By Robert Feinschreiber, Charles River Associates & Margaret Kent, TransferPricingConsortium
Forty years ago, in the movie “Grease,” Olivia Newton-John warned that “you’d better shape up.” This mantra could very well be a warning to multinational enterprises (MNEs) potentially subject to transfer pricing audits as the Inter-American Center of Tax Administrations (CIAT) is stepping up its game.
CIAT is developing an updated and enhanced transfer pricing audit guide for use by the tax administrations of its member countries. CIAT members comprise 32 states from the Americas plus Spain, Portugal, France, Italy, the Netherlands, and Kenya, and associate members, Angola, India, Morocco, and Nigeria.
CIAT transfer pricing audit guide
The new transfer pricing audit guide will provide CIAT country tax administrations with improved techniques for tax and transfer pricing audits and international tax dispute resolution.
To prepare the new guide, a 25-person expert group, established by CIAT earlier this year, will review an existing 140-page confidential CIAT transfer pricing study and reach agreement on changes, where possible. CIAT will coordinate these expert views and prepare a confidential consensus document for review by CIAT country members in October. The new transfer pricing audit guide is expected to be released to the general public in February 2019.
The transfer pricing expert group will meet October 8–10 in Antiqua, Guatemala to discuss this project. Expert group members are from 15 countries. Most have 20+ years of transfer pricing experience and are from major transfer pricing advisory firms or are transfer pricing academics.
CIAT tax database study
CIAT’s leader, Isaac Gonzalo Arias Esteban, has accomplished much in fostering and monitoring a significant number of divergent transnational tax studies. Most recently, in August 2018, CIAT published the English-language version of a comprehensive 100-page study, “Information Sources of Tax Administrations in Latin America.” The information sources study addresses tax database issues in Argentina, Brazil, Chile, Mexico, and Peru.
We expect CIAT’s new information sources analysis will impact the comprehensive transfer pricing study now underway.
CIAT’s goals
CIAT is a member of the International Tax Network, which includes the OECD, other transnational organizations, and NGOs.
Similar to the OECD, CIAT is a non-profit international public organization. CIAT’s goal is to facilitate the sharing of MNE tax information data among tax administrations. CIAT provides specialized cross-border technical assistance to its member-states with the overall goal of strengthening its members’ tax administrations. CIAT formulated this international tax administration focus ten years ago under the leadership of Arias.
CIAT is now in the process of developing a sharp and strong response to a myriad of tax avoidance schemes, both inside and outside the BEPS regime. Two external trans-governmental sources are making a valued contribution to CIAT. The International Center for Taxation and Development (CIFD), sponsored by both Norway and the UK, originally undertook African-based transfer pricing studies but later began to assist CIAT operations.
More recently, the German Agency of International Cooperation has been a contributor to the CIAT process. Norway, the UK, and Germany are not CIAT members.
– Robert Feinschreiber is a senior consultant at Charles River Associates in its Transfer Pricing Practice and Margaret Kent is associated with Transfer Pricing Consortium (TransferPricingConsortium.com). Feinschreiber and Kent currently serve as CIAT US transfer pricing expert group members, interfacing with the highest-level tax administrators.
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