2015 Global Transfer Pricing Country Guide Planning for methods, documentation, penalties and other issues Contents 3 Foreword 128 Kazakhstan 4 Angola 133 Kenya 7 Argentina 136 Korea 10 Australia 140 Latvia 17 Austria 143 Lithuania 20 Belgium 146 Luxembourg 24 Brazil 149 Malaysia 27 Bulgaria 153 Mexico 30 Canada 157 Netherlands 34 Chile 160 New Zealand 37 China 164 Norway 43 Colombia 167 OECD 46 Costa Rica 170 Peru 49 Croatia 173 Philippines 53 Czech Republic 176 Poland 56 Denmark 180 Portugal 59 Dominican Republic 183 Romania 62 Ecuador 186 Russia 67 Egypt 189 Singapore 72 El Salvador 192 Slovakia 75 Estonia 195 Slovenia 78 Finland 198 South Africa 81 France 203 Spain 84 Germany 208 Sweden 88 Greece 211 Switzerland 93 Guatemala 214 Taiwan 96 Hong Kong 217 Thailand 99 Hungary 220 Turkey 103 Iceland 223 Ukraine 107 India 226 United Kingdom 110 Indonesia 231 United States 115 Ireland 234 Uruguay 118 Israel 236 Venezuela 121 Italy 239 Vietnam 125 Japan 244 Contacts 2015 Global Transfer Pricing Country Guide 3 Foreword The 2015 Global Transfer Pricing Country Guide is one of For more information regarding transfer pricing issues the most comprehensive and authoritative guides of its in specific countries, and about Deloitte’s tax practice in kind, compiling essential information regarding the transfer those jurisdictions, please see the list of Deloitte member pricing regimes in 67 jurisdictions around the world and firm contacts at the end of the Global Transfer Pricing the OECD. This 2015 edition of the Global Transfer Pricing Country Guide. Country Guide has been reviewed and updated as of 31 December 2014. For further information about the Global Transfer Pricing Country Guide and the transfer pricing practice of Deloitte Given the complexity of transfer pricing issues, the Global member firms in general, please contact Betty Fernández Transfer Pricing Country Guide should be the starting at [email protected], or visit http://www. point rather than the finish line for all your transfer deloitte.com/tax. pricing inquiries. The transfer pricing specialists in Deloitte member firms around the world have the knowledge and experience to help you on your journey. 2015 Global Transfer Pricing Country Guide 3 Angola Do the local transfer pricing rules or tax What‘s new authorities allow the use of transfer pricing Specific transfer pricing rules were introduced in analyses to calculate profits attributable to Angola at the end of 2013, but the entry into force a permanent establishment or branch? of the underlying obligations was delayed to the There is no specific guidance on this subject in the law. 2014 tax cycle. Because the transfer pricing rules are quite recent, there is no experience yet regarding the tax authorities’ behavior The transfer pricing rules set up documentation on this subject. requirements, namely the obligation to deliver/submit to the tax authorities an annual transfer pricing file Methods and comparables for all large taxpayers whose total annual revenue Acceptable methods exceeds AOA 7,000 million. The comparable uncontrolled price (CUP) method, the resale price method, and the cost plus method. Tax authority and law Priority of methods Tax General Administration, which resulted from The most appropriate method should be applied. the fusion, in December 2014, of the Tax National Directory, the Customs National Services, and Availability of benchmarking/comparative data the Executive Program for the Tax Reform. There is no domestic public database available in the Angolan market. Public databases containing African Article 50.º of the Industrial Tax Code (Law 19/14 comparables data are rare, and include few comparables, of October 22, 2014), applicable for tax years from most of them located in only a few African countries 2014 onwards. Presidential Decree n.º 147/13, (South Africa, Kenya, Algeria). Patricia Matos Articles 10.º to 13.º, published October 1, 2013. +351 21 042 75 34 Are foreign comparables acceptable to [email protected] Regulations, rulings, guidelines local tax authorities? Circular No. 12/DLT/DNI/2014. There is no experience yet with the tax authorities’ Filipe Moura approach to transfer pricing, as the transfer pricing rules +351 21 042 75 29 Nature/extent of relationship between parties to a are quite recent. It is likely that they will be compelled to [email protected] transaction required for transfer pricing rules to apply? accept foreign comparables given the lack of local data. A special relationship exists between two entities if entity has or may have, directly or indirectly, a significant Services issues influence in the management of the other entity, namely: Are management fees deductible? • When the management of one entity (or their relatives), Yes, although taxpayers may require prior formal approval directly or indirectly, have a participation of not less than from the Central Bank and/or some specific committees 10 percent in the capital or voting rights of the other of the Finance Ministry, if the value of the fees exceeds entity; certain amounts. Any payments to nonresident