Tag: Time-barred

Peru vs Repsol Comercializadora de Gas S.A., December 2023, Supreme Court, Case No 17824-2023

Peru vs Repsol Comercializadora de Gas S.A., December 2023, Supreme Court, Case No 17824-2023

In a transfer pricing case between the Peruvian tax authorities (SUNAT) and Repsol Comercializadora de Gas S.A. where the tax court had previously decided in favor of Repsol, the Supreme Court set aside the decision of the tax court and established the following rules as binding precedent of mandatory compliance: “3.47.1. In order to determine whether, within an administrative procedure of partial or definitive audit referring to transfer pricing, the guarantee of reasonable time has been violated, the following must be analyzed and evaluated: (i) that the partial or definitive audit carried out by the tax administration is referred to the application of transfer pricing rules; (ii) that it involves companies linked to or through countries or territories of low or no taxation; (iii) the complexity to obtain the information and if the same is located in other territorial areas; (iv) the conduct of the taxpayer in the delivery of information and/or the requested extensions; (v) the conduct of the ... Read more
Italy vs Tiger Flex s.r.l., August 2023, Supreme Court, Sez. 5 Num. 25517/2023, 25524/2023 and 25528/2023

Italy vs Tiger Flex s.r.l., August 2023, Supreme Court, Sez. 5 Num. 25517/2023, 25524/2023 and 25528/2023

Tiger Flex was a fully fledged footwear manufacturer that was later restructured as a contract manufacturer for the Gucci Group. It had acquired goodwill which was written off for tax purposes, resulting in zero taxable income. The tax authorities disallowed the depreciation deduction. It found that the acquired goodwill had benefited the group as a whole and not just Tiger Flex. Tiger Flex filed an appeal with the Regional Tax Commission. The Regional Tax Commission decided in favour of Tiger Flex. The tax authorities then filed an appeal with the Supreme Court. Judgement of the Supreme Court The Court set aside the decision of the Regional Tax Commission and refered the case back to the Regional Tax Commission in a different composition. Excerpt “It is not disputed that the Tiger and Bartoli factories were profitable assets, endowed with productive and earning capacity. What is disputed, however, is the recorded purchase value which, legally spread over the decade, anaesthetises any contributory ... Read more
Ghana vs Unilever Ghana Limited, July 2023, High Court of Ghana, Case no. CM/TAX/0450/2021

Ghana vs Unilever Ghana Limited, July 2023, High Court of Ghana, Case no. CM/TAX/0450/2021

Unilever Ghana Limited (UKL) filed an appeal with the High Court against an assessment of additional taxabel income issued by the tax authorities in 2019 on the following grounds. a) That the Respondent did not use a transfer pricing method as required by the Transfer Pricing Regulations, 2012 (LI 2188) in examining the Appellant Transfer Pricing Returns. b) That the Respondent misinterpreted, misunderstood and misapplied the OECD Transfer Pricing guidelines to arrive at a liability of Six Million, Two Hundred and Thirty-Six Thousand, Two Hundred Ghana Cedis (GHq:6,236,200.00) on the Advertising, Marketing and Promotion expenses incurred by the Appellant. c) That had the Respondent properly applied the OECD guidelines, the Appellant would not have been liable to pay tax on the Advertising, Marketing and promotion expenses. Judgment of the Court The High Court dismissed the appeal due to lack of statutory jurisdiction. “…I do not need to go further in this judgment than to dismiss the appeal on the grounds ... Read more
Poland vs "V-Tobacco S.A.", May 2023, Administrative Court, Case No SA/Po 112/23

Poland vs “V-Tobacco S.A.”, May 2023, Administrative Court, Case No SA/Po 112/23

V. sp. z o.o. was part of the E group, in which the parent company was E. S.A.. V.’s principal activity was wholesale of tobacco products. The authority issued an assessment based on finding of irregularities consisting in the company’s overstatement, in its VAT purchase registers and tax returns for the periods indicated, of the net purchase value and input VAT resulting from invoices issued to it by: 1) L. sp. z o.o. and I. sp. z o.o. for marketing services for e-cigarettes, 2) E. S. sp. z o.o. for data processing services, 3) E. S. sp. z o.o. concerning re-invoicing of purchases incurred by E. S. sp. z o.o.. The tax authorities did not find that V. sp. z o.o. was entitled to reduce output tax by the input tax shown on the disputed invoices issued to it by: L. sp. z o.o. and I. sp. z o.o., relating to marketing services, and E. sp. z o.o., relating to ... Read more
Czech Republic vs LAKUM – KTL, a. s., April 2023, Regional Court, Case No 25 Af 62/2020

Czech Republic vs LAKUM – KTL, a. s., April 2023, Regional Court, Case No 25 Af 62/2020

