Tax Law: Analyzing the latest changes in tax law and how they affect corporate entities.

Introduction

Tax law is an ever-changing landscape, with new laws and regulations being introduced on a regular basis. These changes can have a significant impact on corporate entities, particularly in the areas of international taxation and transfer pricing. In this article, we will analyze the latest changes in tax law and how they affect corporate entities.

International Taxation

International taxation is an area that has undergone significant changes in recent years. One of the most significant changes is the introduction of the Base Erosion and Profit Shifting (BEPS) project by the Organisation for Economic Co-operation and Development (OECD). The BEPS project aims to address the issue of multinational companies shifting profits to low-tax jurisdictions to avoid paying taxes in higher-tax jurisdictions.

The BEPS project has resulted in the introduction of a number of new rules and regulations. For example, many countries have introduced country-by-country reporting requirements, which require multinational companies to provide detailed information on their operations and profits in each jurisdiction in which they operate. In addition, many countries have introduced new transfer pricing rules, which require multinational companies to ensure that their intra-group transactions are conducted on an arm's length basis.

Another area of international taxation that has undergone significant changes is the taxation of digital companies. Many countries have introduced new rules to ensure that digital companies pay taxes in the jurisdictions in which they have significant economic presence, even if they do not have a physical presence in those jurisdictions.

Transfer Pricing

Transfer pricing is an area that has received increased attention from tax authorities in recent years. Transfer pricing refers to the pricing of goods and services that are transferred between different parts of a multinational company, such as between a parent company and its subsidiaries.

Many countries have introduced new transfer pricing rules in response to the BEPS project, as mentioned earlier. These rules require multinational companies to ensure that their intra-group transactions are conducted on an arm's length basis, meaning that the prices charged for these transactions should be similar to the prices that would be charged for similar transactions between unrelated parties.

In addition, tax authorities are increasingly scrutinizing transfer pricing arrangements to ensure that multinational companies are not artificially shifting profits to low-tax jurisdictions. This has resulted in a number of high-profile transfer pricing disputes, such as the recent dispute between Apple and the European Union over the tax treatment of its Irish subsidiaries. In August 2016, the European Commission ruled that Ireland had provided illegal state aid to Apple by allowing the company to pay an effective tax rate of less than 1% on its European profits between 2003 and 2014. The Commission found that this arrangement violated EU state aid rules and ordered Ireland to recover €13 billion in back taxes from Apple.

Conclusion

In conclusion, tax law is an ever-changing landscape, and corporate entities must stay abreast of the latest changes and developments to ensure that they are in compliance with the law. The latest changes in tax law, particularly in the areas of international taxation and transfer pricing, have significant implications for multinational companies. As such, it is essential for companies to engage in proactive tax planning to ensure that they are in compliance with the law and are not subject to unexpected tax liabilities.