2016 Global Transfer Pricing Country Guide Planning for methods, documentation, penalties and other issues Contents 3 Foreword 147 Kazakhstan 4 Angola 152 Kenya 8 Argentina 155 Korea 12 Australia 159 Latvia 20 Austria 162 Lithuania 24 Belarus 166 Luxembourg 27 Belgium 169 Malaysia 31 Brazil 173 Mexico 35 Bulgaria 177 Netherlands 39 Canada 181 New Zealand 43 Chile 185 Norway 47 China 189 OECD 53 Colombia 193 Peru 57 Costa Rica 197 Philippines 61 Croatia 200 Poland 65 Czech Republic 205 Portugal 68 Denmark 209 Romania 72 Dominican Republic 214 Russia 75 Ecuador 218 Saudia Arabia 79 Egypt 221 Singapore 84 El Salvador 225 Slovakia 87 Estonia 228 Slovenia 91 Finland 232 South Africa 95 France 237 Spain 99 Germany 242 Sweden 103 Greece 245 Switzerland 108 Guatemala 249 Taiwan 112 Hong Kong 253 Thailand 115 Hungary 256 Turkey 119 Iceland 260 Ukraine 123 India 263 United Kingdom 127 Indonesia 268 United States 132 Ireland 271 Uruguay 135 Israel 274 Venezuela 138 Italy 277 Vietnam 143 Japan 282 Contacts 2016 Global Transfer Pricing Country Guide Foreword The 2016 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 69 jurisdictions around the world and firm contacts at the end of the Global Transfer Pricing the OECD. This 2016 edition of the Global Transfer Pricing Country Guide. Country Guide has been reviewed and updated as of December 31, 2015. 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 point at [email protected], or visit http://www. rather than the finish line for your transfer pricing inquiries. deloitte.com/tax. The transfer pricing specialists in Deloitte member firms around the world have the knowledge and experience to help you on your journey. 2016 Global Transfer Pricing Country Guide 3 Angola • Entities in which the majority of the members of its What‘s new corporate bodies, of any administrative body, board of Due to the drop in oil prices, Angola is currently directors, or supervision are the same persons or people facing a severe budget and currency crisis, which connected by marriage, other (legal) forms of joint has given rise to a 33 percent devaluation of the household, or by direct kinship; local currency and a significant shortage of foreign • When entities are connected through a dependent currencies. As a result, most importers are facing relationship [implying direct or indirect 50 percent difficulties obtaining enough foreign currency from ownership], reciprocal participations, parity group, or any local banks and processing payments to nonresident other with similar legal effect; and providers, which in turn has led to a shortage of • When two or more commercial entities engage in several goods in the market. As a reaction to that transactions that represent more than 80 percent of the adverse situation, the Angolan government has total volume of operations or when one entity finances implemented several measures and enacted new laws the other with more than 80 percent of its credit to increase the restrictions on transfers of currency portfolio. abroad, through a new foreign investment law and adjustments to its currency exchange laws. Do the local transfer pricing rules or tax authorities allow the use of transfer pricing The tax authorities are also seeking to compensate analyses to calculate profits attributable to for the sharp reduction in oil tax revenues through a permanent establishment or branch? an increase of the tax derived from other industries. There is no specific guidance on this subject in the law. Transfer pricing is considered a tool to reach that Because the transfer pricing rules are quite recent, there is objective. Thus, the tax authorities hired specialized no experience yet regarding the tax authorities’ behavior transfer pricing consultants during the second half on this subject. Patricia Matos of 2015 to provide specific training to their tax +351 21 042 75 34 audit team. They have also launched a bid to obtain Methods and comparables [email protected] technical assistance for the tax audits of the 30 big Acceptable methods non-oil taxpayers (Angola has been hiring external The comparable uncontrolled price (CUP) method, the Filipe Moura technical assistance for the tax audits of oil operators resale price method, and the cost plus method. +351 21 042 75 29 for many years). [email protected] Priority of methods The most appropriate method should be applied. Tax authority and law Tax General Administration. Availability of benchmarking/comparative data There is no domestic public database available in the Article 50º of the Industrial Tax Code (Law 19/14 Angolan market. Public databases containing African of October 22, 2014), applicable for tax years from comparables data are rare, and include few comparables, 2014 onwards. Presidential Decree n.º 147/13, most of them located in only a few African countries Articles 10.