MEGlobal Canada ULC had sought a downward transfer pricing adjustment, which the tax authorities had refused to grant. An appeal was then filed with the Tax Court. Judgment The Court quashed MEGlobal Canada ULC’s appeal for lack of jurisdiction. The Court held that the refusal to grant such an adjustment was a discretionary decision, distinct from a non-discretionary assessment. Because the Tax Court can only hear appeals related to assessments and cannot interfere with the Minister’s discretionary authority, it lacked jurisdiction to consider the merits of the company’s request. The Court also declined to allow the company to amend its Notice of Appeal. Click here for translation ... Read more

The tax authorities had challenged the transfer prices applied for FY 2014 in several of Sofia Med AD’s related-party transactions, including the purchase of intermediary services, the purchase of copper cathodes (with deferred payment interest), and the sale of finished products and an assessment of additional taxable income was issued. An appeal was made to the Administrative Court, which largely upheld the tax authorities’ decision, and Sofia Med AD then appealed to the Supreme Administrative Court. The main complaints in Sofia Med AD’s appeal were the lack of reasoning in the decision when rejecting the comparability analysis carried out by the company in the transfer pricing documentation submitted, the lack of evidence in the case regarding the additional analysis carried out by the tax authorities of the transactions for the purchase of intermediary services and the sale of production, as well as the failure to consider the evidence submitted in the administrative proceedings and the conclusion of the forensic economic ... Read more

In 2022 the Federal Court of Canada ruled in favour of the Revenue Agency and dismissed Dow Chemicals’ appeal regarding the Tax Court’s jurisdiction to make a downward adjustment. The Federal Court held that the Tax Court could not overturn the Revenue Agency’s (Minister’s) opinion that a requested downward adjustment was inappropriate because the Tax Court’s jurisdiction is only to set aside, vary or remit an assessment to the Minister, whereas an opinion is not an assessment. According to the Federal Court, the jurisdiction to judicially review an opinion lies with the Federal Court. Following the Federal Court’s decision, Dow Chemicals filed an application for leave to appeal to the Supreme Court. In a judgment of 23 February 2023, the application for leave to appeal was granted and the question of the Tax Court’s jurisdiction would therefore be considered by the Supreme Court. Judgment of the Supreme Court The Supreme Court dismissed the appeal of Dow and confirmed that a ... Read more

The tax authorities had disallowed deductions for administrative services paid by Mercer Consulting to a related party. However, Mercer Consulting was remunerated on a cost plus basis for providing intra-group IT-services and payments for the administrative services were included in the cost basis on which the cost plus remuneration was determined. The Income Tax Appellate Tribunal set aside the assessment in a Judgment issued 25 July 2016. “As a corollary to the ALP of the intra group services received by the assessee being treated as NIL, the price paid for these intra group services is required to be taken out from the computation of remuneration receivable in respect of IT enabled services rendered by the assessee. This is so for the reason that the pricing of IT enabled services is on the cost plus 20% basis, which. has been upheld to be at arm’s length price by the DRP, and, therefore, anything removed from the cost will also have to ... Read more

In 2022 the Federal Court of Canada ruled in favour of the Revenue Agency and dismissed Dow Chemicals’ appeal regarding the Tax Court’s jurisdiction to make a downward adjustment. The Federal Court held that the Tax Court could not overturn the Revenue Agency’s (Minister’s) opinion that a requested downward adjustment was inappropriate because the Tax Court’s jurisdiction is only to set aside, vary or remit an assessment to the Minister, whereas an opinion is not an assessment. According to the Federal Court, the jurisdiction to judicially review an opinion lies with the Federal Court. Following the Federal Court’s decision, Dow Chemicals filed an application for leave to appeal to the Supreme Court. Appellant DCC.pdf Respondent HMTK.pdf Appellant DCC.pdf Judgment of the Supreme Court In a judgment of 23 February 2023, the application for leave to appeal was granted and the question of jurisdiction will now be considered by the Supreme Court ... Read more

This appeal and cross-appeal arise as a result of the response provided by the Tax Court of Canada to a question submitted under Rule 58 of the Tax Court of Canada Rules (General Procedure), SOR/90-688a. The question was: Where the Minister of National Revenue has exercised her discretion pursuant to subsection 247(10) of the Income Tax Act (“ITA”) to deny a taxpayer’s request for a downward transfer pricing adjustment, is that a decision falling outside the exclusive original jurisdiction granted to the Tax Court of Canada under section 12 of the Tax Court of Canada Act and section 171 of the ITA? This question arose in the context of the appeal commenced by Dow Chemical Canada ULC (Dow) in relation to the reassessment of its 2006 taxation year. The Tax Court (2020 TCC 139) provided the following answer to this question: The Court has determined that where the Minister has decided, pursuant to subsection 247(10) of the Income Tax Act ... Read more

