APA & MAP Country Guide 2019 - Australia - DLA Piper
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
APA & MAP Country Guide 2019 – Australia CONNECTING THE DOTS OF INTERNATIONAL TAX CONTROVERSY
APA & MAP COUNTRY GUIDE 2019
Australia
APA Program
KEY FEATURES
Competent authority Australian Taxation Office (ATO)
Relevant provisions Law Administration Practice Statement 2015/4 (PSLA
2015/4); and Issued guidance available on the ATO website.
Types of APAs available Unilateral, bilateral, and multilateral APAs are available.
Acceptance criteria According to PSLA 2015/4, requests are more likely
to be accepted if transfer pricing issues are complex;
uncertainty to how transfer pricing rules apply; and there
is a high probability of double taxation without an APA.
Key timing requests, The critical dates negotiated with the ATO during the
deadlines early engagement stage will determine the date from
which the APA will commence.
APA term limits There is a five-year maximum term for an APA.
Filing fee There is no filing fee.
Rollback availability Decisions will be made by the ATO on a risk
assessment basis.
Collateral issues Administrative or tax issues that are relevant to
and may affect the outcome of the APA should be
addressed and resolved at the pre-filing stage with
the ATO. According to PCG 2018/D2, an APA can cover
the application of Australia’s diverted profits tax as a
collateral issue. According to PCG 2017/4 and PCG
2017/1, a Taxpayer does not need to self-assess the
risk rating of its related party financing arrangement or
a centralised function hub (e.g. an offshore marketing
hub), if covered by an APA.
2AUSTRALIA
PRE-FILING REQUIREMENTS
Overview Pre-filing in Australia is called early engagement.
An early engagement form containing an outline of
the proposed APA must be completed that includes:
• name and tax residence country of parties involved;
• explanation of how Australian operations fit into
global group structure;
• role of Australian entity within the global
value chain;
• cross border dealings covered;
• extent of all cross border dealings;
• TP methodology proposed;
• proposed term of the APA;
• collateral issues;
• critical dates;
• global group structure (as optional additional
information); and
• role of Australian entity in the MNE (as optional
additional information).
If the request for a pre-filing conference is accepted,
preliminary discussions will explore avenues for the
appropriate treatment of cross-border dealings and
any collateral issues. A request review workshop will
follow, and the Taxpayer will be invited to lodge a
formal APA application.
Anonymous Anonymous pre-filing is not available.
pre-filing availability
3APA & MAP COUNTRY GUIDE 2019
APPLICATION REQUIREMENTS
Content of application The ATO will discuss and agree what information is
required during early engagement. When preparing
the formal APA application, the level of documentation
must allow the ATO to ascertain the following:
• actual conditions relevant to the cross-border
dealings;
• arm’s length conditions relevant to the cross-border
dealings;
• particulars of the TP method used and comparable
circumstances relevant to identifying those arm’s
length conditions;
• expected result of the proposed method;
• critical assumptions;
• information agreed to in the early engagement
stage or as required; and
• bilateral APAs: information requests made by the
DTT partner(s) in relation to the APA application
and copies of any information supplied by the
foreign entity to the DTT partner(s).
Language The documentation should be submitted in English.
SME provisions No specific guidance.
OTHER PROCEDURAL CONSIDERATIONS
General The ATO follows a standard pre-filing, application
and monitoring process. There are no unique
procedural aspects.
4AUSTRALIA
Monitoring & compliance The Taxpayer must lodge the Annual Compliance Report
(ACR) to the ATO for the duration of the APA. Details as
to what should be included in the ACR are provided on a
case by case basis. The ACR should include:
• analysis of compliance with the APA including
the information and calculations demonstrating
the outcome of the application of arm’s length
methodology;
• details of any compensating adjustments made and
how each was effected in the income tax return; and
• whether there has been a breach of any critical
assumptions.
Renewal procedure Applications for the renewal of APAs are required to
be lodged six months before expiry. An APA renewal
request will go through the same stages as the
initial APA request, unless the ATO considers that a
streamlined process is more appropriate. According to
PSLA 2015/4 this is more likely when:
• there have been no material changes to
cross-border dealings or the role of the Australian
entity within the global value chain;
• there are no proposed changes to the existing APA;
and
• it is unlikely there will be material changes to
dealings covered under the renewed APA.
In the streamlined process the ATO will consider:
• whether an APA is still appropriate;
• the previous APA’s arm’s length outcomes;
• any material changes to the covered dealings;
• the updated benchmarks are appropriate; and
• evidence of compliance with the existing APA.
5APA & MAP COUNTRY GUIDE 2019
MAP Program
KEY FEATURES
Competent authority Australian Taxation Office (ATO)
Relevant provisions Taxation Ruling 2000/16 – Income Tax: international
transfer pricing transfer pricing and profit reallocation
adjustments, relief from double taxation and the
Mutual Agreement Procedure; published guidance on
the ATO website; DTTs between Australia and its treaty
country partners; Australian domestic tax law that has
been enacted, which gives the force of law in Australia
to the OECD’s Multilateral Convention (Article 16 of
which sets out a mandatory provision that contains
specific rules on MAP to be followed by Taxpayers and
competent authorities).
