Week 9/10

Question 1

What is BEPS Action 8 Intangibles? What is DEMPE and describe the DEMPE functions?

Answer 1

BEPS Action 8 addresses the transfer pricing issues relating to controlled transactions involving intangibles since intangibles are by definition mobile and they are often hard-to-value.

DEMPE analysis helps to identify the parties performing
economically significant functions, using assets and managing risks related to DEMPE of the intangibles. DEMPE:
Development - Everything that is associated with ideas for the brand, products and putting plans and strategies in place for their creation
Enhancement - Continuing to work on aspects of intangibles to make sure they can perform well at all times and be constantly improved
Maintenance - Ensure the intangibles continue to perform and generate revenue
Protection - Value of the intangibles remains strong such as securing IP rights so they cannot be copied, sabotaged, and monitoring competitors’ activities
Exploitation - Ways to use the intangibles to generate profits

Question 2

Country by Country Report. Criteria to comply

Answer 2

CbC Report comprises three tables:
i. The first table provides an overview of income, taxes, employees and assets of the MNE group allocated to the different tax jurisdictions that the MNE group operates in

ii. The second table provides an overview of the entities (including permanent establishments) of the MNE group, again organised according to the tax jurisdictions that the entities are tax resident in. The main business activities of each entity are also indicated. Dormant entities must also be included in this table.
iii. The third table allows the MNE group to provide any additional information that it feels would be relevant and useful to interpret or understand the data provided in the CbC Report.

Question 3

Country by Country Report. Who to comply?

Answer 3

CBC Report is required for an MNE group in relation to a financial year, where:

1. The MNE group is a Singapore MNE group and;
2. The consolidated group revenue in the preceding financial year is at least SG$1,125 million; and
3. The MNE group has subsidiaries or operations in at least one foreign jurisdiction.

Question 4

Country by Country Report. How to use the information?

Answer 4

The Country-by-Country Report (“CbCR”) provides a broad overview of how the company allocate its profits globally in relation to its operations, employees and activities in different countries (global profit allocation) and the taxes paid. It is a platform to achieve standardised reporting and information collation across jurisdictions and tax authorities will have access to the template via automatic exchange of information.