges arising from digitalisation of the economy

On 8th October 2021, OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (IF) has agreed a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. We have briefly outlined the agreed component of each pillar as under:

Pillar One

  • Scope - Multinational enterprises (MNE) with global turnover above Euro 20 billion and profitability above 10%. Turnover threshold to be reduced to Euro 10 billion 7 years after the agreement comes into force.
  • Exclusions - Extractives and Regulated Financial Services are excluded.
  • Nexus - a jurisdiction will qualify for an Amount A allocation if a minimum of EUR 1 million revenues is achieved by an MNE in a given market. For smaller jurisdictions (with a GDP below EUR 40 billion), this threshold will be reduced to EUR 250,000.
  • Quantum of re-allocation – For in-scope MNEs, 25% of residual profit defined as profit in excess of 10% of revenue will be allocated to market jurisdictions with nexus using a revenue-based allocation key.
  • The technical analysis and publication of specific parameters for Amount B, covering minimum target profitability levels for routine distribution and marketing activities within MNEs, shall be completed by the end of 2022.
  • Implementation – Multilateral Convention (MLC) through which Amount A is implemented will be developed and opened for signature in 2022, with Amount A coming into effect in 2023.

Pillar Two

  • It consists of
  • two interlocking domestic rules (together the Global anti-Base Erosion Rules (GloBE) rules): (i) an Income Inclusion Rule (IIR), which imposes top-up tax on a parent entity in respect of the low taxed income of a constituent entity; and (ii) an Undertaxed Payment Rule (UTPR), which denies deductions or requires an equivalent adjustment to the extent the low tax income of a constituent entity is not subject to tax under an IIR; and
  • a treaty-based rule (the Subject to Tax Rule (STTR)) that allows source jurisdictions to impose limited source taxation on certain related party payments subject to tax below a minimum rate. The STTR will be creditable as a covered tax under the GloBE rules.
  • Scope of GloBE Rules - GloBE rules will apply to MNEs that meet the 750 million euros threshold as determined under BEPS Action 13 (country by country reporting). Government entities, international organisations, non-profit organisations, pension funds or investment funds that are Ultimate Parent Entities (UPE) of an MNE Group or any holding vehicles used by such entities, organisations or funds are not subject to the GloBE rules.
  • Rule design - The IIR allocates top-up tax based on a top-down approach subject to a split-ownership rule for shareholdings below 80%. The UTPR allocates top-up tax from low-tax constituent entities including those located in the UPE jurisdiction. The GloBE rules will provide for an exclusion (for a period of 5 years) from the UTPR for MNEs in the initial phase of their international activity, defined as those MNEs that have a maximum of EUR 50 million tangible assets abroad and that operate in no more than 5 other jurisdictions.
  • Minimum Corporate Tax - The minimum tax rate used for purposes of the IIR and UTPR will be 15%.

We have outlined brief timelines of the program as under:


Adoption into Law



1 July 2021 – Agreement by 134 signatories on new international tax framework


8 October 2021 – Finalized the July agreement and joined by 136 signatories –


Early 2022 – Finalization of Multilateral Convention (MLC), Explanatory Statement, and model rules for domestic legislation

Mid 2022 – Development of STTR multilateral instrument (MLI)


End of 2022 – Progress of GloBE implementation framework and Final Amount B deliverables

Mid-2022 – Signing of MLC for Amount A


2022-2023 – Adoption of GloBE Rules in domestic legislation, signing and ratification of MLC


2023 – Domestic ratification of MLC for Amount A; some countries may also require domestic legislation changes 2023 – Adoption of STTR MLI

2023 – Effective date for implementation of Amount A and IIR


2024 – Effective date for implementation of UTPR

2030 – Review of Pillar One agreement and possibly reduction of the scope threshold from Euro 20 billion to Euro 10 billion

Crowe UAE’s comments:

All OECD and G20 countries have now signed on to the agreement.  The four Inclusive Framework members did not sign on to the agreement are Kenya, Nigeria, Pakistan, and Sri Lanka. While we may receive further clarifications on rules in coming days, multinational enterprises are recommended to follow these updates carefully to understand how this new international tax framework may affect their business model and overall structuring plan.

Moreover, implementation of minimum corporate tax by many of the countries may require countries to change their domestic legislation and again, this may significantly affect many of the multinational to relook their arrangement.

   2. Thailand – New requirement for Transfer Pricing Documentation

On 30th September 2021, Director-General of the Revenue Department (“TRD”) released a Notification of the Director-General No. 407 on the Transfer pricing documentation requirements for (a) information/documents to be included in a local file; and (b) criteria for benchmarking study exemption. This notification is effective for all accounting periods starting on or after 1st January 2021. We have summarised the key points of the notification as under:

   A) Information/documents to be included in a local file

  • Business model, management structure, local organization chart with headcount numbers, value chain, key suppliers, customers and competitors, business strategy and economic circumstances;
  • Relationship structure including shareholding information;
  • Details of business restructuring between related parties and its impacts;
  • Information of intangible assets acquired/ transferred from/ to related parties and their impact;
  • the nature and amounts of controlled transactions including agreements;
  • Functions, assets, and risks analysis;
  • Selection/ rejection of the transfer pricing method applied;
  • an explanation of uncontrolled comparable transactions or independent comparable companies with Benchmarking search process
  • any other necessary documents or evidence not listed above but requested by assessment officers with approval from the Director-General.

Importantly, it is clarified that local file must be prepared in Thai.

   B) criteria for benchmarking study exemption

The afore-mentioned notification has provided exemption to taxpayers for preparing the benchmarking study on satisfying any of the below criteria. provided following criteria

  • income from business or related business in this accounting period not exceeding THB 500 million
  • no controlled transactions with related parties paying a different corporate income tax rate from the submission taxpayer
  • no controlled transactions with overseas related parties
  • no loss carry forward used in this accounting period and related parties in controlled transactions having no similar loss.
  • taxpayer has requested an Advance Pricing Agreement or any obligations under a Double Tax Treaty with concluded agreement from government bodies during agreed periods.

Crowe UAE’s comments:

The afore-mentioned notification will certainly help the taxpayers while preparing the transfer pricing documentation. At the same time, few taxpayers would be able to claim exemption while undertaking benchmarking search analysis in certain scenario. Taxpayers are recommended to relook their existing documentation to ensure if it there are any gaps or it needs to be updated considering the afore-mentioned notification.

   3. Serbia – Amendment to Rule Book on Transfer Pricing

On 1st October 2021, Ministry of Finance of Serbia has made certain amendments in Rule Book. It was published in Official Gazette of the Republic of Serbia No. 95/2021 and enters into force on October 9, 2021.

Amendments to the Rulebook on Transfer pricing is mainly related to more detailed regulation of the conditions, content and manner of submitting the annual report on controlled transactions of the international group of related legal entities – i.e. Country by Country Report.

As per Article 61v of the Corporate Income Tax Law, taxpayer is obliged to provide following information in the documentation on transfer pricing within the analysis of a group of related parties:

  • whether the taxpayer is a member of an international group of related legal entities;
  • whether it is considered the ultimate parent entity, i.e.
  • information on the identity and country of residence of the ultimate parent entity if the taxpayer itself is not considered the ultimate parent entity.

The obligation to submit an annual report was introduced with effect from 2020 and it is required to be submitted only by the ultimate parent entity of the international group of related entities, if it is a tax resident of Serbia and consolidated turnover of the group is at least EUR 750 million annually.

   4. Austria – Updated Transfer Pricing Guidelines released

On 7 October, Austrian Ministry of Finance released the final version of updated transfer pricing guidelines, replacing the 2010 Austrian transfer pricing guidelines. We have summarised the key points of the updated guidelines as under:

  • Structure and chapters of the guidelines are kept same as 2010 guidelines.
  • Updated guidelines place significantly more emphasize on the economic substance of the transaction.
  • While adopting transaction net margin method, only operating expenses are generally to be taken into account, while taxes, interest expenses, and extraordinary expenses are to be excluded from the cost basis. Further, it is clarified that no profit mark-up should be applied on “transitory items” if third parties would calculate in the same way in comparable situations.
  • Updated guidelines make a correction to median value.  In a situation, taxpayer earns a margin outside the interquartile range, the tax auditor may correct to the median value. However, if the taxpayer demonstrate that another value within the interquartile range is more reliable, the said other value shall be applied.
  • For routine services, mark-ups based on the report of the EU Joint Transfer Pricing Forum between 3% and 10% may be applied. The previously mentioned range of profit mark-ups between 5% and 15% may only be referred to for business years before 1 January 2021.
  • Guidelines has updated the chapter on financial transaction taking into consideration Chapter X of OECD Transfer Pricing Guidelines. With respect to loan transactions, Austrian guidelines mentioned that arm’s length test may also include debt-equity ratio and generally would require credit rating for analysis of transaction.
  • Guidelines has updated the chapter on intangible transaction taking into consideration OECD Transfer Pricing Guidelines.
  • OECD statement on locational advantages and group synergies were also incorporated into the Austrian guidelines. It is emphasized that Austrian research and development premium (14% premium on local qualified research and development costs) may be considered such a location saving.
  • The Austrian 2021 guidelines now include the main topics arising from different types of business restructuring measures in line with chapter IX of the OECD transfer pricing guidelines. 

Crowe UAE’s comments:

Updated Austrian Transfer Pricing Guidelines is a welcome move by Austrian Ministry of Finance. Interestingly, updated guidelines have relied on OECD Transfer Pricing Guidelines and also considered complex topics such as intra-group financing, intangibles, etc. which would definitely help taxpayers in terms of preparing documentation and conducting robust transfer pricing analysis.

