The long running and high profile Ampol transfer pricing case has recently settled and it has been reported that they are paying the Australian Tax Office (ATO) $157 million.
This case has highlighted the importance of organisations operating within Transfer Pricing requirements, and the key points highlight that the ATO:
- Is committed to working with taxpayers to resolve disputes but will also litigate where it considers that the taxpayer has not conducted its affairs in accordance with the transfer pricing rules.
- Their focus remains on offshore trading hubs especially in low tax jurisdictions (PCG2017/1).
- Seeks to engage with taxpayers to agree advance pricing arrangements “APA’S” to provide certainty both for the taxpayer and the ATO.
Transfer pricing is a complex area of tax and it remains the number one tax issue facing multinational organisations.
WHAT CAN BUSINESSES LEARN FROM THE AMPOL TRANSFER PRICING CASE?
This case highlights the importance of the arm's length principle, appropriate pricing, documentation, and the burden of proof in transfer pricing disputes.
It also emphasises the need for businesses to be aware of the risks and the need to take steps to ensure that your transfer pricing practices are in compliance with the relevant laws and regulations.
The ATO rigorously enforce the transfer pricing rules and this has been a focus area for quite some time. We do not see this trend easing, however the ATO will also settle disputes where appropriate.
TALK TO YOUR TRUSTED ADVISOR
If your organisation operates in a multinational manner, we strongly recommend speaking with your Moore Australia advisor. We can provide guidance on your transfer pricing policies documentation and discuss the arm’s length nature of the international related party transaction(s).