Dossier opener

Tax authorities savvy on transfer pricing

Multinational companies are facing an increasingly complex and adversarial transfer pricing environment, according to a Ernst & Young’s recent survey of more than 30 countries’ revenue authorities. The third instalment of 2005-06 Transfer Pricing survey, Tax Authority Interviews: Perspectives, Interpretations and Regulatory Changes indicates that while authorities broadly agree on transfer-pricing principles, they are adopting very different approaches to applying these principles.

In the two years since the previous survey, tax authorities around the world have become better informed and prepared than ever before, and they are also under more pressure to deliver revenue gains from their anti-tax-avoidance efforts. A new wave of countries including China, Colombia, Israel and Turkey are entering the transfer-pricing enforcement field, while the 'old guard' – countries such as Canada and the UK – are stepping up resources, levels of sophistication and focus in their transfer-pricing efforts. 'Companies today must assume that tax authorities everywhere will have a complete picture of their global tax position,' Ernst & Young’s John Hobsterfer says, 'and that any steps they take in one country will have implications across their entire operation.'

Enron sentencing

CFO.com reports that Enron CFO Andrew Fastow was sentenced in late September to six years in prison. In 2004, Fastow pleaded guilty to fraud and money laundering. He had agreed to a 10-year prison sentence in return for the role as chief prosecution witness in the trial against against former chairman Kenneth Lay and former CEO Jeffrey Skilling.

The substantial reduction in prison time reflects the value of Fastow’s testimony and of the statement with which he provided investors, implicating Enron’s former banks in the fraud he orchestrated. Investors are now suing several banks in a bid to recover US$30 billion in share losses.

Reap the data harvest

Business intelligence is not a new concept to organisations. However, there has been a constant refinement and development of technologies, tools, and techniques over the past decade. These developments provide business managers, accountants and executives with user-friendly business intelligence interfaces that not only report on past events, but provide advanced analytical capabilities to predict future relationships and opportunities, for example, understanding and reducing customer churn.

For further information on how to implement business intelligence techniques and toolsets in your workplace, CPA Australia is offering two workshops in Sydney and Melbourne, 'Business Intelligence for Intelligent Businesses' written and presented by Dr Chris Manning, who specialises in information and knowledge management and is a member of faculty at the University of Queensland Business School, where he teaches in the School’s MBA and research higher degree programs.

Manning is also the principal of Knowledge-N-Abler consulting, and an author in CPA Australia’s accreditation and continuing professional development programs.

For more information on these workshops (13 November in Sydney, 14 November in Melbourne) download a brochure.

Graham Hill award

Nominations are open for the inaugural Graham Hill award to be conferred annually on someone who has made a
significant contribution to improving the administration, policy, practice, teaching or understanding of revenue law in Australia.The late Graham Hill was a judge in the Federal Court from 1989 to 2005. He was also a teacher of law. For more information visit the Graham Hill Award website.

Reference: November 2006, volume 76:10, p. 55

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