September 2021

In this edition, we have covered the Transfer Pricing updates of Jordan, Singapore, Cyprus and European Union for the month of September 2021.

1.   Jordan – Executive Instructions of Transfer Pricing Regulations released

On June 7, 2021, the Hashemite Kingdom of Jordan published its official Transfer Pricing Regulations in the official gazette under regulations No. 40 of 2021.

Subsequently, on 16th September 2021, Hashemite Kingdom of Jordan published Executive Instructions No. 3 of 2021 providing additional clarification regarding the transfer pricing requirements in Jordan. We have summarised the key insights of instructions as under:

  • Transfer pricing Regulations will apply to taxpayer having with related-party transactions exceeding JOD 500,000 (approximately USD 7 Million) in a 12-month period.
  • Transfer Pricing documentation requirement would include
  • Local File – Executive Instruction has clarified that taxpayer is required to submit local file within 12 months from the end of financial year. Further, it has specified the contents which needs to be incorporated in local file, including but not limited to, organisation structure, business activities and restructuring, details of related party and transactions undertaken with them, agreements, functional/ risk analysis, selection/ rejection of most appropriate method, comparability analysis, industry/ sector analysis, financial statements, etc
  • Master File– Executive Instruction has clarified that taxpayer is required to submit local file within 12 months from the end of financial year. Further, it has specified the contents which needs to be incorporated in master file, including but not limited to, organisation structure and location of each entity, profit drivers, supply chain of important products/ services, functional analysis of important group subsidiaries, main markets for group’s products/ services, details of intangible assets, details of financial arrangement, consolidated financial statement, any tax/ transfer pricing agreement concluded with tax authorities, etc
  • Country by Country (CbC) Report – While Regulation has provided that CbC Report is applicable to those multinational group having consolidated turnover exceeding JOD 600 millions, Executive Instruction has also provided a template to submit CbC Report in line with OECD format.
  • Disclosure Form – Executive Instruction has released template to submit disclosure form (consist of Section 1 and 2). Taxpayers are required to provide information of related parties and related party transactions (including non-monetary transactions) undertaken during the reportable period. 
  • Affidavit from Chartered Accountant – Executive Instructions has provided a requirement to submit an affidavit from Chartered Accountant confirming the consistent application of Transfer Pricing policy of the taxpayer. However, it is not clarified the format of affidavit and deadline to submit the affidavit.

Crowe UAE’s comments:

Jordan, in line with other Middle East and Africa countries, are taking active steps to implement OECD’s BEPS minimum standards and Transfer Pricing provisions in the country. We recommend taxpayers to pro-actively start analysing the impact of Transfer Pricing Regulations to them and how intra-group transactions can be substantiated.

2.   Singapore – 6th Edition of Transfer Pricing Guidelines released 

Recently, Inland Revenue Authority of Singapore (IRAS) has released 6th edition of e-tax Guide (New Guidelines) on Transfer Pricing. We have summarised the key updates in the edition as under:


  • It is emphasised that appropriateness of the transfer pricing method would be a priority during transfer pricing audits.
  • Service transactions – Guidelines removed a prior condition that the benefits must be “sufficiently direct and substantial” in relation to satisfying “benefit test” for service transaction.
  • New Guidelines allows the application of a markup of 5 percent under the OECD’s simplified approach for low value-adding services under certain conditions and provided that the OECD’s approach is also accepted in the counterparty jurisdiction.
  • It was clarified that APA applications would not be accepted for taxpayers currently under audit or investigation (including TP consultation) by the IRAS for past financial years.
  • It was clarified scenarios wherein the surcharge of 5 percent on gross transfer pricing adjustments would apply and the circumstances where the IRAS may consider a partial or full remission of the surcharge.
  • New Guidelines broadened the scope of the Transfer Pricing beyond loans to other types of financial transactions (including cash pooling, hedging, financial guarantees and captive insurance).
  • A new chapter regarding transfer pricing considerations for Cost Contribution Agreements is introduced which is mainly in line with OECD TP Guidelines.

Crowe UAE’s comments:

IRAS is taking continuous efforts to update it’s Transfer Pricing guidance in line with OECD guidelines and other globally best practices. Moreover, IRAS is also scrutinizing the intra-group transactions of taxpayers aggressively to evaluate adherence to Singapore Transfer Pricing Regulations/ guidelines. Therefore, taxpayers having operations in Singapore are recommended to relook transfer pricing policy to mitigate potential transfer pricing risk.

3.   Cyprus – Transfer Pricing legislation to be commenced 

Recently, new legislation on Transfer Pricing is proposed in Cyprus parliament and we have provided key points of proposed legislation as under:


  • Any person having a direct or indirect relationship of 25% and above in other person in control of the voting rights or a share of capital or a right to the profits can be regarded as related person.
  • Persons having related party transactions are required to prepare/ maintain Transfer Pricing documentation to justify related party transactions. Transfer Pricing documentation may include business overview, detailed description of related party transactions, comparability analysis, etc to support arm’s length analysis.
  • Additionally, it is proposed that taxpayer having related party transaction is required to furnish summary table of related party transactions to the tax authorities no later than nine months from the end of the tax year.
  • New legislation has proposed to provide a relaxation or exemption to small and medium sized taxpayers having consolidated intra-group transactions not exceeding EUR 750,000 (approximately USD 900,000) per tax year.
  • New legislation also provide the option to taxpayers to apply for an Advance Pricing Agreement (APA) to get certainty on arm’s length arrangement.
  • Non-compliance may invite the penalties ranging from EUR 500 (approximately USD 600) to EUR 20,000 (approximately USD 24,000).

Crowe UAE’s comments:

Traditionally, Cyprus was recognised as tax haven by many of the multinational corporations and was commonly used location for tax structuring purpose. With Transfer Pricing legislation may be implemented soon, taxpayers having operations in Cyprus need to be cautious of intra-group arrangement and pro-actively evaluate potential implication to them. 

4.   European Union Council – Proposed directive on publicly releasing Country by Country Report information

On 28th September 2021, the Council of the European Union adopted its position on the proposed directive that would require large multinationals operating in the European Union (‘EU’’) to publicly disclose information on the income taxes they pay on a country-by-country basis.

It is learnt that the Council had reached a provisional agreement with the European Parliament on the proposed directive and therefore, the European Parliament is required to formally approve the agreement before the directive can enter into force.

This directive would mainly apply to multinationals with total consolidated revenues of EUR 750 million (approximately USD 875 million) if they are operating in more than one country in the EU. These multinationals would be required to publicly disclose income tax information on a country-by-country basis for EU member states as well as for non-EU “black list” and “gray list” jurisdictions.

It is learned that EU member states would be required to incorporate the directive into national law within 18 months once it is approved and enters into force. The reporting would be due within one year of the end of the fiscal year being reported.

Crowe UAE’s comments:

The Council of EU makes continuous efforts to increase tax transparency and eliminate base erosion and profit shifting. The afore-mentioned directive may entail many of the large multinational corporation to publicly disclose tax related information and therefore, it is advisable to be cautious while preparing/ disclosing the requisite information. 

August 2021

   1. Hong Kong – Guidance on Transfer Pricing issues on account of Covid-19 situation

Recently, Inland Revenue Department (IRD) of Hong Kong has published guidance on Transfer Pricing related issues arising from COVID-19. IRD’s approach are broadly in line with the Guidance issued by Organisation for Economic Cooperation and Development (OECD) in December 2020 on the same topic.  

It is clarified that guidance issued by IRD only represents the general views (and not legally binding) and therefore, each case is required to be assessed based on its fact pattern.  

We have summarised below the key points of guidance as under:

  • Separate testing period may be considered considering that pricing mechanism for pre-covid or post-covid may vary significantly on account of economic circumstances
  • Loss-making comparable companies should not be excluded for the sole reason of incurring losses. Selection/ rejection of loss making comparable should be determined by virtue of its functional comparability.
  • Limited risk-bearing entities may incur/ allotted certain additional cost towards Covid-19 losses if it is supported by accurate delineation of the controlled transaction and a robust comparability analysis. Having said this, consideration should be given to the fact as to whether the limited risk-bearing entity is adopting consistent positions pre and post-Covid situation.
  • Many of the Government has issued relief packages or assistance to reduce the potential impact of Covid-19 in a country. Therefore, impact of relevant government assistance on controlled transaction should be identified and considered when reviewing potential comparable.
  • In relation to agreed Advance Pricing Agreement, if material changes in economic conditions arises on account of Covid-19, which lead to breach of the critical assumptions, taxpayers should notify the IRD within one month of the breach.

Crowe UAE’s comments:

It is a welcome step by Hong Kong IRD to publish guidance on Transfer Pricing on account of Covid-19 pandemic. Many of the industry/ businesses have been significantly impacted on account of Covid-19 pandemic and this has resulted in substantial changes in structure, functions/ risks of taxpayer and group entity, profitability/ losses, etc.

This guidance would certainly help the taxpayers in terms of preparing their documentation and analysis considering the points mentioned by IRD.

