Transfer Pricing: Rules and Practice in Selected Countries (Q-S) (Portfolio 6970)

Chapter 145, “Transfer Pricing Rules and Practice in Singapore,” provides an overview of the rules and practice of transfer pricing in Singapore with regard to determining arm’s-length pricing. The term “arm’s length” is not defined in the Singapore Income Tax Act (Chapter 134 of Singapore) (ITA), but there are specific provisions in the ITA that require transactions between related parties to be conducted on similar bases as unrelated parties would conduct those transactions. Transfer pricing guidelines have been issued by the Inland Revenue Authority of Singapore (IRAS). The material in the chapter is current as of September 2013.

Chapter 150, “Transfer Pricing Rules and Practice in Spain,” begins with an overview of the main characteristics of Spain’s economy and of the Spanish tax system, and then provides a detailed discussion of the Spanish transfer pricing rules and regulations. The chapter includes an analysis of the specific rules and regulations that are provided under Spanish law for services, cost-sharing arrangements, and loans and thin capitalization. The chapter also discusses transfer pricing audit procedures in Spain as well as the consequences of a transfer pricing adjustment, both from a domestic perspective and from an international dispute resolution point of view. Finally, the chapter discusses the Advance Pricing Agreement alternative that is available to Spanish taxpayers as well as the relevant transfer pricing case law.

Chapter 155, “Transfer Pricing Rules and Practice in Sweden,” provides an overview of the Swedish tax system, particularly the provisions applicable to operating a controlled group of companies, including the rules for tax consolidation, restrictions on interest deductibility, payment of group dividends, and taxation of controlled foreign corporations. The chapter then analyzes in depth the relevant provisions in Swedish tax law governing transfer pricing adjustments, including the definition of an arm’s length price in the controlled group context, the examination process, taxpayer documentation requirements, settlement of transfer pricing disputes through arbitration or the competent authority process, and the advance pricing agreement regime. The chapter also examines significant transfer pricing cases, potential defenses, and tax treaty provisions relevant to transfer pricing issues involving Sweden and the United States.

Chapter 160, “Transfer Pricing Rules and Practice in Switzerland,” analyzes the Swiss federal and cantonal rules and procedures for making transfer pricing adjustments. In many countries there are specific rules for setting or evaluating prices for related-party services, licenses, or sales of goods or intangibles. Switzerland, however, has even today only rudimentary rules dealing with transfer pricing and Swiss tax administrators often simply lack the capacity to audit complex transfer pricing arrangements. The reason for this is that historically multinational enterprises generally used Switzerland’s beneficial tax environment to shelter profits, and thus transfer pricing was seldom used to reduce profits in Switzerland. Nowadays, in today’s worldwide transfer pricing environment, Swiss multinational enterprises and multinationals with Swiss-affiliated companies are more often confronted with foreign transfer pricing adjustments which may affect the taxable base of a Swiss company and thus present the possibility of double taxation. In such a situation, a knowledge of Swiss transfer pricing rules and practice is necessary in order to persuade the Swiss tax authorities that a corresponding adjustment is appropriate, either unilaterally or as part of a mutual agreement procedure.