The Covid-19 pandemic will have serious implications on transfer pricing for many multinational enterprises (MNEs) in the upcoming years. In December 2020, the OECD released its Guidance that clarifies and illustrates the practical application of the arm’s length principle as articulated in their Transfer Pricing Guidelines.
Four priority issues were identified and covered in the Guidance:
Losses and the allocation of Covid-19 specific costs
Government assistance programmes
Advance Pricing Agreements (“APAs”)
Mazars global transfer pricing experts organized the webinar on 21st September, at 8:00pm (HKT), to assist MNEs in mitigating the impact of Covid-19 on transfer pricing. Our Senior Manager of Tax Advisory Services at Mazars in Hong Kong, Karen Lau was one of the speakers and shared her views on different Asian tax authorities’ reactions on Covid-19 impact on transfer pricing.
The webinar covered topics including OECD Guidelines, key take-aways for 2020 and suggestions for MNEs. As a conclusion, the COVID 19 will impact transfer pricing during and post crisis. The crisis period may be longer for certain sectors such as aircraft industry, tourism etc. MNEs need to closely manage their Transfer Prices and prepare robust TP documentations to face the future Tax Audits.
Karen Lau Director, Tax Advisory Services - Hong Kong