   2. OECD – Transfer Pricing country profiles updated

On 3rd August 2021, Organisation for Economic Cooperation and Development (OECD) announced the publication of updated/ new transfer pricing country profiles of 20 jurisdictions. These countries include the following:

Angola (New)

Costa Rica





Czech Republic


Romania (New)




New Zealand

Russian Federation





Slovak Republic


These country profile focuses on countries domestic regulation regarding transfer pricing principles, including the arm's length principle, transfer pricing methods, comparability analysis, intangible property, intra-group services, cost contribution agreements, transfer pricing documentation, administrative approaches to avoiding and resolving disputes, safe harbour, and other implementation measures. 

Crowe UAE’s comments:

While OECD has already updated Transfer Pricing profile of 20 countries, it is learnt that it is planning to update profile of other countries. Moreover, OECD is also encouraging those countries who have not yet shared their profile to share in a manner/ format prescribed by OECD.

This would help multinational organisation to refer ready-made material on key transfer pricing principles in other country.

   3. China – Simplifies procedure for Unilateral APA

Recently, The State Administration of Taxation issued Announcement No. 24 providing guidance on simplified procedure for unilateral advance pricing arrangements (APAs). New simplified procedure will be in effect from 1st September 2021 onwards.

General procedure for applying for an APA in China includes six steps such as pre-filing meeting, letter of intent, analysis and evaluation, formal application, negotiation and signing, and implementation and monitoring.

The simplified procedure terminates the pre-filing meeting step and consolidates the steps of letter of intent, analysis and evaluation, and formal application. Therefore, simplified process will reduce the whole process into only three steps such as application and evaluation, negotiation and signing, and implementation and monitoring.

Guidance mentions that to qualify for the simplified procedure, applicant must have related-party transactions of more than CNY 40 million (approx. USD 6.2 million) for the three years before the year in which the application was made. Additionally, applicants must meet one of following three conditions to qualify for the simplified procedure:

  • Applicant must have submitted the transfer pricing documentation to the tax authorities in accordance with the law for the three years before the year of filing the application; or
  • Applicant must have implemented an APA in the past ten years before the tax year of filing the application, and the implementation result must meet the APA requirements; or
  • Applicant must have been subject to a transfer pricing investigation by the tax authorities in the past ten years before the tax year in which the application is filed, and the investigation has been closed.

Crowe UAE’s comments:

Advance Pricing Agreement is significantly important mechanism to ensure certainty and mitigate risk from Transfer Pricing perspective. In fact, APA is quite popular option amongst multinational corporation in countries like China, India, USA, etc because of the aggressive nature of tax authorities. However, at times, on account of substantial time require to finalise APA, it practically reduces the importance of APA. Simplifies procedure provided by China will help certain taxpayers to eliminate the hurdle of excessive time involved in multiple process and thereby, finalising the APA in a reasonable time frame.

   4. Germany – New Administrative Transfer Pricing Guidelines

Recently, German Ministry of Finance published Administrative Principles Transfer Pricing (APTP). APTP has incorporated recent legislative changes of Transfer Pricing regulation which is effective for fiscal years starting from 1st January 2022. Further, APTP is merely additional guidance document for interpretation of regulation and not binding on taxpayer/ tax authority and it is effective immediately.

We have summarised the key points of APTP as under:

  • APTP has also referred the OECD Transfer Pricing Guidelines 2017 as well as Chapter on Financial Transactions of OECD Guidelines.
  • The APTP emphasizes that the application of the ALP not only refers to the transfer price itself but also to the accurate delineation and the underlying conditions (e.g., prices, discounts, rebates, agreement duration including options to terminate or amend agreements, payment terms, price adjustment clauses) of an intercompany transaction (para. 1.5). Therefore, it is first required to analyse whether the intercompany transaction itself is arm’s length in principle followed by an analysis of the arm’s-length pricing. 
  • Additionally, the APTP directly refers to certain publications of the Joint Transfer Pricing Forum (JTPF) of European Union that are deemed helpful for the examination of cross-border transactions, in particular transactions between Germany and EU Member States (para. 2.5). Hence, such publications are considered as additional German administrative principles.
  • While APTP has referred OECD guidelines for selection of most appropriate Transfer Pricing methods, it has also mentioned the possibility to apply a combination of the methods or economically recognized valuation methods (such as capitalized income method and discounted cash flow method).
  • Arm’s-length test should be performed basis the data available at the time of concluding the agreement. However, a taxpayer can also use data that is available at a later point in time, if such data refers to the period when the controlled transaction was undertaken. Moreover, if projected data is used to determine the transfer prices, a comparison between projected data and actual results should be performed at the year-end.
  • APTP highlights that in an independent scenario, third parties would not continue loss-making activities if there were no economically sound expectation to earn profit within reasonable period. Considering this aspect, group entity of multinational corporation that is generating losses and continuing to operate a business, needs to be compensated appropriately by the Group.
  • APTP has also provided guidance on intangible aspects as well as financial transactions aspects in line with OECD Guidelines to examine the arm’s length principle.

Crowe UAE’s comments:

Guidance issued by Germany on Transfer Pricing is a welcome note for German taxpayer in terms of applying Transfer Pricing principles. Many of the practical aspects were addressed in the guidance which would help taxpayers to take appropriate action while demonstrating intra-group transactions.

   5. Ukraine – Transfer Pricing applicability for certain unrelated party transactions

Recently, Ukraine’s state tax service has published a tax ruling No 2891/IPK/99-00-21-02-02-06 regarding transactions between a Ukrainian taxpayer and a US limited liability company located in Texas.

As per Ukrainian Transfer Pricing regulations, controlled transactions include not only taxpayer’s transactions with foreign related parties, but also transactions with unrelated parties if they are situated in low-tax jurisdictions or are fiscally transparent entities. Recently, Limited Liability Company of Texas is included in the Ukrainian list of fiscally transparent entities. Therefore, Ukrainian taxpayers having transaction with unrelated Texas based Limited Liability Company are subject to Transfer Pricing Regulations in Ukraine. However, as an exception, if the Texas Limited Liability Company has been paying corporate tax in the fiscal year concerned, transaction with them will not be under purview of Transfer Pricing.

Having said this, it may still be subject to General Anti-Avoidance Rules. As per GAAR, the taxpayer shall increase its taxable income by 30% of the transaction value, unless the taxpayer can demonstrate that the transaction is undertaken at arm’s length.

Additionally, Ukrainian list of fiscally transparent entities also include general partnerships and Limited Liability Partnerships established in Delaware, California, Nevada, New Jersey, New York, and Florida. Therefore, any transactions of Ukrainian taxpayer with unrelated party situated in these jurisdictions would also apply Transfer Pricing principles.

Crowe UAE’s comments:

Afore-mentioned tax ruling of Ukraine is treating certain fiscally transparent entity (even though unrelated parties) at par with related parties. Therefore, any transactions with these unrelated party is required to be justified from Transfer Pricing perspective as if it was entered with related party. Many of the times, fiscally transparent entities are used by multinational corporation to reduce the overall tax burden and therefore, tax ruling of Ukraine is a welcome step in discontinuing the loophole and require justifying any transactions with them.

July 2021

1. UAE – Ministry of Finance comments on OECD Statement of Inclusive Framework 

On 1st July 2021, OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) released a statement concerning a two-pillar solution to address the tax challenges arising from the digitalisation of the economy.

Out of 139 members of OECD Inclusive Framework, 132 member countries have agreed to a detailed implementation plan together with remaining issues that will be finalised by October 2021.

As per Pillar-One, formulaic share of the consolidated profit of multinational corporation will be allotted to those jurisdictions where the sale arises. This Pillar-One will apply to only those multinationals whose profitability is above 10% and global turnover is exceeding Euro 20 billion. In this case, profit to be re-allocated will be 20% to 30% of the profit in excess of 10% of revenue. Having said this, sectors such as extractive industry and regulated financial service sector have been carved out from this at the moment.

Further, as per Pillar-two/ Global Anti-Base Erosion Rules (Globe rules), members have agreed for enacting minimum effective tax rate of at least 15%. While this would be applicable for multinational having global turnover exceeding Euro 750 million, countries are free to apply this rule to MNEs headquartered in their country even if they do not meet the threshold.

Subsequently, Ministry of Finance, UAE has also issued a statement on supporting a global consensus approach to combat aggressive tax avoidance and profit shifting and it’s commitment to work collaboratively with OECD and other IF members to advance the technical discussion for achieving fair and sustainable outcome. Ministry also mentioned that successful implementation of Economic Substance Regulation (BEPS Action Plan 5) and transparency rules is a testament to the UAE’s ability to adapt its practices to meet global standards.

Crowe UAE’s comments:

Statement from Ministry of Finance, UAE re-iterates UAE government’s positive approach towards supporting OECD and IF members in implementing new international tax standards. Moreover, with this development, we may also witness introduction of corporate tax by UAE government to implement minimum corporate tax suggestion of pillar two of OECD. We are expecting to get more clarity in coming months.

2. UAE – Guidance on Mutual Agreement Procedure (MAP)

On 1st July 2021, UAE issued a guidance on MAP which provide dispute resolution mechanism to resolve tax treaty related disputes. This is in line with UAE’s commitment to comply with OECD BEPS standards and one of the Plan (Action Plan 14) pertains to dispute mechanism.

Taxpayers may request MAP if they believe that action of tax authority is not in accordance with tax treaty and therefore, they are being taxed or will be taxed. Generally, such issue must related to a country with whom UAE has entered into double tax treaty in order to request MAP. Moreover, most of the double tax treaty of UAE stipulates period of 3 years to request for a MAP from receiving the notification of the action which is not in line with tax treaty

UAE competent authority will evaluate the request and may ask for additional information/ clarification and also consult a competent authority of another country with whom the issue has been requested by taxpayer. If both competent authorities reach common conclusion, taxpayers in UAE may accept or reject the said conclusion.

