Inbound distribution arrangements - 29 November 2018
How do your profits stack up against the ATO’s profit markers?
On 23 November 2018, the ATO released draft Practical Compliance Guideline (PCG) 2018/D8 on inbound distribution arrangements.
The draft PCG sets out ‘profit markers’ that the ATO will use under its compliance approach to assess the transfer pricing (TP) risk of inbound distribution arrangements. The ATO provides profit markers for three industry sectors:
- Life Sciences
- Information and communication technology (ICT) and
- Motor vehicles, and a catch-all segment called ‘General distributors’.
Taxpayers should review their TP arrangements to determine where they sit within the ATO’s risk assessment framework, and consider mitigation strategies for any potential risks identified.