Top Transfer Pricing Challenges for the Agricommodities Industry (BEPS)

Authors: Steef Huibregtse is the CEO and the founding partner of TPA Global and Katerina Miari is an Associate at TPA Global in Amsterdam.

The complexities of transfer pricing, particularly in the midst of BEPS-driven reforms, have created significant burdens for multinational enterprises. The following article looks at how these challenges have affected agricommodities, a sector already beset with complexity.

The commodities industry has been faced with many business and operational challenges recently, including the challenge of managing its tax agenda. At various times the industry has been accused of not paying its fair share of profits in various countries. However, the lack of a sound and broad understanding of how this industry operates has created more conflicts in the tax area. Examples include:

  • Glencore/Africa
  • BHP/Singapore and Swiss hubs; and
  • Glencore/Switzerland

In order to get a better understanding of the top challenges in the field of transfer pricing and tax in the agricommodities industry the following topics are being addressed in this article:

  1. Arbitrage is the Leading Value Driver in the Agricommodities Industry
  2. Allocation of $/Volume between Group Functions is key in the Industry
  3. Third Party Prices (CUP) are used in less than 10% of the Intercompany Transactions
  4. When and how to Apply End of Period ’True Ups’ or Adjustments to Intercompany Prices Charged
  5. How to Split Total Net Profits across Group Entities
  6. Practical Challenges on Country-by-Country Reporting
  7. How should the In-house Tax and Transfer Pricing Team be set up in a BEPS Proof Manner?
  8. How to Disclose Tax Sensitive Data with Various Stakeholders?
  9. Key Dilemmas in the Preparation of Masterfiles
  10. Value Chain Analysis Required by Chinese Tax Authorities

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Transfer Pricing Associates introduces TPA BEPS Desk. If you have any questions, or need more detailed advice on any aspects of BEPS related issues, please get in touch with us. The TPA Global network has alliance partners throughout the world, and the network can provide multi-disciplinary approach on today's critical transfer pricing challenges faced by multinational enterprises.

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