The Australian Taxation Office (ATO) on October 11 updated its transfer pricing guidance for multinational businesses that use hubs, providing a risk assessment framework for offshore “non-core” procurement hubs.
New schedule 2 of the guidance, PCG 2017/1, applies to offshore procurement hubs that supply ‘indirect’ or ‘noncore’ goods or services to an Australian entity.
Non-core items are goods are services that support the operations of a business and are not finished or resold, such as office equipment, consumables, packaging, fuel, advertising, travel management, and professional services.
Under the amended guidance, procurement hub arrangements can be assessed as low risk where the hub profit is less than or equal to a 25 percent mark up of hub costs.
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