Cost Sharing Agreement Philippines

6 December 2020, 10:08 | Uncategorized | Commenti: 0

A cost-sharing agreement is concluded if, with common interests, there are costs for the respect of the assets and rights of one of the group`s companies – which they make available to others – according to justified distribution criteria. A cost contribution would be, given the fruitification, a means of repaying the costs to the entity that owns the right or asset. Despite the controversy over the taxation of transfers The deductibility of expenses and costs – IRPJ / CSLL – and credit – PIS / COFINS – has a favorable position for taxpayers, following the response to the tax notice request 94 COSIT of March 25, 2019, which states that, based on a comparative assessment of arm length, the next step is to verify whether the service provider will use a cost-plus markup method or a full cost-plus markup method. The decision depends on the business strategy of the service provider or group. This is because an allocation that does not appear to have a rational basis may indicate a motivation that goes beyond the simple allocation of costs that may prompt the BIR to continue to learn. The main feature of the cost-sharing agreement is that the fees are simply reimbursed. This is because these costs are only distributed between the parties, as the parent company does not provide services to benefit from such activities. The other mode is where waiting-related businesses make an intermediate prepayment of their estimated cost share for a specified period, such as a schedule or exercise, and these payments are grouped into a trusting, managed and paid pooled by the parent company or other designated organization. It then disfigures the rest for any deficits of their final share of costs at the end of the specified period. Judge Carlos Nogueira pointed out that the consultation solution (8/2012) only mentioned income tax in a marginal way, since the cost-sharing agreement could allow the outsourcing of services (indirect service contracts) that should not receive the same treatment. The 378/2017 consultation solution should also not serve as the basis for this eventuality, as its objective is different from that of Arcos Dourados. Its vote also mentions that the position of the tax authorities is not bound by these consultation solutions The 94/2019 consultation solution and divergence Solution 23/2013 focuses on the deduction of expenses under the cost-sharing agreement, which was never challenged in this case.

Instead, consultation solution 8/2012 focuses on deductibility and the application of transfer pricing rules for verification of payments. Under such conditions, there are still doubts and controversies. However, if there is an effective cost-sharing agreement with the respective controls, we believe that, whether by decision of the Federal Finance Tribunal, the administration or the court, there will be the impossibility of taxation. It is the question of deductibility This is the flip side of the question of the reduction of shared costs. Common cost payments may not be taxable, but are they tax deductible by the payer? How does the principle of arm length work on the issue of deductibility? It can therefore be concluded that federal revenues do not have a clear guideline against non-taxation of foreign transfers when it comes to a cost-sharing agreement.

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