IN the first agreement of its kind in the world, Australia has reached agreement with three of its major trading partners to standardise transfer-pricing documentation.
Pacific Association of Tax Administrators partners Australia, Canada, Japan and the United States have released the voluntary package to protect taxpayers against transfer pricing penalties that might otherwise have applied.
Tax Commissioner Michael Carmody said it would eliminate the need for different documentation for each country.
“This package is the first of its type in the world and will potentially benefit about 10,000 Australian taxpayers, mainly multinational companies, doing business in these four countries,” he said.
Transfer pricing relates to the setting of prices for the goods, services and property that related parties provide to each other. The new rules also seek to ensure that financial relationships and other dealings between related parties are arranged and carried out on the same basis as independent parties would use.
The package is consistent with the general principles outlined in Chapter 5 of the Organisation for Economic Co-operation and Development Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.
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