Crowe UAE’s comments:

UAE joined OECD BEPS Inclusive Framework in 2018 and is progressing well in terms of its commitment to comply with OECD measures to restrict profit shifting. In line with its objective, UAE has taken significant steps by introducing/ implementing country by country regulation, economic substance regulation and MAP. In continuation with this, we may witness many more measures in future too and therefore, taxpayers in UAE are suggested to keep close eyes on these developments to avoid any challenges in future.

3. Oman – Clarification on suspension of country by country reporting in certain cases\

On 7th July 2021, Oman’s Tax Authority announced a suspension of the requirement to file a Country by Country (CbC) report with the OTA until further notice.                                      

CbC rules are applicable in Oman since September 2020, requiring all covered tax resident entities in Oman to file a CbC notification on or before the last date of the relevant reporting fiscal year. Additionally, regulation also required filing of the detailed CbC report if the tax resident entity in Oman is an ultimate parent entity, surrogate parent entity or local constituent entity (in certain situation).

Subsequently, on 14th July 2021, tax authority clarifies that above suspension is applicable only to those Multinational Enterprise (MNE) Groups with Ultimate Parent Entity resident outside Oman. In other words, CbC Report requirement continues to be applicable for Oman Headquartered entities. Additionally, CbC notification requirement would continue to be applicable for all covered Oman tax resident entities (i.e. Oman headquartered entity as well non-headquartered entity).

With the above development, we have summarised the CbC filing requirement of Oman for the year 2021 and its timeline as under:


Sr. No.

Compliance Requirement

Where MNE is headquartered in Oman

Where MNE is not headquartered in Oman


CbC Notification for FY 2021

Yes – on or before 31st December 2021

Yes – on or before 31st December 2021


CbC Report for FY 2020

Yes – on or before 31st December 2021

Suspended basis above clarification

Crowe UAE’s comments:

In the absence of active exchange agreement by Oman with other countries, local Oman constituent entity would have also required to file CbC Report. Therefore, it is a welcome move by Oman tax authority to suspend CbC Report filing for these Oman constituent entities and reduce their burden of additional compliance in Oman.

4. European Union Court – Rejects Nike’s challenge of Transfer Pricing state aid investigation 

On 14th July 2021, European Union (EU) Court dismissed Nike’s application challenging the decision of EU Commission to investigate issue of unlawful state aid from Advance Pricing Agreement (APA) of Nike with Netherlands tax authority.

The afore-mentioned APA was entered on royalty payment by Nike Netherlands Subsidiary entities to overseas Nike Group entities.

European Commission undertaken a provisional assessment and determined that APA resulted in a level of profit for the Netherlands subsidiaries that was lower than it would have been if the transactions were priced at arm’s length. In order to further examine the alleged preferential corporate tax treatment amounted to unlawful state aid, the European Commission opened a formal investigation in 2019.

Against the above investigation, Nike made an application in EU Court to revoke the investigation which is dismissed by EU Court in July 2021.

Crowe UAE’s comments:

Under European Union rules, it is illegal for EU countries to give financial help to some companies and not others in a way which would distort fair competition. This help is called state aid. In last few years, we have witnessed many cases being caught up in net of unlawful state aid and many of these cases relates to transfer pricing. Therefore, taxpayers operating in European Union countries need to be cautious while framing their Transfer Pricing policies and recommended to maintain robust documentation to demonstrate.

5. Kenya – Introduced Country by Country Reporting 

Kenya’s Finance Act 2021 was signed into law on 29th June 2021 and thereafter, published in official gazette on 1st July 2021

Amongst other amendments/ introduction, one introduction is Country by Country Reporting to be applicable from 1st January 2022 with an intention to align its Transfer Pricing Regulation with OECD BEPS Action Plan 13.

Regulation would be applicable for the multinational group having ultimate parent entity in Kenya. Detailed regulation are still awaited.

Crowe UAE’s comments:

Kenya is progressing well in terms of implementing and aligning transfer pricing regulation in line with OECD. At the same time, it is learnt that tax authority in Kenya is scrutinizing intra-group transactions aggressively. With introduction of CbC Report, tax authorities will get access to insights of large multinational group and they are recommended to revisit their transfer pricing policies at the earliest in line with arm’s length principles.

6. Madagascar – Guidance on Transfer Pricing documentation

Recently, Ministry of Economy and Finance of Madagascar issued a guidance note on Transfer Pricing documentation for taxpayers. We have summarised few key points of the guidance as under:

  • Taxpayers who has entered into cross-border related party transactions are obligated to prepare as well as submit local file as well as master file irrespective of quantum of transaction.
  • Documentation can be prepared in French language. In case documentation is prepared in other language, a certified translation document also to be submitted.
  • Transfer Pricing documentation may be submitted either on online portal or hard copy submission to the tax authority.
  • Deadline to submit document would be 15th day over 4th Month following the year end of the accounting period. While deadline for 31st December 2020 was falling due on 15th May 2021, it has been extended up to 31st October 2021.

Crowe UAE’s comments:

Madagascar is not a signatory to OECD’s Base Erosion and Profit Shifting Inclusive Framework. In spite of being non-member, guidance issued by Madagascar tax authority demonstrates their commitment in ensuring compliance of arm’s length principles in the country. Having said this, submission of local file as well as master file without any threshold on transaction/ turnover, would increase the compliance burden of the taxpayers. Taxpayers operating in in Madagascar are recommended to be cautious of this new requirement to avoid challenges in future. 

7. Iceland – Penalty provisions introduced for non-compliance of Transfer Pricing

Iceland regulation requires mandatory preparation of Transfer Pricing documentation for taxpayers who has entered into cross-border related party transactions and having income or assets exceeding ISK 1 billion (apprx USD 8 million).

Recently, Iceland parliament modified the tax regulation to empower tax authorities in imposing penalties for any non-compliance undertaken by taxpayers in preparing/ maintaining Transfer Pricing documentation. Penalty amount may be as under:


Sr. No.

Nature of non-compliance or default

Penalty amount (in ISK)


Failure to fulfil TP documentation requirement for any year

ISK 3 million (approx USD 24,500)


Failure to fulfil TP obligation within 45 days from request of tax authority

ISK 3 million (approx USD 24,500)


Failure to make correction in TP documentation as per tax authority’s requirement within 45 days

ISK 1.5 million (approx USD 12,250)

Further, it is mentioned that penalties may be imposed for a maximum of six income years immediately preceding the year for which the penalty was imposed and maximum penalty that may be levied would be ISK 6 million (apprx USD 50,000). Additionally, it has been clarified that penalty amount may be reduced to 90%, 60% or 40% if taxpayer complies with the requirement within 30 days, 60 days or 90 days from the tax authority’s decision to levy the penalty.

Crowe UAE’s comments:

With penalty provisions in place, taxpayers in Iceland need to be careful in ensuring that Transfer Pricing compliance is undertaken within prescribed time. Non-compliance may entail stringent penalties.

June 2021

In this edition, we have covered the Transfer Pricing updates of Organisation of Co-Operation and Development (OECD), Jordan, Qatar and Argentina for the month of June 2021.

1. OECD – Statement of Inclusive Framework on two-pillar solution addressing tax challenges of digital economy

On 1st July 2021, OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) released a statement concerning a two-pillar solution to address the tax challenges arising from the digitalisation of the economy.

Out of 139 members of OECD Inclusive Framework, 130 members have agreed to a detailed implementation plan together with remaining issues that will be finalised by October 2021. 9 countries which did not sign the consensus include Hungary, Ireland, Kenya, Nigeria, Barbados, Peru, Sri Lanka, Saint Vincent and Grenadines.

As per Pillar-One, formulaic share of the consolidated profit of multinational corporation will be allotted to those jurisdictions where the sale arises. This Pillar-One will apply to only those multinationals whose profitability is above 10% and global turnover is exceeding Euro 20 billion. In this case, profit to be re-allocated will be 20% to 30% of the profit in excess of 10% of revenue. Having said this, sectors such as extractive industry and regulated financial service sector have been carved out from this at the moment.

Further, as per Pillar-two/ Global Anti-Base Erosion Rules (GloBE rules), members have agreed for enacting minimum effective tax rate of at least 15%. While this would be applicable for multinational having global turnover exceeding Euro 750 million, countries are free to apply this rule to MNEs headquartered in their country even if they do not meet the threshold.

Government entities, international organisations, non-profit organisations, pension funds or investment funds that are Ultimate Parent Entities (UPE) of an MNE Group or any holding vehicles used by such entities, organisations or funds are not subject to the GloBE rules.

The above statement mentions that Pillar One and Pillar Two will come into effect in 2023.

Crowe UAE’s comments:

Introduction of Pillar One and Pillar Two is a significant change in international tax dynamics. While this is a substantiate step forward, it would be interesting to witness how the implementation will take effect of this plan.

Interestingly, signatories include countries like United Arab Amirates and Bahrain wherein corporate tax regime does not exist at the moment. Considering that they have agreed to implement above pillars, it would be interesting to witness steps taken by these countries in coming time.

2. Jordan – Introduction of Transfer Pricing Regulation

In October 2019, Jordan has signed Organisation of Economic Co-Operation and Development’s (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS). Thereby, Jordan was actively taking steps to implement minimum standards of BEPS and introduce Transfer Pricing regime in a country.

