Transfer pricing set for axe
Complex transfer pricing structures put in place by multinational groups to reduce their tax liabilities could become a thing of the past, experts warned this week.
The warning came just a week after watch manufacturer Swatch was compelled to issue a public denial of claims by whistle blowers that the company was guilty of evading tax through the use of transfer price arrangements.
While transfer pricing is a ‘very, very common’ tool used by global corporations to reduce their overall tax burden, authorities have now begun to clamp down on its use.
‘The scope for these elaborate plans will become less common,’ said Rajesh Sharma, corporate tax director at Smith & Williamson. He added that an increasing number of countries were legislating to prevent its use.
A Swatch statement said that the group ‘did not violate laws’ and that it is its policy to ‘vigorously respect all national and international laws, including tax laws’.