BEFIT – Transfer Pricing Proposal
On September 12, 2023, the European Union commission unveiled the much awaited proposal on “Business in Europe: Framework for Income Taxation” (“BEFIT”) , which lays down a common set of rules for computing the tax base for EU group companies.
As part of BEFIT, the commission issued a second separate proposal on Transfer Pricing to harmonise the Transfer Pricing regulations across the EU states.
It is to be noted that while the TP proposal is substantive, the BEFIT corporate tax proposal also lays down important regulations relating to simplification of TP compliance procedures for certain activities. Hence both the TP proposal and BEFIT corporate tax proposal in so far as it relates to Transfer pricing, will need to be read in conjunction.
The common framework is expected to create a level playing field, enhance legal certainty, reduce compliance cost, encourage businesses to operate cross-border and stimulate investments and growth in the Union.
VSTN’s Newsletter highlights the key facets of the TP Proposal and BEFIT Corporate Tax proposal in relation to Transfer Pricing.