The OECD Transfer Pricing Guidelines provide guidance on the application of the “arm’s length principle”, which is the international consensus on the valuation of cross-border transactions between associated enterprises. Let’s take closer look. Continue reading Transfer Pricing Requirements and other Potential Pitfalls. Cash Pooling Traps when not Cautious.
The Moral Hazard of Cash Pooling (a series of 4) providing context and perspectives (from the subsidiaries and the headquarters), on what scenario could potentially lead to moral hazard risk, and how to eliminate it. Continue reading Moral Hazard in Cash Pooling. The Business Case. (4/4)
The Moral Hazard of Cash Pooling (a series of 4) providing context and perspectives (from the subsidiaries and the headquarters), on what scenario could potentially lead to moral hazard risk, and how to eliminate it. Continue reading Moral Hazard in Cash Pooling. Headquarters’ & Treasury Centers’ Perspective. (3/4)
The Moral Hazard of Cash Pooling (a series of 4) providing context and perspectives (from the subsidiaries and the headquarters), on what scenario could potentially lead to moral hazard risk, and how to eliminate it. Continue reading Moral Hazard in Cash Pooling. The Subsidiaries’ Perspective. (2/4)
The Moral Hazard of Cash Pooling (a series of 4) providing context and perspectives (from the subsidiaries and the headquarters), on what scenario could potentially lead to moral hazard risk, and how to eliminate it. Continue reading Moral Hazard in Cash Pooling. Introduction. (1/4)
ING Bank Philippines and Bank Mendes Gans will centralize and manage International Container Terminal Services Inc and its subsidiaries’ global cash holdings into a cash pool. Continue reading Enhanced Global Liquidity through Notional Pooling and Payment Netting.
On July 1, 2022 The Dutch Ministry of Finance published its latest transfer pricing decree. This article specifically focuses on the decree’s high-level guidance relevant with intercompany loan and Cash Pooling. Continue reading New Dutch Transfer Pricing Decree – Relevant Action Points for Cash Pooling.
Stating that “Cash Pools result in intercompany loans”, simply because they link deposits with loans, seems improperly assessed or uncarefully judged. It is common banking practice to use deposits to make loans. Deposits create loans. Deposits and Loans are per definition connected. Cash Pool or not. Financial intermediaries play a different role than conduits, agents, custodians or nominees. This should lead to different treatment. Continue reading Everything You Always Wanted to Know About Withholding Tax.
A question coming from finance professionals regarding Intra-group Guarantees is, whether the guarantees should be disclosed in financial statements and if so, how. Intra-group guarantees are widely used in different forms, thus resulting in complexity in accounting disclosure. This article focuses on interpreting relevant accounting principles and sharing the best corporate practice of disclosing Intra-group Guarantees, to be more specific, parent guarantees. Continue reading Best practices of disclosing Intra-group Guarantees in financial statements.
Intra-group guarantees are usually used by companies within the same multinational enterprise to obtain beneficial conditions for funding arrangements. To which extend Intra-group guarantees trigger Intra-group Loans depends on how the guarantee is exactly structured. In this article a closer look at the two main types of guarantees often associated with cash management. Continue reading Banking: How Intra-group Guarantees trigger Intra-group concerns.
Stating that “Cash Pools result in intercompany loans”, simply because they link deposits with loans, seems improperly assessed or uncarefully judged. It is common banking practice to use deposits to make loans. Deposits create loans. Deposits and Loans are per definition connected. Cash Pool or not. Financial intermediaries play a different role than conduits, agents, custodians or nominees. This should lead to different treatment. Continue reading Banking: How Deposits and Loans are always linked (agents between Depositors and Borrowers).
集团内部担保是否触发关联公司借款主要取决于谁承担信用风险以及担保协议内规定的银行义务。另一个财务人员关心的问题是，集团内部担保是否需要在报表上披露以及如何披露。集团内部担保使用广泛且形式多样，在会计披露上有其复杂性。值得注意的是，担保的性质（向下担保或交叉担保，债权的优先顺序等）对于决定担保是否需要进行会计披露，以及如何披露有重要作用。本文着重解读担保披露相关的会计准则，并分享集团内部担保（具体指母公司担保）披露的企业实践。 Continue reading 企业实践分享：如何在报表中披露集团内部担保
关联公司担保经常用于跨国企业为了给同集团企业更优惠的融资而做出的安排。比如，银行可以对降低信用风险的贷款提供更低的利率，还款期限以及增加借款额度等。那么对银行借款安排的关联间公司的担保是否导致这笔银行借款认定成为关联公司间的借款？这取决于担保是如何安排。在本文中，我们将具体审视（银行现金管理产品中）两种类型的担保。 Continue reading 银行角度：为何关联公司担保或触发关联交易之顾虑？
BEPS has not only put the spotlight on transfer pricing (TP) audits, but also provided comprehensive tooling to tax authorities globally. This strengthens and supports tax authorities in taking a more aggressive stance on tax returns, which has led to a huge surge in tax audits. The subsequent adjustments of those tax returns often lead to double taxation. In turn, this leads to tax disputes. Continue reading Best Practices for Transfer Pricing Assurance (dealing with disputes).
