Tag: Tax-Free Zone

Area within the territory of a country in which customs duties and other types of indirect taxes are not applied.

Panama vs Chevron Panama Fuels Limited, October 2019, Administrative Court of Appeals, Case no 1060 (559-19)

Panama vs Chevron Panama Fuels Limited, October 2019, Administrative Court of Appeals, Case no 1060 (559-19)

The Transfer Pricing Department of the General Directorate of Revenue of the Ministry of Economy and Finance, through Resolution 201-1429 of 24 October 2014, decided to sanction the taxpayer Chevron Products Antilles, LTD, now Chevron Panama Fuels Limited, with a fine of one million balboas (B/. 1,000,000.00), for failure to file the Transfer Pricing Report-Form 930 for the 2012 tax period. As a result of the issuance of the resolution mentioned in the previous paragraph, Chevron’s legal representative filed an appeal for reconsideration with the tax authority, which was resolved by Resolution 201-1321 of 1 March 2016, through which the accused act was maintained in all its parts. This resolution was notified to the taxpayer on 8 April 2016. Chevron then filed an appeal before the Administrative Tax Court, which by Resolution TAT-RF-057 of 22 May 2019, confirmed the provisions of the main administrative act and its confirmatory act, being notified of this appeal ruling on 18 June 2019, thus ... Read more
Poland vs Non-Woven z o.o., July 2019, Supreme Administrative Court, Case No II FSK 3433/18

Poland vs Non-Woven z o.o., July 2019, Supreme Administrative Court, Case No II FSK 3433/18

The question in this case was whether or not year-end-adjustments/profit adjustments should be considered part of the market price for acquisition of raw materials used in the production of non-wovens products in the Polish company operating partially under a tax exempt zone. The Court of First Instance had come to the conclusion, that the payment of year end adjustments were part of the price for acquisition of raw materials and thus not tax deductible as related to tax exempt activities. This decision was appealed by the company. The Supreme Administrative Court considered the following : The appeal should be upheld. It should be noted that one of the assumptions of transfer prices is respect for the so-called market price rules. It consists in the fact that when transactions are concluded by related entities , the agreed conditions should be consistent with the conditions applied in comparable transactions by independent entities. The means of implementing this principle are the so-called profitability ... Read more
Turkey vs Lender, April 2012, Danıştay Üçüncü Dairesi, E. 2011/5165, K. 2012/1247, UYAP, 12.04.2012

Turkey vs Lender, April 2012, Danıştay Üçüncü Dairesi, E. 2011/5165, K. 2012/1247, UYAP, 12.04.2012

A Turkish company located in a tax free zone had obtained interest income based on the interest rate applied to foreign currency loans, although the company had lent money to its partner in Turkish Lira. Normally interest income is considered taxable, but within the tax free zone, income from listed activities is exempt. Click here for translation Turkey Case e-2011-5165-k-2012-1247-t-12-4-2012 ... Read more
Turkey vs Headquarter Corp, September 2007, Danıştay Üçüncü Dairesi, E. 2007/89 K. 2007/2446, T. 20.09.2007

Turkey vs Headquarter Corp, September 2007, Danıştay Üçüncü Dairesi, E. 2007/89 K. 2007/2446, T. 20.09.2007

Headquarter Corp had transaction with it’s branch in the Turkish Mersin Free Zone. The branch imported the goods subject to the transaction from abroad for $ 2,298,137.79 and these goods were then transferred from the branch to the Headquarter Corps for US $ 3,214,135.00 without any special processing, production process or added value by the branch. The tax office issued an assessment where the price of the controlled transactions were adjusted based on the import price (internal CUP). Headquarter Corp brought the assessment to court. The tax court stated, that because the branch does not have a separate legal entity from the company, profits were not transferred out of the company as a result of the high-priced transaction. Therefor there was no hidden distribution of income. However, it was also concluded that the reason behind the sale of the goods sold to the Headquarter from the branch in the free zone of Mersin, at a price that was above market prices for ... Read more