Arcotia Hatsidimitris - International Tax Dialogue

7. RESOURCES, SKILLS AND USE OF SPECIALISTS – 63
administrations in developing greater the level of commercial awareness required for effective transfer
pricing audits and enquiries.
In the UK, for example, HMRC has arranged events with a wide range of external speakers to
cover global trading and the tax issues that can arise. For example, a group of senior tax specialists
have been working with tax partners in a Big 4 firm to promote increased understanding of how crossborder
transactions are structured, the tax issues which can arise and how HMRC is likely to react.
Similarly, HMRC has good working relations with most of the transfer pricing teams in major
accounting firms and regularly meets with them to discuss matters of mutual interest.
The way transfer pricing work is organised in tax administrations usually reflects different
national contexts. A degree of specialisation is common, but can vary from country to country. Some
tax administrations have developed training packages designed to give generalist auditors a broad
awareness of transfer pricing issues and the ability to spot key transfer pricing risks in their day to day
dealings with the businesses they are responsible for, while others have identified a need to bring in
external specialists in one form or another.
Complexity
Transfer pricing is undoubtedly a complex technical issue for all tax administrations requiring
highly trained staff and specialist skills. However, tax administrations which are most successful in
addressing transfer pricing issues are those which treat transfer pricing work not only as a specialist
subject but also as a mainstream compliance activity. To do this they embed transfer pricing in their
overall strategies for large business, compliance, governance and audit and enquiry handling. As a
result transfer pricing work can be addressed using existing, well established compliance processes so
that scarce specialist resource can be focused on the aspects of transfer pricing that require it.
The Role of Specialists
There is wide agreement that transfer pricing is a specialism in its own right. It involves not just
the need to understand the applicable domestic law, relevant treaty provisions and the OECD’s
Transfer Pricing Guidelines, but also the need to make an economic assessment as to whether
transactions are on commercial terms. In addition, although pricing issues can have a big impact on
tax liabilities, they are not generally a routine area of training and development for tax officials.
The following paragraphs in this chapter are, however, concerned with the use of specialists from
disciplines other than taxation, particularly economists and business experts.
Types of specialists
Different types of specialists can all play a significant part in transfer pricing audits and enquiries.
The UK tax administration, for example, has:
• established a network of experienced trade sector advisors inside the organisation, with deep
understanding of business, who have been recruited from the private sector with commercial
rather than tax backgrounds. They provide insights into the environment within which a
range of businesses exist and promote understanding of how businesses operate in practice.
Often, their approach is to provide industry reports for less knowledgeable colleagues, as
well as being available to work on aspects of specific cases
• engaged on a consultancy basis private sector industry experts and specialist economists to
advise on specific high profile and/or high risk cases as difficult issues have arisen.
DEALING EFFECTIVELY WITH THE CHALLENGES OF TRANSFER PRICING © OECD 2012