entities • Entities in which the majority of the members of its derived from technical assistance or management fees are corporate bodies, of any administrative body, board of limited to an amount corresponding to 10 times the value directors, or supervision are the same persons or people of the local companies’ “own funds” (deemed as being the connected by marriage, other (legal) forms of joint local entity equity), with reference to the contract’s date of household, or by direct kinship; signature. • When entities are connected through a dependent relationship [implying direct or indirect 50 percent Are management fees subject to withholding? ownership], reciprocal participations, parity group, or any Yes. other with similar legal effect; and • When two or more commercial entities engage in May stock option costs be included in the cost base transactions that represent more than 80 percent of the for intercompany services charges? total volume of operations or when one entity finances There is no specific guidance and no local domestic the other with more than 80 percent of its credit experience on this. portfolio. 2015 Global Transfer Pricing Country Guide 4 Commissionaire arrangements group, a presentation of the taxpayer’s sector/industry of Are commissionaire arrangements allowed? activity, a presentation of the related entities, a description Yes. of the transactions conducted with those entities, and a transfer pricing analysis of the pricing conditions applied, Cost sharing agreements taking into consideration the approved methods. There is Are Cost Contribution Arrangements (CCA) or no experience yet on the tax authorities’ understanding of Cost Sharing Agreements (CSA) accepted? the time frame to refresh or perform new studies. There is no specific domestic guidance on this. Those transactions will be deemed acceptable provided Deadline to prepare documentation they comply with all other legal requirements. June 30 of the following year, that is 6 months after the closing of the accounts, as in Angola all tax exercises are Are cost contribution or cost sharing mandatorily aligned with the calendar year (December 31). payments deductible? There are no formal guidelines on this subject. Payments Deadline to submit documentation will be deemed deductible provided they comply with the June 30 of the following year. domestic general deduction provision. Deadline to file income tax return Are cost contribution or cost sharing May 31 of the following year. payments subject to withholding tax? Yes. Acceptable languages for documentation Documentation must be in Portuguese. What is the payer’s tax treatment of payments to a contributor of preexisting intangibles to a CCA or CSA? Transfer pricing adjustments There is no specific domestic guidance on this topic. Must the transfer prices reflected on an The tax treatment will be similar to that of any other income tax return be the same as those cross-border payment. Depending on the nature of reflected in financial statements? In other the transactions, payments should be deductible and words, are book/tax differences allowed? amortizable over the period of use of the intangible, if There aren’t yet specific fields on the tax return for transfer applicable. pricing adjustments, nor is there specific guidance on transfer pricing adjustments in the tax laws. Taxpayers may Documentation and tax return disclosures perform general cost deductibility adjustments on their tax Tax return disclosures returns. No specific transfer pricing tax return disclosures are required, although there is a general tax return. Self-initiated adjustments Article 50.º of the Industrial Tax Code provides that Documentation requirements the tax authorities may perform transfer pricing Taxpayers included in the large taxpayer list, and adjustments, whether primary adjustments or whose total revenue exceeds AOA 7,000 million in correlative adjustments, but there is no mention a certain tax cycle, will have to deliver a mandatory of taxpayer self-initiated adjustments. transfer pricing file to the tax authorities for that cycle by June 30 of the following year. Statute of limitations on assessment for transfer pricing adjustments Are the documentation requirements annual Five years, which may be extended to 10 requirements? If so, what do they involve each years if the delay on the payment of the taxes year (for example, a complete report, a memo owed is due to the taxpayer’s infraction. identifying any changes and the updated transaction values?) Must comparables be Taxpayer set-offs for other related-party transactions refreshed or a new search performed? There are no formal provisions on this topic. The documentation requirement is an annual obligation, and consists of a traditional complete transfer pricing file, including a presentation of the taxpayer and its corporate 2015 Global Transfer Pricing Country Guide 5 Interest and penalties Advance Pricing Agreements (APAs) Additional assessment payment deadline Are APAs available? Fifteen days if the taxpayer does not contest the additional APAs are not available.