º to 13.º, published October 1, 2013. (South Africa, Kenya, Algeria). The tax authorities have negotiated with BvD to obtain access to the Orbis Regulations, rulings, guidelines database. Circular No. 12/DLT/DNI/2014. Are foreign comparables acceptable to Nature/extent of relationship between parties to a local tax authorities? transaction required for transfer pricing rules to apply? There is no experience yet with the tax authorities’ A special relationship exists between two entities if one approach to transfer pricing, as the transfer pricing rules entity has or may have, directly or indirectly, a significant are quite recent. It is likely that they will be compelled to influence in the management of the other entity, namely: accept foreign comparables given the lack of local data. • When the management of one entity (or their relatives), directly or indirectly, have a participation of not less than 10 percent in the capital or voting rights of the other entity; 2016 Global Transfer Pricing Country Guide 4 Services issues the transactions, payments should be deductible and Are management fees deductible? amortizable over the period of use of the intangible, if Yes, although taxpayers may require prior formal approval applicable. from the Central Bank and/or some specific committees of the Finance Ministry, if the value of the fees exceeds certain Documentation and tax return disclosures amounts. Any payments to nonresident entities derived Tax return disclosures from technical assistance or management fees are limited No specific transfer pricing tax return disclosures are to an amount corresponding to 10 times the value of the required, although there is a general tax return. local companies’ “own funds” (the local entity equity), with reference to the contract’s date of signature. Due to the Documentation requirements drop in oil prices and the subsequent budget and currency Taxpayers included in the large taxpayer list, and issues, Angola introduced in 2015 new regulations on whose total revenue exceeds AOA 7,000 million in foreign investment and exchange regulation that increase a certain tax cycle, will have to deliver a mandatory the restrictions and taxes on payments or dividends to transfer pricing file to the tax authorities for nonresident entities. that cycle by June 30 of the following year. Are management fees subject to withholding? Are the documentation requirements annual Yes. requirements? If so, what do they involve each year (for example, a complete report, a memo May stock option costs be included in the cost base for identifying any changes and the updated intercompany services charges? transaction values?) Must comparables be There is no specific guidance and no local domestic refreshed or a new search performed? experience on this. The documentation requirement is an annual obligation, and consists of a traditional complete transfer pricing file, Commissionaire arrangements including a presentation of the taxpayer and its corporate Are commissionaire arrangements allowed? group, a presentation of the taxpayer’s sector/industry of Yes. activity, a presentation of the related entities, a description of the transactions conducted with those entities, and a Cost sharing agreements transfer pricing analysis of the pricing conditions applied, Are Cost Contribution Arrangements (CCA) or taking into consideration the approved methods. Cost Sharing Agreements (CSA) accepted? Even when the taxpayer has not recorded any transactions There is no specific domestic guidance on this. Those with related parties in the tax year under analysis, the tax transactions will be deemed acceptable provided authorities have in the past requested the delivery of a they comply with all other legal requirements. transfer pricing report as complete as possible, imposing penalties whenever the information provided is deemed Are cost contribution or cost sharing noncompliant with the documentation requirements. payments deductible? There are no formal guidelines on this subject. Payments There is little experience with the tax authorities’ will be deemed deductible provided they comply with the expectation of the time frame to refresh or perform new domestic general deduction provision. studies. Initial discussions with the tax authorities indicate that comparables should be updated at least every three Are cost contribution or cost sharing years. payments subject to withholding tax? Yes. Deadline to prepare documentation June 30 of the following year, that is, six months after What is the payer’s tax treatment of payments to a the closing of the accounts, given that in Angola all tax contributor of preexisting intangibles to a CCA or CSA? exercises are mandatorily aligned with the calendar year There is no specific domestic guidance on this topic.