Acceptance criteria A prerequisite for a correlative adjustment is the
existence of relevant provisions in a DTT between
Australia and the other relevant country. Where there
is no DTT between Australia and the country making
the adjustment, a correlative adjustment to relieve
juridical or economic double taxation will generally not
be available.
Key timing requests, Most of Australia’s DTTs permit Taxpayers to present
deadlines a case to the ATO within three years from the first
notification to the Taxpayer of the actions giving rise
to taxation not in accordance with the DTT. However,
time limits may vary, and the relevant DTT should be
consulted for the applicable time limit.
6AUSTRALIA
APPLICATION REQUIREMENTS
Content of application Taxpayers should include the following information in
a MAP request to the ATO:
• identity and details of Taxpayers covered in the
request;
• basis for the request, specifying the articles of the
relevant DTT that the Taxpayer considers one or
both of the DTT partner countries are not applying
correctly and the jurisdiction applying the DTT;
• all relevant facts and any supporting
documentation, including income years and
amounts involved with details of what is to be
adjusted and the basis of the calculation;
• analysis of the issues the Taxpayer would like
resolved under the MAP, including how the Taxpayer
considers the specific DTT provision should be
interpreted and supporting documentation,
including:
• transfer pricing documentation
• copies of tax assessments, audit or other
tax administration documentation for the
purportedly incorrect application of the relevant
DTT provisions;
• copies of briefs or objections submitted by the
Taxpayer in response of the tax administration’s
action
• details of any MAP request submitted by the
Taxpayer to the other jurisdiction’s competent
authority;
• whether the issues involved have been dealt with
previously, for example, in a ruling, APA, settlement,
or tribunal/court decision;
7APA & MAP COUNTRY GUIDE 2019
• a statement confirming all information and
documentation is accurate and that the Taxpayer
will help the competent authority to resolve the
issues by providing any other information or
documentation requested by specified dates.
The ATO will consider whether the Taxpayer has
reasonable grounds to seek consideration in the
circumstances, and if so, it will endeavor to arrive at a
satisfactory solution itself. Where resolution of the case
cannot be achieved by the ATO alone, it will resolve the
case by mutual agreement with the tax authority of the
relevant DTT partner country.
Language The documentation should be submitted in English.
OTHER PROCEDURAL CONSIDERATIONS
Interaction with domestic Taxpayers may seek relief using domestic remedies
proceedings should they choose not to accept the outcome of MAP.
The ATO endeavours may cease at the review and
appeal stages.
Arbitration The ATO recognises arbitration as an available means
of alternative dispute resolution. Australia has also
included an arbitration clause in a number of its MAP
provisions under DTTs.
8AUSTRALIA
STATISTICS
APA There were 131 active APA applications during income
year 2015‑16 (as at 30 June) and 41 completed
applications. The average completion time was
10 months for bilateral APAs and 16 months for
unilateral APAs. The ATO has had an APA program
since 1991.
MAP Australia had a total of 46 active MAP applications as of
31 December 2016. The average time needed to close
MAP cases is 28 months for transfer pricing cases, and
9 months for other cases.
9APA & MAP COUNTRY GUIDE 2019
Double Taxation Treaty Network
The following treaties include MAP provisions which are the
basis for bilateral and multilateral APA negotiations:
Argentina Ireland Romania
Austria Italy Russia
Belgium Japan Samoa
British Virgin Islands Jersey Singapore
Canada Kiribati Slovakia
Chile(IV) Korea (Republic of) South Africa
China Malaysia Spain
Czech Republic Malta Sri Lanka
Denmark Marshall Islands Sweden
Fiji Mauritius Switzerland(I), (IV)
Finland Mexico Taipei(III)
France Netherlands Thailand
Germany (I), (IV)
New Zealand (I)
Turkey(IV)
Gunernsey Norway United Kingdom
Hungary Papua New Guinea United States
India Philippines Vietnam
Indonesia Poland
NOTES
I denotes treaties with MAP arbitration provisions.
II denotes treaties with the USSR that remain applicable until a separate tax treaty is concluded.
III denotes treaties between the countries’ representative office in Taipei and the Taipei Economic and
Cultural Office in the relevant country.
IV denotes treaties that became effective within the last five years.
V denotes treaties that are awaiting ratification.
VI denotes MAP provisions identical to para 3, art 25 of the OECD Model Convention with respect to Taxes
on Income and on Capital.
VII arbitration is to be conducted under the statutes of the ECJ.
VIII arbitration is to be conducted under the statutes of the ICJ.
10AUSTRALIA
11DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at www.dlapiper.com. This publication is intended as a general overview and discussion of the subjects dealt with, and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. This may qualify as “Lawyer Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. Copyright © 2019 DLA Piper. All rights reserved. | APR19 | A00091
You can also read