Perspectives and insights on dealing with transfer pricing in the context of the recent OECD publication COVID-19. The OECD decided to focus on four interrelated (priority) issues (Allocation of Losses and COVID-19 Specific Costs; Government assistance programs; Comparability analysis; and Advance Pricing Agreements (APAs)) Continue reading New OECD guidance on Transfer Pricing Challenges in light of COVID-19.
In this article we look at Market Data and the Implications for Financial Transactions as guidance towards Transfer Pricing analysis in the context of COVID-19. For several years tax authorities in general have focused on financial transactions. The OECD’s guidance on financial transactions opens the door for tax authorities to not only challenge the arm’s length nature of the interest rate, but also the characterization of intercompany loans as bona fide. Greater care must therefore be taken when implementing or modifying intercompany debt funding to ensure that the financing is respected as debt and the interest expense is deductible for tax purposes. To avoid unpleasant tax consequences, a good analysis upfront is paramount. Continue reading Update on Transfer Pricing Challenges in light of COVID-19.
Exceptional times may require a review of existing Transfer Pricing Policies to determine if they are still in line with the arm’s length principle and what Third Parties would do at this moment. With pressure on budgets, it is important to have considered the impact of COVID-19 on the business and if adjustments to the Transfer Pricing Model should be made. Continue reading Transfer Pricing Challenges in light of COVID-19.
An innovative approach to properly disclosing Cash Pool transactions for listed companies against the backdrop of the Kang De Xin case (the fall out of which triggered the great concerns from the regulators as well as the investors). How to protect shareholders and ensure listed subsidiaries maintain independence of liquidity and avoid core capital being influenced negatively. Continue reading Proposed technical approach to achieve group liquidity centralization and separately-listed-company-funds independency
With efforts and counteracting measures to combat tax evasion and tax avoidance both at international and national level, banks are also involved. They are required by regulators to assess tax integrity of their clients and prevent that the products offered are utilized as tools for evading or aggressively avoiding tax. Also insights in tax areas relevant to liquidity management ( assessing tax integrity in the areas of substance, arm’s length and ownership). Continue reading Tax Integrity crackdown on Cash Pools unveiled, in light of the New (2021) tax initiative. Must know for Treasury Professionals. (2/2)
Background to how The Netherlands approaches a global initiative on tackling tax evasion and (immoral) tax avoidance. Specifically the measure of conditional withholding tax on interest and royalties if paid to low-tax jurisdictions (effective on January 2021) and its potential impact on. Also other tax related elements in view of multi-entity multi-currency notional Cash Pools outlined. Continue reading Withholding tax implications on Cash Pools unveiled, in light of the New (2021) tax initiative. Must know for Treasury Professionals. (1/2)
An important item, relevant to Corporate Treasury, is to gauge cautiously the corporate interests of subsidiaries and the associated risk, before joining a group’s Cash Pool. Also, subsidiaries should not simply follow instructions form the head office, but take responsibility in verifying whether or not participation in Cash Pools is possible. Why? Because failing to do so may have unexpected adverse consequences for all parties involved. Especially during times of economic downturn. Continue reading Is set-off enforcement legitimate? – Essential elements to be considered before joining a Cash Pool. (3/3)
An important item, relevant to Corporate Treasury, is to gauge cautiously the corporate interests of subsidiaries and the associated risk, before joining a group’s Cash Pool. Also, subsidiaries should not simply follow instructions form the head office, but take responsibility in verifying whether or not participation in Cash Pools is possible. Why? Because failing to do so may have unexpected adverse consequences for all parties involved. Especially during times of economic downturn. Continue reading Respecting Capital Maintenance Rules – Essential elements to be considered before joining a Cash Pool. (2/3)
An important item, relevant to Corporate Treasury, is to gauge cautiously the corporate interests of subsidiaries and the associated risk, before joining a group’s Cash Pool. Also, subsidiaries should not simply follow instructions form the head office, but take responsibility in verifying whether or not participation in Cash Pools is possible. Why? Because failing to do so may have unexpected adverse consequences for all parties involved. Especially during times of economic downturn. Continue reading Consider Corporate Benefit at subsidiary level – Essential elements to be considered before joining a Cash Pool. (1/3)
Are TP-professionals at risk to lose their job? As the evolving rules for profit allocation adapt a more rule-based principle and steer away from Transfer Pricing, it seems realistic. In this article a simplified summary of the statement released end January 2020 by the OECD, on the refinement of the approach on tax challenges arising from the digitalisation of the economy. Continue reading The impact of BEPS on Transfer Pricing and the Effective Tax Rate. Insights based on the January 2020 OECD update.
It is argued that the OECD’s BEPS 2.0 initiative has the potential to alter the global tax landscape by changing how profits are allocated between jurisdictions (aka Pillar One) and by introducing a new globally coordinated regime for minimum tax and anti-base erosion measures. In this article, a closer look at what this all means. Continue reading BEPS 2.0 – Background for those not too familiar with the topic.