LAKUM KTL, a. s. had deducted from its taxable income costs for the purchase of advertising and promotional services from PRESSTEX MEDIA and PAMBROKE Media. Following an audit, the tax authorities concluded that LAKUM had entered into a legal relationship with PRESSTEX and PAMBROKE for the purpose of reducing the tax base. The tax authorities established reference prices on the basis that LAKUM could have entered into the contract for advertising and promotional services directly with the club concerned and, from the price range thus established, determined the arm’s length price for the services and increased the tax base accordingly. Decision of the Regional Court The Regional Court ruled in favour of the tax authorities on the pricing issue. Excerpts “37. The applicant first argued that the conditions for the application of the first sentence of Article 23(7) of the Income Tax Act were not met. According to that provision, if the prices agreed between related parties differ from the ... Read more
Spain vs Varian Medical Systems Iberica S.L., October 2021, Audiencia Nacional, Case No SAN 4241/2021 - ECLI:ES:AN:2021:4241

Spain vs Varian Medical Systems Iberica S.L., October 2021, Audiencia Nacional, Case No SAN 4241/2021 – ECLI:ES:AN:2021:4241

Varian Medical Systems Iberica S.L. is the Spanish subsidiary of the multinational company Varian Medical Systems and carries out two types of activities – distribution and after-sales services. The products sold was purchased from related entities: Varian Medical Systems Inc., Varian Medical Systems UK Ltd., Varian Medical Systems International AG and Varian Medical Systems HAAN GmbH. The remuneration of Varian Medical Systems Iberica S.L. had been determined by application of the net margin method for all transactions and resulted in a operating margin of 2.86% in 2005 and 2.75% in 2006. In 2010 an audit were performed by the tax authorities for FY 2005 and 2006, which resulted in an adjustment. The tax authorities accepted the net margin method, but made various corrections in its application. The adjustments made by the tax authorities resulted in a operating margin of 6.45% in the two years under review, The tax administration argued that the margins determined by Varian Medical Systems Iberica S.L ... Read more
Canada vs Amdocs CMS Inc., July 2021, Federal Court, Case No 2021 FC 707

Canada vs Amdocs CMS Inc., July 2021, Federal Court, Case No 2021 FC 707

An employee (tax manager) of Amdocs Inc did not cooperate with the Canada Revenue Agency during several audits of the company and did not inform his superior about the audits. The audits resulted in tax reassessments for FY 2012 – 2014. The reassessment concerning FY 2012 resulted in income tax payable by $3,353,906, but by the time the employee informed his superior of the reassessment in 2019, Amdocs was time barred from objecting by virtue of the limitation periods. With respect to the assessments for FY 2013 and 2014 the limitation period for objections had not yet elapsed. Amdocs Inc filed an appeal with the court in regards of the denied access to object on the assessment for FY 2012. Judgement of the Federal Court The court dismissed the appeal of Amdocs and decided in favor of the tax authorities. Excerpts “…I find the Minister’s decision is reasonable. The Minister’s decision is internally coherent and justified in relation to the ... Read more
Russia vs PJSC Vimpelcom-Communications, May 2021, Arbitration Court of Moscow, Case No. A40-36350/21-140-1024

Russia vs PJSC Vimpelcom-Communications, May 2021, Arbitration Court of Moscow, Case No. A40-36350/21-140-1024

PJSC Vimpelcom-Communications submitted to the tax authority a revised notice of controlled transactions for 2017, under which contract numbers for 68 transactions were adjusted, including an agreement with a foreign counterparty Veon Wholensale Services B.V. (Netherlands) for the provision of agency-services (the “Controlled Transactions”), and information was also provided on another transaction with another foreign counterparty. Based on the revised notification, the Russian Tax Authorities issued a decision on 29 December 2020 to conduct an audit with respect to pricing of the Company’s Controlled Transactions for 2017. The Company held that the tax authority’s decision as unlawful. The Company insisted that the Russian Tax Authorities had missed the two-year deadline for issuing a decision on the appointment of an audit, and therefore lost its right to conduct a price audit in respect of the 2017-transactions in question. Judgement of the Arbitration Court The court dismissed the complaint and decided in favor of the tax authorities. The court concluded that the ... Read more
Switzerland vs "Contractual Seller SA", January 2021, Federal Supreme Court, Case No 2C_498/2020

Switzerland vs “Contractual Seller SA”, January 2021, Federal Supreme Court, Case No 2C_498/2020

C. SA provides “services, in particular in the areas of communication, management, accounting, management and budget control, sales development monitoring and employee training for the group to which it belongs, active in particular in the field of “F”. C. SA is part of an international group of companies, G. group, whose ultimate owner is A. The G group includes H. Ltd, based in the British Virgin Islands, I. Ltd, based in Guernsey and J. Ltd, also based in Guernsey. In 2005, K. was a director of C. SA. On December 21 and December 31, 2004, an exclusive agreement for distribution of “F” was entered into between L. Ltd, on the one hand, and C. SA , H. Ltd and J. Ltd, on the other hand. Under the terms of this distribution agreement, L. Ltd. undertook to supply “F” to the three companies as of January 1, 2005 and for a period of at least ten years, in return for payment ... Read more
Romania vs Lender A. SA, December 2020, Supreme Court, Case No 6512/2020

