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ATO Publishes TP Guidance For Offshore Hubs

by Mary Swire, Tax-News.com, Hong Kong

18 January 2017


The Australian Taxation Office has published a practical compliance guideline for offshore hubs.

The guidance sets out the ATO's compliance approach to transfer pricing issues related to centralized operating models, often called hubs. According to the ATO, the types of activity commonly centralized include marketing, sales, and distribution functions.

"The ATO understands that the overall structure of hubs, the transactions that flow in and out, and the diversity and sophistication of a hub's dealings contribute to increased complexity and higher costs for tax compliance," the PCG stated.

The ATO said that the PCG will help companies to self-assess the risk that their hub arrangement(s) will be examined further by the Office, and to assess the compliance risk of the transfer pricing outcomes of their hubs in accordance with the ATO's risk framework. The ATO hopes that companies will work with it to mitigate the transfer pricing risk related to their hub(s), and that the guidance will help them understand the type of analysis and evidence the ATO would require when testing the outcomes of a hub.

The PCG applies to income years beginning on or after January 1, 2017. The ATO said that, at this stage, a risk benchmark has been included for offshore marketing hubs only. The intended risk benchmarks for other types of hubs will be added to the PCG at a later stage.

TAGS: compliance | tax | tax compliance | revenue guidance | Australia | tax authority | offshore | tax planning | transfer pricing | BEPS

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