Recently, Jordan has introduced Transfer Pricing (TP) Regulation in a country vide Regulation No 40 of 2021 in Official Gazette in June 2021.

TP Regulations would be applicable to all taxpayers who has entered into related party/ intra-group transactions. Having said this, relaxation is provided to small taxpayers to comply with TP Regulation if quantum of related party transaction does not exceed JOD 500,000 (equivalent to USD 700,000 approximately) during the reportable period.

In case TP Regulation is applicable, taxpayers are required to prepare and maintain local file as well as master file documentation. However, submission of document would be required only upon request from tax authority.

Multinational Group is required to prepare and submit CbC Report if consolidated turnover of group exceeds JOD 600 million (equivalent to USD 840 million). CbC Report needs to be submitted within 12 months from the end of reportable period.

In addition to the Transfer Pricing documentation, Taxpayers are mandatorily required to furnish Related Party Disclosure Form along with annual tax return.

Crowe UAE’s comments:

Jordan, in line with other Middle East and Africa countries, are taking active steps to implement OECD’s BEPS minimum standards and Transfer Pricing provisions in the country. While it is expected that tax authorities will provide further guidance on the subject matter soon, taxpayers may pro-actively start analysing the impact of TP regulation to them and how intra-group transactions can be substantiated.

3. Qatar – Deadline to furnish master file and local file extended

On 17th June 2021, General Tax Authority (“GTA”) of Qatar issued Decision No. (8) of 2021 to announce the extension of deadline for furnishing Master File and Local File for the year ended 31 December 2020.

While original deadline was 30th June 2021, the deadline has been extended by 3 months i.e. upto 30 September 2021. Having said this, deadlines for filing Tax Returns and Transfer Pricing Declaration for taxable and tax exempt entities remain same i.e. 30th June 2021.

Crowe UAE’s comments:

Submission of master file and local file is applicable for the first time in Qatar for the year ended 31st December 2020. While most of the taxpayers are grappling to prepare master file and local file for the first time, this extension provides much needed relief to them.

Preparation of first time Master File and Local File documentation requires significant efforts and therefore, we highly recommend the taxpayers to proactively work towards collating the necessary details and identify gaps. Non-submission of master file and local file may not only attract penalties but also entail tax additions in the hands of taxpayers on account of failure to justify intra-group transactions.

4. Argentina – Introduction of Simplified Transfer Pricing Reporting

On 18th June 2021, Argentina’s tax agency introduced simplified regime for Transfer Pricing information vide General Resolution 5010/2021. This new rule modifies the transfer pricing regulations released last year in General Resolution 4717/2020.

In order to apply simplified reporting regime, following conditions need to be fulfilled:

  • Taxpayers should not have incurred recurring operating losses as per financial statement. Further, they should not have undergone business restructuring processes in last three years.
  • Taxpayers should not be involved in carrying out operations involving royalties or licensing arrangements or research and development arrangements or service arrangement with related/ third parties located in non-cooperating countries or jurisdictions with low or no taxation.
  • Additionally, taxpayers should not be having loans with foreign related parties, should not import/ export goods through an international intermediary, and should not belong to multinational groups that are required to furnish the country-by-country report or master file.

Taxpayers that qualify to adopt simplify reporting regime, may submit disclosures in a Form F2672, international operations simplified regime.

Having said this, qualifying for the simplified disclosure regime will not exempt the taxpayer from preparing the transfer pricing report or local file.

Crowe UAE’s comments:

While new rule will provide relaxation to many of taxpayers who are qualified as per afore-mentioned criteria, conditions/ criteria mentioned for applicability seem to be quite comprehensive. Therefore, it would be interesting to witness feasibility of new regime for the taxpayers in Argentina.

May 2021

In this edition, we have covered the Transfer Pricing updates of Africa, Singapore, Australia, Kenya, Nigeria, Malta and Qatar for the month of May 2021.

      1.  Africa – 3rd edition released on Tax Transparency and Exchange of Tax Information

Given the high levels of illicit financial flows from African countries and recognising the potential of tax transparency and exchange of information to raise resources for development, African members of the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) decided to create an African focused programme: the Africa Initiative in 2014. The objective was to unlock the potential of tax transparency and exchange of information for Africa by ensuring that African countries are equipped to exploit the improvements in global transparency to better tackle tax evasion.

The Africa Initiative is open to all African countries and currently has 32 African member jurisdictions. It is supported by 11 partners and donors.

Recently, 3rd edition (2021) report was published on progress made by African countries (34 countries surveyed) in utilising tax transparency and Exchange of Information (EOI) to tackle tax evasion in 2020.

This report contains six chapters as under:

  • Chapter 1 recalls how critical tax transparency is in fighting IFFs in Africa.
  • Chapter 2 provides an update of the developments Africa has attained in tax transparency since 2019 and the achievements registered despite the COVID-19 pandemic.
  • Chapter 3 measures the progress African jurisdictions registered in 2020 and for the past six years since the Africa Initiative was launched, on the implementation of tax transparency and EOI standards.
  • Chapter 4 presents “country safaris”, which share some country experiences in tax transparency and EOI.
  • Chapter 5 looks forward to the future of tax transparency in Africa and the work the Africa Initiative intend to focus on to address existing challenges and continue translating tax transparency and EOI into more revenues for Africa’s development, including in the post COVID-19 era.
  • Chapter 6 provides a snapshot of the tax transparency and EOI measures introduced by the 34 African countries surveyed and the advancement accomplished.

Transfer Princing Page

Source: Tax Transparency in Africa 2021 - Africa Initiative Progress Report

The number of EOI requests sent by African countries in 2020 increased by 21%. For the first time, African countries turned the tide in 2020 and became net senders of EOI requests. However, most African countries are still behind their potential of EOI. More efforts need to be put into the operationalisation of EOI.

African countries identified more than USD 43 million (EUR 34.8 million) in additional taxes due to EOIR in 2020. Since 2009, EOI has enabled African countries to identify over EUR 1.2 billion of additional revenues (tax, interest and penalties).

Crowe UAE’s comments:

African countries are taking significant efforts in increasing tax transparency and exchange of information with the intention to increase their tax revenue. In last decade, many African countries have already issued Transfer Pricing regulations/ guidance and taking actions to implement the same effectively.

Therefore, both companies headquartered in Africa or foreign multinational group having presence in Africa needs to revisit their operational structure to align with Transfer Pricing principles to mitigate the risks.

      2.  Singapore-Transfer Pricing Guidelines for centralised activities

Recently, Inland Revenue Authority of Singapore (IRAS), has issued Transfer Pricing guidelines for centralised activities of multinational group in Singapore. Guidelines not only focus on large number of headquarters situated in Singapore but also include other entities who provide centralised services to their group entities.

We have summarised the key points of the guidelines as under:

 1. It is clarified that there are diverse functional profiles of headquarters which define their contribution to value chain analysis. It is imperative to evaluate the operations of the Group and accurately delineate the intra-group transaction in order to determine the intensity of activities undertaken by headquarters, and the corresponding arm’s length transfer price.

 2. Guidelines discusses four categories of activities undertaken by headquarters such as

  • Principal in distribution, manufacturing or research and development arrangements;
  • Activities relating to core business processes;
  • Activities relating to administrative, technical, financial, commercial, management, coordination and control functions);
  • Shareholder activities.

3. Guidelines has emphasized on robust functional analysis having regard to the characterisation of the headquarter entity and basis that appropriate transfer pricing methodologies may be adopted.

Crowe UAE’s comments:

Intra-group service charge or management fees is one of the most prone transfer pricing issue across world. In multinational group structure, it is quite routine to have such kind of cross charge for centralised activities provided by headquarter. In most countries, tax authority always challenges such cross charge on account of following:

  • Whether any actual services were availed by taxpayer?
  • Whether services are received are duplicative in nature?
  • Whether activities are akin to shareholders activities? If yes, whether charges were required to be paid?
  • Whether mark-up on such cost were required to be paid? Can this be considered as pure cost to cost arrangement?
  • What is the arm’s length value of charges paid by taxpayer?

Guidance provided by IRAS will certainly help taxpayers in evaluating the intra-group arrangement in detail and determining appropriate arm’s length price. Having said this, taxpayers are recommended to document robust analysis to justify at later stage.

      3.  Australia-ATO released draft guidelines on intangible arrangements

Recently, Australia Tax Officer (ATO) has released PCG 2021/D4, a draft Practical Compliance Guideline, in relation to cross-border intra-group arrangements of intangibles. We have summarised key findings of the guidelines as under:

1. Draft guidelines covers all types of intangible arrangement, including but not limited to

  • Transfer of acquisition of intangible assets
  • Licensing of intangibles assets
  • Development, Enhancement, Maintenance, Protection and Exploration (DEMPE) functions of intangible assets
  • Characterization of transaction

2. Further, guidance focuses not only transfer pricing risk of intangible but also other Australian tax laws that may be relevant, including capital gains tax, withholding tax, the general anti-avoidance rules (GAAR) and diverted profits tax (DPT). 

 3. Draft guidelines provides a framework as to how ATO examines intangible arrangements and categorises in high, medium or low risk. Additionally, taxpayers having intra-group intangible transaction may need to furnish Reportable Tax Position (RTP) Schedule along with annual income tax return and may also need to self-assess the risk relating to intangible in RTP disclosures. 

Crowe UAE’s comments:

Over the years, ATO is considered to be one of the most aggressive transfer pricing authorities in terms of issuing guidance to taxpayers as well as scrutinizing intra-group transactions. Frequent guidance on complex issues published by ATO shows their seriousness in ensuring Transfer Pricing compliance in a country.

