After BEPS, another topic that has received significant attention has been that of intra-group services defined in Chapter VII of the OECD TP guidelines. While some clarity has been provided on the mark-up to be applied for low value adding services, some additional requirements have also been set forth on what types of costs can be pooled, who can effectively receive a recharge, how to classify pass-through costs etc. For large multinational groups involved in providing cross border services to each other, this often translates to administrative inconvenience and issues with deductibility in certain countries.
Now that real-time reporting of tax related data is becoming a reality, multinationals also need to be proactive in efficiently managing their cost structures both from an efficiency point of view as well as to prepare themselves from questions from the tax authorities of countries receiving a recharge.
TPA Global has been using a “3x3x3 model” especially with large multinationals (of operations in more than at least 10 countries) to:
Some key attributes of the 3x3x3 model are:
With the fast growth of China’s economy and the continuous improvement of the comprehensive strength of domestic enterprises, as well as the implementation of the “One Belt, One Road” policy, an increasing amount of Chinese enterprises are beginning to expand their global footprint and establish their presence in Europe.
TPA Global has developed a practical roadmap of 6 steps meant to guide CFOs in their Journey of rising above troubles to reach a situation of full control. These steps are presented in a series of short video clips (3-5 minutes):