By a notice of December 2020, the Court of Appeal of Brussels referred the following question for a preliminary ruling by the Constitutional Court : “ Does article 207, second paragraph, ITC (1992), as it applies, read together with article 79 ITC (1992), in the interpretation that it also applies to abnormal or gratuitous advantages obtained by a Belgian company from a foreign company, violate articles 10, 11 and 172 of the Constitution? “. The Belgian company “D.W.B.”, of which Y.S. and R.W. were the managers, was set up on 4 October 2006 by the Dutch company “W.”. On 25 October 2006, the latter also set up the Dutch company “D.W.” On 9 November 2006, bv “W.” sold its shareholdings in a number of subsidiaries of the D.W. group to its subsidiary nv ” D.W. “. It was agreed that 20 % of the selling price would be contributed by e.g. “W.” to the capital of the latter and that ... Read more

Nidera S.A. exported commodities (cereals, oilseeds etc.) via group traders domiciled on the British Virgin Islands. In the absence of evidence to the contrary, in transactions involving entities domiciled in low-tax jurisdictions, it was presumed that prices had not been agreed in accordance with the arm’s length principle. The tax authorities issued an adjustment by applying the “CUP” method (Sixth method), considering the statistical average prices set as a reference value by the National Secretariat of Agriculture, Livestock and Fisheries, corresponding to the date of shipment (and not to the date of agreement as claimed by the claimant). However adjustments were only made to those transactions where the quoted price was higher than the one agreed by Nidera S.A. An appeal was filed with the National Court by Nidera S.A. In 2016 the National Court of Appeals issud ist decision in the case. The decision was in favour of Nidera S.A. in regards to the approach of the tax authorities ... Read more

This decision is about the jurisdiction of the Tax Court of Canada, or perhaps more accurately about the scope of an appeal of an assessment. It arises in the context of an appeal by Dow Chemical Canada ULC of a reassessment of its 2006 taxation year. The reassessment increased Dow Chemical’s income under the transfer pricing provisions in section 247 of the Income Tax Act. In reassessing Dow Chemical for its 2006 and 2007 taxation years, the tax authorities had increased Dow Chemical’s income in respect of certain transactions with non-residents to which Dow Chemical is related. The authorities initially indicated that the transfer pricing provisions also would result in a downward adjustment to Dow Chemical’s income in those taxation years in respect of another transaction. However, the most recent reassessment of Dow Chemical’s 2006 taxation year did not reflect the downward adjustment, although the reassessment of its 2007 taxation year did. Dow Chemical has appealed the 2006 reassessment. The ... Read more

Nidera S.A. exported commodities (cereals, oilseeds etc.) via group traders domiciled on the British Virgin Islands. In the absence of evidence to the contrary, in transactions involving entities domiciled in low-tax jurisdictions, it was presumed that prices had not been agreed in accordance with the arm’s length principle. The tax authorities issued an adjustment by applying the “CUP” method (Sixth method), considering the statistical average prices set as a reference value by the National Secretariat of Agriculture, Livestock and Fisheries, corresponding to the date of shipment (and not to the date of agreement as claimed by the claimant). However adjustments were only made to those transactions where the quoted price was higher than the one agreed by Nidera S.A. Judgment of the Court The National Court accepted Nidera S.A.’s appeal in regards to the approach of the tax authorities were only the unfavorable pricing were being adjusted whereas the favorable pricing were not, and referred the case back to the ... Read more

The Korean company was active as a domestic wholesaler of hospitals and pharmaceutical equipment imported acquired from foreign related parties. The taxation authorities have calculated the normal price by applying the TNM method for controlled transactions between the Korean company and it’s foreign related parties. In years where profits in the company was below the interquartile range the tax authorities issued an adjustment. But in years where profits was above the range no downward adjustment was made. The company filed a tax appeal claiming that income in year where profits had been to high should also be adjusted. The Judgment of the Court “Law No. 4 No. 1 on international tax adjustments” tax authorities deal is one of the parties in the international trade foreign related parties the transaction price if you do not meet or exceed the normal price, the residents based on the normal price The taxation authority can determine or adjust the tax base and tax amount ... Read more