Moreover, it is often a complex exercise to determine arm’s length price for intangible arrangements and it is advisable to undertake detailed exercise to evaluate DEMPE functions of entities involved in the transactions. While this draft guidelines will certainly help to taxpayers, self assessment of risk may trigger challenges. We recommend taxpayers to prepare/ maintain robust analysis for intangible transactions including benchmarking analysis to demonstrate fair allocation of profitability.

      4.  Kenya-Proposed Country by Country Reporting Regulation

On 5th May 2021, Kenya has introduced Finance Bill 2021 (the Bill) before reading the budget in June 2021. Amongst other tax related amendments proposed, the Bill proposed requirement for multinational group to submit group’s financial activities in Kenya as well as other countries. This is akin to country by country (CbC) report.

The information required to be submitted by the ultimate parent entity would include jurisdiction-wise amount of revenue, profit or loss before tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees and tangible assets other than cash or cash equivalents for all the jurisdictions where the group has presence.

The return would be required to be submitted not later than 12 months from the last day of the group’s financial year and it is proposed to commence the regulation from 1st January 2022. Interestingly, turnover threshold for applicability of Regulation is yet to be provided.

Crowe UAE’s comments:

While Kenya is a signatory to Organisation of Economic Co-Operation and Development’s (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS), it has not yet signed Multilateral Competent Authority Agreement on Country by Country Report. Having said this, it is learnt that Kenya is progressing on ensuring Transfer Pricing requirement in country and tax authority too scrutinizing the case to evaluate profit shifting cases.

With the proposed introduction of CbC Reporting Regulation, the taxpayers are required to prepare additional transfer pricing documentation (if applicable) and therefore, it is recommended to relook their intra-group transactions policy at early stage to avoid challenges in future.

      5.  Nigeria-Suspension of Country by Country Report for subsidiaries and branches

In 2018, Federal Inland Revenue Service (FIRS) of Nigeria has published The Income Tax (Country by Country Reporting) Regulations S.I. No. 6 of 2018. Based on this, subject to revenue threshold, following persons were required to submit CbC Report in Nigeria:

  • Ultimate Parent entity of multinational group headquartered in Nigeria;
  • Nigerian branches/ subsidiaries of foreign multinational group - when there is no automatic exchange of information mechanism between Nigeria and country of ultimate parent entity

However, recently, FIRS has issued a public notice suspending CbC obligation for Nigerian branches/ subsidiaries of multinational group. Having said this, these entities are required to continue to comply filing of annual notification under CbC Regulations.

Further, filing obligation of ultimate parent entity of multinational group headquartered in Nigeria will remain continue.

Crowe UAE’s comments:

The above suspension of CbC report filing obligations of Nigerian branches and subsidiaries will reduce the compliance burden significantly.

Further, this step is in alignment of Nigeria’s current status as a “non-reciprocal jurisdiction.” In other words, as a non-reciprocal jurisdiction, while Nigeria has agreed to provide CbC reports to other countries, it does not intend to receive any CbC reports from other countries.

      6.  Malta-Penalty for Country by Country Reporting non-compliance

Malta has published amendment in Cooperation with Other Jurisdictions on Tax Matters (Amendment) Regulations, 2021 wherein it has introduced penalty provisions for non-compliance of CbC Reporting regulations.

As per Malta CbC Reporting Regulations, all constituent entities are required to submit notification whether their multinational group is required to file CbC Report and if yes, jurisdiction in which multinational group is filing the report. This notification is required to be filed on or before last day of filing tax return of Malta constituent entity for preceding fiscal year.

Recently, Malta authority has provided that failure to notify/ inform that which entity entity will be filing CbC Report or whether constituent entity falls under the obligation to file the CbC Report will invite penalty of Euro 200 and Euro 50 for every day of non-compliance to each stated obligation separately. Having said this, total penalty is restricted at Euro 5,000 for each non-compliance activity.

Crowe UAE’s comments:

African countries are significantly progressing towards achieving tax transparency and with this intention, countries are adopting stricter norms in implementing transfer pricing provisions in country.

      7.  Qatar-Published FAQs on Transfer Pricing documentation

Earlier in December 2019, Qatar’s General Tax Authority (GTA) has issued Executive Regulation to Law No. 24 of 2018 by way of Decision No. 39 of 2019 published on 11th December 2019 introducing substantive changes in Tax and Transfer Pricing Regulation.

Subsequently, GTA has issued additional Transfer Pricing guidance on documentation and compliance requirement by way of President’s Decision No. 4 of 2020.

Recently, GTA has released Frequently Asked Question (FAQ) to address the concerns of taxpayer on Transfer Pricing Regulation. FAQ is dividend in two parts i.e. (1) Transfer Pricing declaration form (2) local file and master file documentation.

Click here to read our detailed alert providing insights on FAQs. 

Crowe UAE’s comments:

Qatar, in line with other Middle East and Africa countries, are frequently providing guidance for taxpayers before their first compliance for FY 2020 due in 30th June 2021. FAQ’s are a welcome step to provide much needed clarity to taxpayers. Now, the taxpayers in Qatar are recommended to –

  • Conduct a health-check for their intra-group transaction (domestic or cross-border) keeping in mind requirements of Transfer Pricing Regulation
  • Take corrective steps, basis the risk areas identified during the health-check

Ensure accurate/ appropriate disclosures to be submitted in Transfer Pricing Declaration form and local file/ master file documentation within prescribed time.

April 2021
  1. United Nation – Practical Manual on Transfer Pricing for Developing Countries (2021)

    On 27th April 2021, United Nation’s (UN) released 2021 edition of practical manual on Transfer Pricing for developing countries replacing it’s 2017 edition. Similar to previous edition, 2021 edition is also organised in four parts as under:

    Part A – overview of multinational enterprises, their operation and structure, and the management of their transfer pricing function.

    Part B – Designing principles of Transfer Pricing such as arm’s length principle, comparability analyses, transfer pricing methods and policy considerations for certain arrangements/ transactions. Interestingly, this edition has also included separate chapter providing guidance on financial transactions. This was expected in line with guidance released by Organisation of Economic Co-Operation and Development (OECD) on Financial transactions in 2020.

    Part C – Focuses on designing transfer pricing legislation and practical implementation of regulations, documentation requirements, risk assessment, conducting audits/ dispute resolution mechanism.

    Part D – Provides latest country practices in few developing countries such as Brazil, China, India, Mexico, South Africa and Kenya.

    Crowe UAE’s comments:

    Over the years, both OECD and UN have been front-runner organisation sharing guidance on implementation of Transfer Pricing principles.  Content of the manual is contributed by a UN sub-committee whose members also include few government tax/ policy officials, representatives of private sector, subject experts, etc. While Transfer Pricing regulation of many countries do not directly refer UN manual, it would be a good reference/ source for taxpayers/ tax officials while analysing the topic in-depth.


  2. India – Revise threshold for CbC; relaxes master file compliance burden

    In 2017, Indian adopted 3-Tier Transfer Pricing documentation in line with OECD recommendation.

    Earlier, Country-by-Country (CbC) Reporting was applicable if the consolidated turnover of multinational group exceeded INR 5500 crore. On 5th April 2021, Central Board of Direct Tax (CBDT) has increased the threshold to INR 6400 crore for applicability of CbC Reporting. This new threshold corresponds to OECD and other global standard and thus, will help multinational group to avoid hardship by filing CbC Report in India in spite of non-applicability at group level.

    Further, in relation to master file compliance, Regulations allowed the multinational group to designate 1 resident entity on behalf of all other resident constituent entities of group to comply with regulation. However, all non-resident entities were required to comply with master file compliance separate in India. CBDT has relaxes the compliance burden to designate 1 entity on behalf of all group entity (resident as well as non-resident) to undertake master file compliance in India. This will significantly reduce the compliance burden for non-resident entities in India and avoid duplicating their efforts.

    These changes are applicable with effect from 1st April 2021.

    Crowe UAE’s comments:

    These are welcome move by CBDT and changes are in line with Indian Government’s continuing efforts in easing the compliance burden on taxpayers.


  3. United Kingdom – Proposal for New Transfer Pricing documentation requirement

    Unlike many other countries, United Kingdom (UK) has not adopted OECD’s recommendation for 3-Tier Transfer Pricing documentation requirement. Presently, UK only requires Country by Country Reporting to be filed and there is no formal requirement to prepare/ submit local file/ master file. While routine documents/ records maintained fulfils the requirement to justify intra-group transactions, multinational group often prepares this documentation on suo-moto basis.

    Recently, HM Revenue and Customs (HMRC) has issued consulting paper to evaluate if large multinational group with UK operations should prepare standard Transfer Pricing documentation in line with OECD recommendations.

    Additionally, HMRC has proposed requirement to submit international dealing schedule to be filed along with tax return. This is akin to related party disclosure schedule wherein details like nature of intra-group transactions, details of related party with whom transactions entered, amount, transfer pricing methodology, etc need to be submitted. It is expected that this schedule will be applicable only for cross-border transactions and also exclude small and medium enterprise from compliance requirement. Possibly, threshold for cross-border transaction may also be prescribed while complying with the schedule to focus on only significant transactions.

    The consultation paper seeks comments from public on or before 1st June 2021. Basis the comments received from public, HMRC will issue final guidance on this aspect.

