What are the most challenging international tax issues for corporate tax departments? The consensus was that transfer pricing (both U.S. and non-U.S.) topped the list when a group of Tax Executives Institute (TEI) members joined Thomson Tax & Accounting, a segment of The Thomson Corporation, to discuss international tax issues on which corporate tax departments were spending the most time.
"Transfer pricing takes a significant amount of time and training in many of the multi-national enterprises in our membership. According to TEI's most recent Corporate Tax Department Survey, TEI's members have substantial tax planning responsibility, and in more than 80 percent of the cases, our members have significant responsibility for planning with respect to transfer pricing. Moreover, as several TEI panelists confirmed, the panelists do expect transfer pricing to get more scrutiny in countries around the world," said Timothy McCormally, Executive Director, TEI.
Linda Scheffel, Thomson Tax & Accounting Vice President, said: "The U.S. transfer pricing regulations have always been a challenge, even for experts like TEI's members. Add to those issues non-U.S. regimes with practices such as non-public comparables as well as complex new accounting rules (e.g., FIN 48), and transfer pricing can eat up the time and overwhelm the resources of corporate tax departments."
Thomson Tax & Accounting is a preeminent source of information and up-to-the-minute guidance on international tax issues including transfer pricing. It offers a wide range of resources on Checkpoint, the industry-leading online research platform. An in-depth article covering this TEI panel discussion of international issues will appear in the March 2008 issue of Journal of International Taxation.
According to Scheffel, "TEI panel participants indicated that the following transfer pricing issues were among their most time consuming:
(1) Non-U.S. transfer pricing issues;
(2) U.S. transfer pricing issues;
(3) Secret comparables;
(4) Maintaining the documentation levels necessary for multiple regimes; and
(5) Coordination of internal and external resources working on transfer pricing.
TEI is the preeminent association of business tax executives in North America with 7,000 members representing 3,200 of the leading corporations in the United States, Canada, Europe, and Asia. TEI represents a cross-section of the business community, and is dedicated to developing and effectively implementing sound tax policy, promoting the uniform and equitable enforcement of the tax laws, and reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. As a professional association, TEI is firmly committed to maintaining a tax system that works -- one that is administrable and with which taxpayers can comply in a cost-efficient manner.
Members of TEI are responsible for managing the tax affairs of their companies and must contend daily with the provisions of the tax law relating to the operation of business enterprises. The diversity and professional training of TEI's members enable it to bring a balanced and practical perspective to the business tax and tax-related financial reporting issues.