The US IRS’s Large Business and International division (LB&I) today announced a new compliance campaign aimed at making certain that US companies pay no more than arm’s length prices to foreign subsidiaries that perform services exclusively for the parent or other members of the multinational group.
Excessive payments to these captive service providers inappropriately shifts taxable income to these foreign entities eroding the US tax base, the Service said.
The IRS said it would conduct issue-based examinations and issue soft letters as a part of the transfer pricing campaign.
The IRS also announced new compliance campaigns addressing offshore private banking and incorrect filing of the Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations.
Altogether 53 compliance campaigns are being undertaken by LB&I.
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