    Crowe UAE’s comments:

    Consultation report has mentioned that in last 5 years UK has earned over £6 billion tax from Transfer Pricing stream. HMRC believes that with the proposed move of standard documentation to be prepared, tax revenue from Transfer Pricing may further increase in country.

    Going forward, we may witness aggressive approach from HMRC to scrutinize documentation requirement and evaluation of Transfer Pricing risk amongst UK taxpayers. Therefore, it is recommended to UK taxpayers to pro-actively commence the Transfer Pricing documentation preparation and revisit their model (if required) to analyse if any gaps to be fulfilled.


  4. Denmark – Supreme Court upholds tax addition for inadequate Transfer Pricing documentation

    On 26th April 2021, Danish Supreme Court (five-judge bench) upholds the judgement of Danish Western High Court in case of Tetra Pak Processing Systems A/s (Case BS-19502/2020-HJR) (Part of Tetra Laval Group) (“Taxpayer”) wherein it concluded that tax authority has rightly made discretionary assessment since taxpayer has not maintained adequate Transfer Pricing documentation. We have summarised the facts of the case as under:


    • Taxpayer is a part of Tetra Pak Group's (having presence in over 165 countries) business area “Processing Solutions”, which comprises approx. 10% of the group.
    • Taxpayer develops and produces industrial plants, which are sold to ice cream manufacturers. The products range from stand-alone machines, e.g. freezers, for entire production facilities.
    • Taxpayer sells these plants to sales office of Group which in-turn sells to end customers. Therefore, intra-group transaction includes sale of process plants, spare parts, service and upgrades.
    • Taxpayer adopted Resale Price Method (RPM) wherein profit of average profit (EBIT) of sales companies (i.e. 7%) was concluded to be reasonable.
    • Danish Tax Agency observed that taxpayer is incurring losses and also verified that it has not maintained adequate Transfer Pricing documentation on account of following:
      • Taxpayer have not performed comparability analysis while justifying profit of sales company
      • Moreover, profit computed for sales company also include profit made from its other controlled/ uncontrolled transaction.
      • Numbers considered to compute profit was on estimated basis and not on actual basis.
      • Thus, it was concluded that documentation couldn’t comprise sufficient information and contains significant uncertainty. Therefore, tax authority adopted Transactional Net Margin Method (TNMM) wherein profitability of independent companies were compared with taxpayer (tested party) to make discretionary addition of USD 57.5 million in taxable income.
    • Danish High Court and Supreme Court, while referring to case of Microsoft and Adecco, upholds the judgement of Danish Tax Agency.

    Crowe UAE’s comments:

    In last few years, we have witnessed ample rulings from Danish authority wherein it has highlighted the importance of adequate Transfer Pricing documentation to justify intra-group transactions. Most of countries have placed onus on taxpayer while substantiating the documentation maintained by them and therefore, it is imperative for taxpayers to incorporate robust factual and comparability analysis while preparing Transfer Pricing documentation. Analysis should be more in-depth wherein taxpayers has suffered losses since this would immediately catch attention of tax authority for potential tax adjustment.

    Moreover, Danish authority has made their Transfer Pricing Regulation stricter from years beginning from 1st January 2021 wherein taxpayers are mandatorily required to furnish local file and master file to tax authority within 60 days of tax return deadline unlike previously where documentations were required to be submitted only upon request from tax authority.

    With this move, we expect increase in Transfer Pricing scrutiny for Danish taxpayer and therefore, it is recommended that taxpayers maintain adequate documentation to avoid challenges in future.


  5. Maldives – Introduction of Advance Pricing Agreement

Maldives Inlands Revenue Authority has published Regulation Number 2021/R-42 introducing Advance Pricing Agreement (APA) mechanism in a country. We have summarised key requirement of APA mechanism as under:

  • Time-frame – APA can be entered for a duration of 5 future years (as well as possibility to enter APA for roll back period)
  • Process – Before formal APA application, process requires pre-filing consultation to discuss the controlled transaction and thereafter, formal APA application can be submitted. Subsequently, several round of discussion may take place between taxpayer and tax authority owing to fact pattern to mutually determine appropriate remuneration mechanism for the proposed controlled transactions. Post APA is signed, taxpayer is required to submit annual compliance report every year along with tax return to demonstrate facts/ assumption remained same as agreed in APA.
  • Roll-back provision – While tax authority has also provided a hint towards applicability of APA mechanism for roll-back years (past years where controlled transactions has already taken place), we may expect additional guidance on applicability as well as process.

Crowe UAE’s comments:

Over the years, APA mechanism is quite popular amongst many countries, especially multinational corporations are inclined towards opting for APA to ensure certainty on Transfer Pricing rather than to possess potential risk.

We have witnessed the high-pitched tax addition on account of Transfer Pricing matters in numerous matters in last couple of decades. Nowadays, tax authorities are scrutinizing intra-group transactions to evaluate value creation activity instead of traditional manner of merely verifying profitability of taxpayer. Therefore, APA will remain attractive option to save time/ efforts and avoid litigation.

March 2021
  • United States – IRS issues annual report Advance Pricing agreement for 2020

On 23rd March 2021, Internal Revenue Service (IRS) issued Announcement 2021-6 providing the Advance Pricing and Mutual Agreement (APMA) program’s 22nd annual report on advance pricing agreements (APAs) for 2020. Report also provided few interesting statistics on APA program for the year 2020 which is as under:







Applications filed





APAs executed





Open APAs as on 31st December 2020





Renewals executed





Pending renewals as on 31st December, 2020





Applications revoked/ cancelled





Applications withdrawn





While most of the transactions covered in APA executed in 2020 involve the sale of tangible goods (35%) or provision of services (38%), interestingly, Annual Report mentions that approximately 25 percent of transactions covered in APAs executed in 2020 involve the use of intangible property, which can be among the most challenging transactions in APMA’s inventory.

Crowe UAE’s comments:

APA has been one of the most popular program amongst multinational in many developing and developed countries. Saving of litigation cost and time as well as certainty received by multinational on Transfer Pricing policy for 3-5 years (even more in few countries) is a key advantage as to why multinational prefers to opt for APA.


  • Mauritius – Country by country report deadline extended

Mauritius Revenue Authority (MRA) has issued a communique dated 26th March 2021 informing taxpayers that due date for filing country by country (CbC) report/ notification for the accounting period ended 31st March 2020 has exceptionally been extended from 31st March 2021 to 20th April 2021.

Extension has been announced as a result of national sanitary lockdown in the country in the country in March 2021.

Crowe UAE’s comments:

This relaxation will definitely help the taxpayers in undertaking their CbC compliance on timely basis and without suffering any monetary penalty or other consequences.

  • Belgium – Deadline for submission of local file extended

On 18th March 2021, Belgian tax authorities have announced the extension in filing corporate tax return for the financial year ended between 31st December 2020 and 28th February 2021 upto 28th October 2021. The extension is on account of difficulties faced by taxpayers due to Covid-19 pandemic.

This extension of deadline is also applicable for filing local file reporting that is required to be submitted in Form 275LF. Submission of local file is required by each Belgian entity of multinational group if any of the following threshold meets:

  • Aggregate of operational and financial income equal to or exceeding Euro 50 million (excluding non-recurring income); or
  • Balance sheet total equal to or exceeding Euro 1 billion; or
  • Annual average of employees equal to or exceeding 100 full-time equivalents.

Crowe UAE’s comments:

Extension would help the taxpayers in undertaking their compliance on timely basis. It takes substantial efforts in preparing local transfer pricing documentation, taxpayers would have additional time to collate/ prepare the documentation for this year.


  • Serbia – Ministry of Finance published arm’s length interest rates for 2021

On 19th March 2021, Ministry of Finance has published a Rulebook in Official Gazette of Serbia No. 24 providing arm’s length interest rates for 2021 for intra-group loans.

As per tax regulation of Serbia, in order to determine the arm’s length rate of interest, taxpayers may either (i) adopt interest rates as prescribed by ministry of finance in Rulebook; or (ii) apply OECD method for determining arm’s length interest rates. Taxpayers may need to follow any of this option on consistent basis for all inter-company loans.

Arm’s length prescribed by ministry of finance for 2021 is as under:


Credit/ loan currency

Banks/ Financial leasing company

Other companies

Short term loan

Long term loan

Short term loan

Long term loan






























Crowe UAE’s comments:

Determination of arm’s length price for the financial transactions is much talked topic in recent years. Infact, OECD has released guidance on financial transactions in 2020 wherein they have emphasized on credit rating approach while determining arm’s length interest rates.

In Covid-19 pandemic situation, it is expected that intra-group financing will significantly increase amongst multinational group and therefore, it is recommended to taxpayers to relook their transfer pricing policy of financial transactions.


  • Zambia – Introduces Country by country Reporting

Zambia Revenue Authority published a Statutory Instrument No. 117 of 2020 to introduce country by country (CbC) reporting regulation to be effective from 1st January 2021. CbC Regulation is applicable for a MNE Group if the consolidated group revenue exceeds  Zambia Kwacha 4,795 million (equivalent to EUR 750 million). 

Regulation requires two-fold compliances as under:


Sr. No.

Compliance required


Required by whom


Filing of notification

On or before last day of Group’s reporting accounting year

Constituent entity tax resident in Zambia


Filing of CbC Report

Within 12 months from last day of Group’s reporting accounting year

Ultimate parent entity or surrogate parent entity

Tax resident constituent entity that is not the ultimate parent entity or surrogate parent entity may also be under the obligation to file a CbC report where

  • Group’s ultimate parent entity is not obliged to file a report in its tax residence jurisdiction; or
  • Country in which the ultimate parent entity is tax resident, whilst having an international agreement with Zambia, does not have a qualifying competent authority agreement with the latter; or
  • there is a systemic failure in the tax resident country of the ultimate parent entity and the Commissioner-General notifies the constituent entity in Zambia.


