Offshore Business Hubs

September 27 2016  by Noé Vicca - Principal

Taxpayers have until September 30 to lodge submissions regarding an ATO discussion paper dealing with the use of offshore marketing and ancillary service hubs.

The Position Paper sets out the ATO Plan to treat transfer pricing issues related to the location and relocation of certain business activities i.e. "hubs". Hub activities (as they are commonly referred to)  utilize centralised operations for marketing, sales and distribution functions, although the ATO is a lengths to say centralised operating models are not necessarily limited to these functions.

The ATO, in dealing with the question of Hub commerciality and tax compliance has created a hub risk framework consisting of 5 risk zones:

  • Green zone – low risk;
  • Blue zone – low to moderate risk;
  • Yellow zone – moderate to high risk;
  • Amber zone – high risk; and
  • Red zone – very high risk.

The different zones reflect a number of variables including pricing indicators, quantum tax at risk, taxpayer engagement and behaviour and the quality of your transfer pricing analysis and evidence contained on client master files.

The ATO says the purpose of the draft paper is to help taxpayers:

  • assess whether their hub arrangements pose a transfer pricing risk
  • how taxpayers can liaise with the ATO to mitigate risk;
  • understand what documentation the ATO will expect taxpayers to have prepared and readily available;
  • Understand taxpayer disclosure obligations.

For further information follow the link to the ATO pdf document - CLICK HERE.


Disclaimer: The contents herein are intended for general information only and should not be construed as legal or accounting advice. Vicca Chartered Accountants Brisbane bears no responsibility for any loss that might occur from reliance on information contained in this publication. Please do not reproduce, transmit or distribute the contents herein in any form without prior permission from Vicca Chartered Accountants, Taxation Accountants Brisbane Australia.

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