Special project to control transfer pricing
Tax Administration Bulletin, 1/20/2012
New project run by Large Taxpayers' Office responds to transfer pricing control needs in 2012.
The special monitoring project of the Large Taxpayer's Office will cover all tax assessment operations that target transfer price manipulation in its various forms. The complicated commercial schemes that multinational corporations may implement will make for difficult tax assessments. To ensure the uniformity of tax control in these situations, transfer pricing must become a subject for tax experts who specialise in it.
– Our new transfer pricing project will improve tax assessment quality and helps us build up our results. To have one single entity in charge of transfer pricing is good for the taxpayer, too, because we will be giving better guidance and assistance. The centralised transfer pricing control operation ensures that all taxpayers will receive the same treatment if their international tax-assessment situations are similar, says Jouni Marjo who is in charge of the project.
The Finnish Tax Administration carried out readjustments of taxable income in 2011 to the tune of 240 million euros in connection with tax audits that involved transfer price issues. The resulting tax revenue amounts to €60 million. The new project, especially dedicated to the monitoring of transfer pricing operations, is expected to increase future tax revenue.
– Many other countries are currently dealing with the same issues within their tax administrations. Setting up a single entity in charge of transfer pricing has been a very successful approach in the United Kingdom and in Denmark. Following the lead of these forerunner countries, the Finnish Tax Administration is placing itself in the frontlines among the tax administrations that have to find good solutions against transfer price manipulations.
The project is comprised of the work efforts of 37 staff members. There is a group of specialists in tax assessment, and three groups of tax auditors. The project also creates a centralised point of contact for Mutual Agreement Procedures (MAP) and Advance Pricing Agreements (APA) with other countries.
One of the key elements is a risk-management approach that covers all relevant taxpayer groups. The Finnish Tax Administration adheres to the recommendations of the OECD as enumerated in OECD Transfer Pricing Guidelines. These recommendations are generally accepted by all OECD member countries.
The Large Taxpayers' Office will continue to organise taxpayer instruction events as it has done during the last two years. The next event is planned for autumn 2012. There will also be an international seminar similar to the one held last year.
More information: What is transfer pricing?