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The Transfer Pricing Beat: News for the Week of May 24, 2021

Dominican Republic Introduces New Transfer Pricing Regulations  

Sun, sand, and new transfer pricing rules. Sounds like paradise in the Dominican Republic—if you’re a tax professional. The Caribbean nation is changing up its transfer pricing regulations with Decree 256-21. The guidance applies to fiscal years beginning January 1, 2021, and addresses comparability analysis provisions, the pertinent factors for delineation of related-party transactions, and how to conduct a risk analysis. It also spells out the three-tier documentation requirements, solidified by the country’s membership in the Inclusive Framework on BEPS in October 2018. For taxpayers, it’s time to up their SPF—scrutiny protection factor— or risk getting burned by the tax authority.  

ATO Issues Draft Compliance Guideline on Intangible Arrangements  

Intangible transactions can be stickier than vegemite. Thanks to the ATO, they don’t have to be. The tax agency published a draft compliance guideline on intangible arrangements. The aim? To help taxpayers identify and eliminate risks associated with this highly scrutinized area of transfer pricing. The draft also clarifies how to back arrangements with evidentiary support, in case of an audit. While the guidelines are technically in the consultation phase, it will help taxpayers feel like they’re not lost in the bush. The government agency is taking comments until June 18, 2021.  

European Commission Vies for Public Disclosure of Effective Corporate Tax Rates  

The European Commission is at it again. The organization announced its latest ploy in the quest for tax transparency: A rule for multinationals to publicly disclose their effective corporate tax rate. Talk about putting it all out there. While the EU corporate tax rates range from nine to 30 percent, the Commission isn’t convinced that MNEs are squeaky clean in their application. The plan would also require multinationals to share shell company information ‘to assess whether they have substantial presence and real economic activity.’ The commission hopes to formally propose the rules later this year, in conjunction with another transparent move: Public country-by-country reporting