Review into the ATO's transfer pricing management
The Inspector-General of Taxation (IGT), Mr Ali Noroozi, has announced terms of reference for his review into the ATO’s management of transfer pricing matters and called for stakeholder submissions.
The trigger for the review was concerns raised by businesses, their advisers and representative bodies during consultation on the IGT’s 2012-13 work program. The IGT summarised those concerns as:
- ATO advice and guidance – a need for clearer, more consistent and comprehensive ATO advice. An extensive review through an appropriate and transparent consultation process was also advocated
- ATO compliance approach, processes and practices – risk reviews, audits, Advance Pricing Arrangements and Mutual Agreement Procedures have been claimed to be inefficient and very costly. Specific concerns included information requests, timeframes, lack of transparency and communication
- ATO capability – ATO officers are believed to have varied levels of capability regarding knowledge of the transfer pricing regime, economics and business. Concerns were also raised with the ATO’s organisational arrangements for dealing with transfer pricing matters in the large business segment.
The review is timely, coinciding with an unprecedented level of changes in the transfer pricing landscape, highlighted by the current process of reforming Australia’s transfer pricing laws and increase in tax return disclosure requirements. At the same time, we have witnessed a reduction in senior ATO transfer pricing resources and capability, prompting real concerns about the ATO’s ability to competently administer Australia’s transfer pricing regime.
The review is an opportunity for those who have dealt with the ATO on transfer pricing matters to share their experiences, both good and bad, and to have a say in how the ATO’s administration of transfer pricing can be improved.
The terms of reference and submission guidelines for the IGT review can be found here.
Deloitte has already had discussions with the IGT’s office about the review, and will continue to be involved in the process. Submissions are due by 23 November 2012. We would welcome the opportunity to receive any comments you may have or to discuss any aspect of the review with you.