Identification of Tax and Transfer Pricing Risks Through Due Diligence ATAD1 As the ATAD1 measures have been largely implemented in the national legislation of the EU member states, special attention should be paid to the financial statements of the acquisition target within the due diligence process. [...] In order to neutralize double-deduction mismatches, the directive includes a primary rule stating that the deduction of a payment is disallowed in the payer's state; as a secondary rule, it states that the payment is included in the recipient's taxable income. [...] Planning for the Future When Structuring a Deal If the tax and transfer pricing risks are correctly identified during the due diligence phase, it offers opportunities to properly structure the takeover and negotiate the best financial terms of the acquisition. [...] [8] If the application of the at arm's-length principle leads to a higher transfer price, the book value of an asset can only be increased by party A to the extent that the higher transfer price is added to the book value of party B. [...] [11] The allocation of revenues (and costs) from intangible assets should be achieved by remunerating members of the multinational enterprise group for the functions performed, and the assets used, and the risks assumed in the development, improvement, maintenance, protection and exploitation of intangible assets.
- Pages
- 6
- Published in
- Australia
