Arcotia Hatsidimitris - International Tax Dialogue

70 – 8. TRANSFER PRICING AND DEVELOPING COUNTRIES
being done through technical assistance on the ground in developing countries and they see as an important
mechanism this being delivered directly by tax administrations that have the relevant expertise providing
technical specialists through secondments on a short term or mid-term basis and by the twinning of FTA
Commissioners to provide strategic oversight. Such an approach must, however, be responsive to needs of
the countries themselves and providers of assistance have a responsibility to co-ordinate this form of
assistance to ensure that it is demand led, and delivered at the right time in the right way.
Box 19. Transfer Pricing Secondment from the UK to South Africa
• HMRC recently seconded a senior transfer pricing specialist to SARS for a 5 year period. He has
helped SARS develop a leading edge transfer pricing function made up of tax specialists and
economists. SARS also made him available to ATAF to provide technical advice to ATAF on developing
transfer pricing capacity in member countries. Working with ATAF he has assisted in identifying a range
of transfer pricing products to build transfer pricing capability and capacity in ATAF member countries.
These include:
– Guidance on drafting transfer pricing legislation
– A panel of transfer pricing specialists from other tax administrations to answer anonymised
technical transfer pricing enquiries from ATAF member countries
– Web-based transfer pricing knowledge and commercial data sets
– Risk analysis guidance
– A joint business, tax adviser, tax administration forum to discuss transfer pricing issues
• An action plan has been drawn up to meet these needs in some cases within the next year and in
others within the next 2 to 3 years.
Another approach is for a developed country to bring inside its transfer pricing team colleagues from
another country who want to learn new skills and techniques (but not to work cases). Officials from
China’s SAT have worked in HMRC in this way for several years.
ATAF have made it clear that they intend to develop a register of resources (as well as needs) on
transfer pricing and in this context the FTA should establish and maintain a register of countries prepared
to provide assistance to tax administrations in developing countries that are looking to build up their
transfer pricing skills. The register would identify the particular areas of expertise in which a country can
provide assistance. This would involve individual countries with expertise in a particular aspect of transfer
pricing agreeing to offer in depth support to a partner country in the developing world.
Framing transfer pricing rules and practices
As has been acknowledged, transfer pricing legislation is a necessary first step in dealing with transfer
pricing risks but many developing countries either have no specific transfer pricing legislation or need to
strengthen it. Although they may seek assistance from private sector organisations in framing their transfer
pricing legislation, few such organisations have all the necessary and relevant experience. The OECD
model legislation is a useful starting point but this is another area where countries experienced in
developing and applying legislation may be able to provide that assistance, and potential support could be
included in the register proposed above. In a similar way, there have been calls for the FTA and ATAF to
work together to develop a hand book of anonymised transfer pricing case studies that could be drawn on
by developing countries to assist in framing the rules and practices and growing their capacity.
DEALING EFFECTIVELY WITH THE CHALLENGES OF TRANSFER PRICING © OECD 2012