Nowadays more and more scrutiny is asked to combat base erosion and profit shifting attempted by multinational corporates. The usual suspect in this combat is transaction conducted among group companies. More specifically, authorities look at lending and borrowing activities between group companies and seek for any possible base erosion and profit shifting. This can lead to misinterpretation and confusion. In this post a closer look. Continue reading BEPS-combat attacks “innocent” Cash Pooling.
A series of three articles from the viewpoint of Corporate Treasurer in China multinational corporates (MNCs). Particularly in respect of the current capital control in China, China headquartered MNCs have to distinguish the onshore and offshore market. Therefore they have to use different tools to manage group liquidity by separating mainland China and rest of the world. (1) comprehensive considerations of centralizing group liquidity management; (2) understanding in setup Singapore Treasury Center; and (3) probe into different notional cash pooling forms. Continue reading “Chinese best practices in Treasury” by Chen Chao.
前文谈到，上市公司规则并未明确禁止上市公司参与任何形式的资金池。但不同银行提供的资金池产品有差异，企业财资人员需要仔细研究如何对资金池进行合理披露。 Continue reading 上市公司的资金集中与合理披露——方案初探（2/2）
本文中我们将探讨某中国企业的上市公司即便有122亿人民币现金存款，却无法偿还10亿到期债券；以及监管机构是如何看待其产生的负面影响。 Continue reading 您的资金池是否合理披露？谈谈和资金管理有关上市公司的关联交易的问题（1/2）
There are no specific rules that prohibit listed companies to participate in any kind of Cash Pool. But as there are many different kinds of Cash Pools provided by many different banks, it pays to take a closer look at exactly how disclose should take place.
This article takes a closer look at a more advanced Cash Pool structure, whereby no physical movement of funds is required (so called multi-currency multi-entity notional Cash Pools). Continue reading The way forward for listed companies – achieving liquidity concentration and respecting disclosure rules. (2/2)
A closer look at how a (publicly) listed subsidiary of a Chinese multinational could not repay a RMB 1 billion matured bond, even though RMB 12.2 billion of free cash was recorded. And how this attracted (negative) regulatory attention. Continue reading Is the Cash Pool properly disclosed? Must know for Treasurers. (1/2)
A series on what Treasury Professionals should know about Basel-3. This article explains why and how Risk-weighted Assets (RWA) affect Cash Pools (in particular Multi-Currency Multi-Entity Cash Pools). Also: the added value of RWA now that banks already need to meet ratios like Liquidity Coverage Ratio (LCR) and Leverage Ratio (LR). Continue reading Different treatment Single-Entity vs. Multi-Entity Cash Pools for Risk-Weighted Assets (RWA). Must-know about Basel-3. (4/4)
On May 11, the Dutch Ministry of Finance published a new Transfer Pricing Decree. But don’t think this is an isolated case, applicable only to Dutch MNCs (Multinational Companies). This is a coordinated approach by Tax Authorities globally. Hence relevant for MNC’s worldwide. This article takes a closer look. Continue reading Transfer Pricing re-calibrated: “Value creation”. The new Dutch TP Decree.
The Cayman Islands may be beautiful, but the world’s wealthy, and some of the world’s biggest businesses are there for another reason, its financial system. This article sheds light on how this works, against the backdrop of tax avoidance, the moral aspects, and financial institutions’ Customer Due Diligence / Know Your Customer. Continue reading Who and What Determines Offshore Ethics? – A perspective on tax avoidance, KYC v2.0
If the price isn’t right, suspicion of Corporate Tax Avoidance could rise.
A discussion paper against the backdrop of OECD’s “Transfer Pricing Reporting”. The recent crises and some scandals shed light on the risk that a certain way of applying transfer pricing was jeopardizing the arm’s length principle itself. That’s why the OECD aims at redrafting the guidelines. Transfer pricing has become one of the main risks to be addressed and managed by MNCs. How does this potentially affect Treasury? What are best practices? Continue reading Transfer Pricing? Keep it at arm’s length! (BEPS Action #13)
Qualification mismatches can be powerful tools to reduce tax costs in a tax planning structure. How the OECD proposes to neutralize the effects of hybrid mismatch arrangements may/will impact MNC’s. This article provides a technical analysis. Continue reading Dealing with OECD’s “Neutralizing the effects of hybrid mismatch arrangements” (BEPS Action #2).
November 3rd this year, the IRAS (Inland Revenue Authority of Singapore) published an update of its guidelines as it pertains to related party transactions. Starting 2018, if the value of related party transactions in the audited accounts for the financial year exceeds a fairly low threshold of 15 million SGD, certain details of these related party transactions must be reported. Continue reading A Holistic view on Transfer Pricing – IRAS follows the Global Trend.
Singapore’s tax authority roll out new rules on transfer pricing reporting. Multinationals will have to invest in people and resources to ensure they are compliant. An interview with Ann Shi for the Corporate Treasurer Asia. Continue reading Singapore’s new rule on MNC transfer pricing ups reporting burden – In interview with The Corporate Treasurer – by Ann Shi.
TREASURY INSIGHTS & CURRENT TOPICS 