Transfer Pricing & the Ampol case
What clients need to know about the recent Ampol transfer pricing case
The long running and high profile Ampol transfer pricing case has recently settled and it has been reported that they are paying the Australian Tax Office (ATO) $157 million.
This case serves to illustrate the necessity for organisations to stay within Transfer Pricing regulations, and has demonstrated that the ATO:
- Is committed to working with taxpayers to resolve disputes but will also litigate where it considers that the taxpayer has not conducted its affairs in accordance with the transfer pricing rules.
- Their focus remains on offshore trading hubs especially in low tax jurisdictions (PCG2017/1).
- Seeks to engage with taxpayers to agree advance pricing arrangements “APA’S” to provide certainty both for the taxpayer and the ATO.
Transfer pricing is a complex area of tax and it remains the number one tax issue facing multinational organisations.
What can businesses learn from the Ampol transfer pricing case?
This case highlights the importance of the arm's length principle, appropriate pricing, documentation, and the burden of proof in transfer pricing disputes.
In addition, businesses must be aware of the potential risks and take proactive steps to ensure that their transfer pricing practices comply with all applicable laws and regulations.
The ATO has made enforcing transfer pricing rules a top priority for many years and it does not appear this trend will be changing anytime soon. Nevertheless, the ATO is also willing to resolve disputes when necessary.
How we can help?
If you need more advice on this issue, please contact our team.
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