Around 700 TPWeek readers, made up of tax directors, transfer pricing advisers, officials, non-government organisations (NGO) and scholars, voted in a week-long poll featuring 14 of the biggest forces in global transfer pricing over the past year, as selected by the editorial team.
A leading force in transfer pricing may not always be a positive influence but represents an ability to move transfer pricing policy, influence taxpayer trends and engender support for pressing issues.
Top of the poll were ActionAid, the OECD, Pranab Mukherjee the Indian Minister of Finance, PwC and the Taskforce on Financial Integrity and Economic Development.
TPWeek would like to thank all those who voted. The top five leading forces are a healthy combination of international organisations, political movers, non-government organisations and practitioners, providing the mixture of experience and skills that will encourage transfer pricing development in more countries over the next year.
The OECD was nominated for the project on intangible assets undertaken by Working Party No 6.
“Being recognised is not completely illogical but what is important is being recognised for delivering and being recognised by non-member OECD countries too,” said Pascal Saint-Amans, the head of the organisation’s centre for tax policy and administration. “What matters is what we can bring now; solutions that are global, acknowledge differences [between the OECD and the UN] and eliminate double taxation.”
The project on intangibles has finished its consultation with business in the pre-draft stage and is preparing its first draft for 2013.
The OECD aims to maintain its position as the leading force in global transfer pricing by delivering greater cooperation between officials through its global forum on transfer pricing, which was held for the first time on March 27 2012. Saint-Amans said the turn-out of more than 90 countries, including Brazil, Russia, India and China, was a great result.
Saint-Amans was happy to see NGOs alongside global economic organisations in the nomination list but said the people doing the work on the ground, such as the African Tax Administration Forum, should have received more recognition than they did.
PwC was nominated for its report on transfer pricing in developing countries, carried out on behalf of the European Commission. The study made recommendations about the best ways to support developing countries in the adoption and implementation of transfer pricing rules.
Patrick Boone, a partner in PwC’s transfer pricing group who worked on the project, said it is comforting to see that the market recognises PwC is making a constructive and sustainable impact on the transfer pricing debate.
“It is clearly our global strategy to continuously play an active role in various projects at the level of the EU, OECD or UN, that are aimed at the development of an even more coherent and transparent application of the arm's-length principle, both in the developed and emerging markets,” said Boone.
The firm’s report concluded that emerging nations need help from many stakeholders, such as professional firms, academics, governmental and non-governmental organisations, for capacity building in training and transfer pricing implementation.
Isabel Verlinden, PwC’s central cluster (covering the majority of the EEA) leader for transfer pricing, said the firm is working hard to develop a team of motivated and trained specialists in emerging economies to help clients navigate the complexity of different rules and conflicting authorities' aspirations.
“What is probably most important is that, thanks to our clients' efforts, a growing population gets access to goods and services that are basic to us such as hygiene, medical and industrial products and utilities,” said Verlinden.
“I guess it is fair to say that this is more important than any particular tax authority's fear that profits remain untaxed in one or another country of consumption,” she added.
Verlinden said the OECD deserved to be rewarded for its persistence and diplomacy while the upcoming launch of the Indian APA programme is a milestone event.
“The [OECD’s] intangibles project raises high expectations and I am confident Joe Andrus and his team will not disappoint us,” said Verlinden.
“There are so many organisations contributing to the dialogue on making the rules of the game clear for investors as well as hosting authorities in emerging economies, and each has its own tone and tools to express its voice, which in my view is a great recipe to enrich the quality of the dialogues rather than a reason to risk ending up toe-to-toe,” she added.
ActionAid was nominated for its report on drinks company SAB Miller, entitled Calling Time: Why SAB Miller should stop dodging taxes in Africa.
The report has led to investigations by South Africa, Ghana, Tanzania, Zambia and Mauritius and may lead to future audits. Since the report, Ghana has implemented its own transfer pricing regime.
“This is a recognition that civil society campaigning can have a positive and constructive influence on debates about transfer pricing,” said Martin Hearson, ActionAid’s policy officer for aid and development finance.
“There has been some criticism of activist groups who attack companies’ aggressive tax planning, but that scrutiny is here to stay, and this award is recognition that it is having an effect,” Hearson added.
Since the SABMiller report was published, ActionAid Ghana has organised a series of events to engage journalists and policymakers in the country and Hearson said the organisation wants to continue generating critical debate about transfer pricing in developing countries.
“Our focus will be on building the capacity of our staff and partners in other developing countries to do the same, as well as continuing to run global campaigns that demonstrate the need for a rethink of international tax rules,” said Hearson.
Hearson said the nomination of two campaigning organisations illustrates the politicisation of the transfer pricing debate: “Growing preoccupation with transfer pricing in non-OECD economies makes it uncertain whether the OECD will maintain its position as a focal point for transfer pricing policy making in future,” said Hearson.
Hearson said others whose transfer pricing work deserved more recognition were developing countries trying to break the consensus such as Brazil, which ensured its own transfer pricing model was included in the UN manual, and developing-country NGOs, such as TJN Africa and TJN Latin America, which Hearson said will be increasingly important in the future.
4. Taskforce on Financial Integrity and Economic Development
The Taskforce on Financial Integrity and Economic Development is affiliated with Global Financial Integrity and the Tax Justice Network. It campaigns for improved transparency and accountability in the global financial system. The NGO was nominated for its work to curtail the mispricing in trade imports and exports and its promotion of: country-by-country accounting of sales, profits, and taxes paid by multinational corporations; beneficial ownership in all bank and securities accounts; automatic cross-border exchange of tax information; and harmonisation of predicate offences under anti-money laundering laws.
“We believe that the Task Force provides a unique voice in the global transfer pricing debate,” said a spokesman. “Through the work of our members, the Task Force's work has helped to bring to light the terrible consequences of abusive transfer pricing on developing countries. We hope that our work has helped to grow these issues in the public consciousness, and make them accessible to a wider audience. Our 60,000-person social media audience showed tremendous interest in this poll, and we thank them for their engagement.”
The Task Force is looking to build its relations with international organisations, such as the OECD and the UN, and said it works with each of the other four TPWeek leading forces for 2012 in some capacity already.
5. Pranab Mukherjee, the Indian Minister of Finance
The Indian Minister of Finance was nominated for his power to implement an APA programme in India. This is a long-awaited development for Indian taxpayers and the new option for certainty will go some way to alleviating taxpayers’ disputes in the country and may encourage more foreign direct investment. Mukherjee also announced a number of other transfer pricing amendments in the March 2012 budget including changes to domestic transfer pricing and extensions of official powers, among others. Mukherjee also has the power to implement the inter-quartile range and the acceptance of multiple-year data – something industry has been long-campaigning for - bringing Indian transfer pricing further in line with global best practice and taxpayers hope these amendments will be included in the upcoming Direct Tax Code in 2013. The minister’s power to influence India’s standing in global economics through the tax system influenced a number of voters.