|BREAKFAST WORKSHOP ON TRANSFER PRICING WITH KPMG AND NERA CONSULTING|
|Host / Sponsor:||European Chamber of Commerce / European Union Business Information Programme|
|Event Time:||Wed 28-Sep-2011 8:00 AM To 10:30 AM|
|Venue:||Hong Kong Bankers' Club, 43 Floor, Gloucester Tower, Landmark, Hong Kong
Only for National European Chamber of Commerce in Hong Kong Members.
|View Flyer/Attachment:||Presentation of NERA Consulting
Presentation of KPMG
The European Chamber of Commerce in Hong Kong thanks to EUBIP was delighted to host a breakfast workshop on the topic of Transfer Pricing with the support of KPMG and NERA Consulting.
Pricing Transfer is simply the act of pricing of goods, services or intangibles when the same is given for use or consumption to a related party (e.g. subsidiary). Transfer Pricing is hence a business reality affecting most European companies in Hong Kong and Mainland China, and vice-versa, as enterprises with business units in more than one country are exposed to such issue when dealing with their global taxation strategy.
From the moment a certain profit is generated in any of such units, the first question from a transfer pricing angle will be WHERE and HOW to allocate such profit. Besides the impact this has for the businesses at a micro-level, this topic has also implications for the tax authorities, which pay more and more attention to transfer pricing as a source of income and as a potential source of transfer pricing manipulation and illegal practices. In the case of Mainland China, the local tax authorities have been showing in recent years a very strict positioning in Transfer Pricing and they rank nowadays amongst the top 3 toughest tax authority world-wide in this area. Although Hong Kong Tax Authorities show a more lax attitude in Transfer Pricing, the topic is drawing a larger attention from the general public and Governments, and the ongoing signature of Double Taxation Treaties between Hong Kong and EU Member States is a faithful proof of the importance of bilateral/ multilateral agreements in the taxation field.
So what are the principles and rules to establish a “fair” Transfer Pricing system? Although there is not an international legislation valid world-wide, the main guideline commonly accepted by all jurisdictions is the “arm’s length principle”, according to which, the transfer price should be calculated based on the independent market price in a similar transaction between external third parties under similar economic circumstances. Such principle is the corner stone of OECD legislation in Transfer Pricing, generally accepted by all jurisdictions (including the EU, China and Hong Kong), provided it does not contradict the national legislation.
Nonetheless, Transfer Pricing remains an extremely complex tool as its methodology, interpretation and execution may vary substantially from country to country and therefore, professional preparation, corporate due diligences and strong compliance are crucial to avoid eventual sanctions and penalties. Anticipating a potential tax audit and getting ready for a transfer pricing scrutiny have become a MUST in the daily operations of multinational enterprises.
On the side of Intellectual Property, Transfer Pricing has as well a strong repercussion and has opened the floor for a vivid discussion on the economic impact (notably in Greater China) of well-established brands in new markets (notably China) in terms of revenue, the quantification of such brand value, the potential generation of royalties, and hence tax revenue abroad.
At the EU level, Transfer Pricing is object of major concern for tax authorities who worry that multi-national entities may set transfer prices on cross-border transactions to reduce taxable profits in their jurisdiction. This has led to the rise of transfer pricing regulations and enforcement, making transfer pricing a major tax compliance issue.
Please find the enclosed presentations of NERA Consulting and KPMG.
For more information about the OECD regulation in Transfer Pricing please visit here.
Please click here for viewing event photos.
This event was partly funded by the European Union