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Philippines Steps Up Transfer Pricing Audits

by Mary Swire,, Hong Kong

29 April 2010

The Philippines Bureau of Internal Revenue (BIR) has set up a team of specialists to audit the tax obligations of major multinational companies by investigating their transfer pricing policies and transactions with related companies in the Philippines.

BIR tax commissioner, Joel Tan-Torres, said the Big Conglomerate Tax Force (BCTF) would start by focusing on 20 as yet unnamed conglomerates. The tax force would unite the investigation of these 'Large Taxpayers' in one team reporting to the Large Taxpayers Service (LTS) and the Enforcement Service (ES), whereas before, different members of the same group may have been handled in different offices.

The BIR has attempted on several occasions to enforce compliance with the arm’s length standard for related party transactions with little success.

Whilst the publication of more detailed transfer pricing policy guidelines is still awaited, the BIR formally adopted the Organization for Economic Cooperation and Development Transfer Pricing Guidelines in March 2008.

More recently in March 2010, the BIR prescribed procedures regarding audit and enforcement in respect of related companies, conglomerates, their affiliates and subsidiaries for the tax year 2009. This circular directed the LTS and the ES to identify groups of related companies that will be subject to audit under the program.

This comprehensive report in our Intelligence Report series examines the global and national landscapes in which companies can use transfer pricing to improve their after-tax returns, including summaries of recent developments in design of the corporate supply train, the usefulness of 'offshore' in international corporate tax planning, and a section covering the spread of DTAAs and CFC laws. It is available in the Lowtax Library at and a description of the report can be seen at
TAGS: compliance | tax | audit | Philippines | enforcement | transfer pricing | standards

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