Romania vs Lender A. SA, December 2020, Supreme Court, Case No 6512/2020

In this case, A. S.A. had granted interest free loans to an affiliate company – Poiana Ciucas S.A. The tax authorities issued an assessment of non-realised income from loans granted. The tax authorities established that the average interest rates charged for comparable loans granted by credit institutions in Romania ranged from 5.45% to 19.39%. The court of first instance decided in favor of the tax authorities. An appeal against this decision was lodged by S S.A. According to S S.A. “The legal act concluded between the two companies should have been regarded as a contribution to the share capital of Poiana Ciucaș S.A. However, even if it were considered that a genuine loan contract (with 0% interest) had been concluded, it cannot be held that the company lacked the capacity to conclude such an act, since, even if the purpose of any company is to make a profit, the interdependence of economic operations requires a distinction to be made between ... Read more
UK vs Royal Bank of Canada, June 2020, First-tier Tribunal, Case No [2020] UKFTT 267 (TC), TC07751

UK vs Royal Bank of Canada, June 2020, First-tier Tribunal, Case No [2020] UKFTT 267 (TC), TC07751

A UK PE of the Royal Bank of Canada had (through its Canadian head office) advanced loans of CAD $540 million in the early 1980s to Sulpetro Limited (“Sulpetro”), a Canadian company, to help fund the exploitation by its group of companies of rights to drill for oil, largely in the Buchan field of the North Sea. The Sulpetro group sold its interest in the Buchan oil field to the BP group in 1986, in exchange for various sums including an entitlement to contingent royalty payments on production from the oil field (linked to the excess of the market price of the oil in question above a benchmark level) (“the Payments”). Sulpetro was already in financial difficulties at the time of the sale to BP and ultimately went into receivership in 1993, by which time some Payments had started to be made due to the rise in oil prices. After the remainder of its assets were realised, Sulpetro still owed ... Read more
Switzerland vs "Contractual Seller SA", May 2020, Federal Administrative Court, Case No A-2286/2017

Switzerland vs “Contractual Seller SA”, May 2020, Federal Administrative Court, Case No A-2286/2017

C. SA provides “services, in particular in the areas of communication, management, accounting, management and budget control, sales development monitoring and employee training for the group to which it belongs, active in particular in the field of “F”. C. SA is part of an international group of companies, G. group, whose ultimate owner is A. The G group includes H. Ltd, based in the British Virgin Islands, I. Ltd, based in Guernsey and J. Ltd, also based in Guernsey. In 2005, K. was a director of C. SA. On December 21 and December 31, 2004, an exclusive agreement for distribution of “F” was entered into between L. Ltd, on the one hand, and C. SA , H. Ltd and J. Ltd, on the other hand. Under the terms of this distribution agreement, L. Ltd. undertook to supply “F” to the three companies as of January 1, 2005 and for a period of at least ten years, in return for payment ... Read more
Greece vs "O.P.A.P. PROVISION OF SERVICES S.A.", February 2020, Supreme Administrative Court, Case No A 320/2020

Greece vs “O.P.A.P. PROVISION OF SERVICES S.A.”, February 2020, Supreme Administrative Court, Case No A 320/2020

The tax authorities had issued a TP adjustment for FY 2013 later than 18 month after initiating an audit of “O.P.A.P. PROVISION OF SERVICES S.A.” “O.P.A.P. PROVISION OF SERVICES S.A.” disagreed with legal basis for the assessment and filed an appeal. Judgement of the Supreme Court The Supreme Court allowed the appeal of “O.P.A.P. PROVISION OF SERVICES S.A.” and dismissed the assessment issued by the tax authorities. Since, the tax authorities had not carried out and completed its own tax audit within 18 months, these cases were considered definitively closed and time-barred after the 18-month period has passed. In other words, for these cases, the limitation period of the State’s audit right is 18 months and not five years. According to the Supreme Court, a re-inspection could only be carried out after the 18-month period, but within the normal five-year limitation if serious offenses were found concerning money laundering from criminal activities or transactions with non-existent tax companies or issuing ... Read more
Malaysia vs Shell Timur Sdn Bhd, June 2019, High Court, Case No BA-25-81-12/2018

Malaysia vs Shell Timur Sdn Bhd, June 2019, High Court, Case No BA-25-81-12/2018

In FY 2005 Shell Timur Sdn Bhd in Malaysia had sold its economic rights in trademarks to a group company, Shell Brands International AG. The sum (RM257,200,000.00) had not been included in the taxable income, but had – according to Shell – been treated as a capital receipt which is not taxable. The tax authorities conducted a transfer pricing audit beginning in June 2015 and which was finalized in 2018. Following the audit an assessment was issued where the gain had been added to the taxable income of Shell Timur Sdn Bhd. According to the tax authorities they were allowed to issue the assessment after the statutory 5-year time-bar in cases of fraud, wilful default or negligence of a taxpayer. An application for leave was filed by Shell. Courts decision The Court dismissed the application. Excerpt “I am, by the doctrine of stare decisis, bound by these pronouncements of the Court of Appeal and Federal Court. Hence, it is crystal ... Read more