Crowe UAE’s comments:

CbC Reporting Regulation in Zambia is mainly in line with OECD requirement and thereby, Zambia has also adopted 3-Tier Transfer Pricing documentation approach of OECD. Further, it is learnt that Zambia Revenue Authority is quite aggressive in scrutinizing the intra-group transactions of multinational group. Therefore, it is recommended for multinational having presence in Zambia to revisit their Transfer Pricing policy of intra-group transactions and maintain robust documentation to demonstrate arm’s length principles.


February 2021
  • Qatar – Transfer Pricing declaration form to be submitted

    In 2017, Qatar signed Organisation of Co-Operation and Development’s (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and thereby, committed to align its domestic regulation with global tax rules.

    In 2018, it introduced Country by Country (CbC) Regulation and subsequently, it published new income tax law and corresponding Executive Regulation for Transfer Pricing documentation requirements.

    In September 2020, General Tax Authority of Qatar (GTA) launched tax portal “Dhareeba” wherein taxpayers are required to file income tax return as well as other declarations. This also mandates the taxpayers to submit Statement on Transfer Pricing subject to certain threshold. The statement requires information such as

  • Information of related party – Basic details including country, main activity of related party, whether any changes in activity of related party during the year,
  • Information of transaction - Nature of transactions, transaction currency and amount, methodology applied to justify arm’s length price, declaration as to changes in Group’s Transfer Pricing policy during the year,
  • Information on intangibles - Nature of intangible owned by related party and used by taxpayer in Qatar, description of transfer pricing policy adopted by group

Recently, in February 2021, it is learnt that GTA verbally confirmed that afore-mentioned Transfer Pricing declaration to be filed by those taxpayers whose either total value of assets or revenue exceeds the threshold (which is expected to be QAR 10 million equivalent to USD 2.75 million)

Crowe UAE’s comments:

Transfer Pricing is relatively a new regime in Middle East region. While many countries have signed OECD’s BEPS Inclusive Framework, only few countries (like Kingdom of Arabia, Egypt and now Qatar) have introduced 3-tier documentation requirement in a country.

Additionally, Qatar also requires taxpayer to submit statement on Transfer Pricing along with tax return which is added compliance requirement. Since this is the first year of Transfer Pricing compliance in Qatar, it is recommended to take timely action in revisiting existing transfer pricing policy and preparing comprehensive Transfer Pricing documentation to avoid challenges in future.

  •   Bahrain – Ratified MCAA for CbCR

Bahrain has signed Multilateral Competent Authority Agreement for Country-by-Country Reporting in 2019. Recently, vide publication in official gazette on 28th January 2021, Bahrain ratified Multilateral Competent Authority Agreement for CbCR.

The ratified agreement will come into force from immediately next day of its publication

Crowe UAE’s comments:

With this move, it is expected that Bahrain will soon publish CbC Regulation in a country. While most other Gulf Co-Operation Council (GCC) countries have already implemented CbC Regulation, Bahrain too will commence the Transfer Pricing regime soon. Therefore, companies operating in Bahrain are required to proactively re-assess their Transfer Pricing policies and restructure their business model, if required, in order to be compliant with arm’s length policies.

  • Malaysia – Time limit reduce to 14 days to submit Transfer Pricing documentation

    Recently, Malaysia’s Inland Revenue Board (IRB) updated Malaysia’s Transfer Pricing Guidelines.

    Previously, Transfer Pricing documentation in Malaysia was not required to be submitted to IRB along with tax return filing. Instead, documentation was required to be submitted within 30 days from the request from IRB to submit the same. IRB

    In this context, IRB has updated the guidelines to reduce the number of days to 14 (from 30) in order to submit Transfer Pricing documentation for Transfer Pricing audit cases commending on or after 1st January 2021. Corresponding amendments were also made in penalty provision.

    Crowe UAE’s comments:

    Generally, many taxpayers adopt the approach to prepare the Transfer Pricing documentation only upon request from IRB even though it is supposed to be kept ready while filing tax return. Considering the fact that time limit is reduced to only 14 days, it is recommended to taxpayers to keep their Transfer Pricing documentation ready in order to timely submit (if required) the same.

    In our experience, Malaysia’s tax authority generally adopts aggressive approach while scrutinizing the Transfer Pricing case and therefore, non-compliance may entail stringent penalties.

  • Canada – Revocation of APA cost recovery charges

    Previously, Canada’s Revenue Agency (CRA) required taxpayer to pay cost recovery charges when applying for the Advance Pricing Agreement (APA). This charge was mainly to cover the estimated expenses of during APA process including travel cost to taxpayer’s location. Subsequently, any excess amount not incurred by CRA was refunded to taxpayer at the end of APA process.

    Recently, on 5th February 2021, CRA announced that going forward taxpayers will not be required to  pay such cost recovery charges.

    Crowe UAE’s comments:

    Most of the developed and developing countries have APA mechanism in place wherein taxpayer can enter into an agreement with tax authority in advance for certain period (generally 3-5 years) on Transfer Pricing policy to be adopted. In last many years, APA has remained attractive mechanism for multinational corporation in order to get certainty as well as on saving time and cost on Transfer Pricing matters. Moreover, in today’s scenario wherein most of taxpayers have been severely affected by Covid-19 pandemic and thus, grappling with transfer pricing compliant policy, it is expected that APA mechanism will remain attractive option for taxpayers.

    Therefore, CRA’s move to revoke cost recovery charges from taxpayers is a welcome move for those who wish to apply APA soon.

  • South Africa – Transfer Pricing adjustment upheld in the absence of Transfer Pricing documentation

Recently, Tax Court in South Africa upheld the transfer pricing adjustment for taxpayer who failed to prepare Transfer Pricing documentation to justify arm’s length nature of intra-group transactions. We have summarised the facts of the case as under:

Case - ABC (Pty) Ltd v. Commissioner for the South African Revenue Service (14305) (2021) (ZATC 1)


  • Taxpayer is engaged in the business of manufacturing, importing, and selling chemical products
  • It has a catalyst division that is focused on manufacturing and selling catalytic converters (catalysts).
  • In order to manufacture catalysts, taxpayer imported Precious Group of Metals (PGMs) from its Swiss Group entity. Such PGMs was used in a manufacturing process and thereafter, final products in the form of Catalysts were sold to end customers in South Africa.
  • During the audit proceedings, taxpayer failed to product Transfer Pricing documentation and therefore, tax authority conducted its own analysis.
  • In fact, tax authority’s in-depth analysis included functions performed, risks assumed and assets employed (FAR analysis) by taxpayer and its related party, analysis of cost base of the taxpayer, performing benchmarking search analysis on database to identify independent comparable companies in similar business activity and adopting Transactional Net Margin Method (TNMM) with Full Cost Mark-up (FCMU) to benchmark the transaction.
  • Based on the above analysis, since the taxpayer’s profitability was lower than median, it was concluded that inter-company transactions were not at arm’s length and therefore, tax adjustment was made by authorities.

    Tax Court’s decision:

  • Tax Court decided the matter in the favour of tax authority and upheld the adjustment.

    Crowe UAE’s comments:

  • It is recommended to prepare and maintain comprehensive Transfer Pricing documentation to substantiate intra-group transactions. In the absence of appropriate documentation, tax authority may conduct its own analysis and most probably may make adverse tax adjustment. Additionally, there is a greater risk of levying penalty for such non-compliance.
  • Therefore, it is advisable for taxpayers to revisit their transfer pricing compliance for past years and proactively take steps to prepare robust documentation for future years.

Transfer pricing is a term used to describe intra-group pricing arrangements amongst the multinational corporations. Transactions may relate to intellectual property, tangible goods, services, loans or other financing transactions.

Interestingly, Transfer Pricing mechanism is used by many multinational enterprises to reduce the overall tax effect by exploiting gaps and mismatches in tax rules of different jurisdictions.

With increase in cross border transactions amongst multinational corporations and stringent norms imposed by many countries, the risks pertaining to Transfer Pricing has significantly increased. In 2015, Organisation for Economic Co-Operation and Development (OECD) has also introduced Base Erosion and Profit Shifting (BEPS) Actions Plans (one of the Action Plan 13 being Transfer Pricing Documentation and Country by Country Reporting) in order to restrict tax avoidance practice and allocate fair share of tax to respective countries.

In response to these factors, tax authorities around the world have become more aggressive in the transfer pricing arena, introducing stricter penalties, new documentation requirements, increased information exchange requirement.

This intense scrutiny implies significant risks for the unwary and the unprepared, particularly in a complex field such as transfer pricing where each transaction must be analysed under its own unique facts and circumstances.


We can help answer the most important questions?

  • Whether operating/ business structure is tax and transfer pricing efficient?
  • Whether global transfer pricing policy is in place for intra-group transactions?
  • Are you managing Transfer Pricing compliance effectively at group level or country level?
  • Whether internal documentation is robust enough to demonstrate arm’s length pricing policy?
  • Whether intra-group agreement is effective in line with latest tax/ transfer pricing developments?

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Rakesh Nair
Director, Corporate Tax
Alessandro Valente
Alessandro Valente
Director - International Tax Service & Transfer Pricing