SEC Roundup: Various MNEs Report IRS Transfer Pricing and related Adjustments and the SASOL tax case in S.Africa

SEC Roundup: Various MNEs Report IRS Transfer PricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... and related Adjustments
By Sony Kassam

Dell Technologies Inc., a Texas-based information technology company, reported that the IRS Office of Appeals is reviewing its federal income taxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable...tax returnsA Tax Return is a formal statement filed by an individual or entity that details income, expenses, and other pertinent tax information to a tax authority. Its primary purpose is to assess tax liability, determine refunds owed, or highlight outstanding taxes due. Tax returns may include information about earnings, capital gains, allowable deductions, and credits, depending on the tax regulations... for 2007-09 and that the agency proposed transfer pricing adjustmentsTransfer Pricing Adjustments are modifications made to the pricing of transactions between related entities within a multinational enterprise (MNE) by tax authorities or the MNE itself. These adjustments are carried out to ensure compliance with the arm’s length principle, which stipulates that prices for intercompany transactions should reflect what independent parties would have agreed upon under similar circumstances. The arm’s... for those years, according to a filing with the Securities and Exchange Commission.

In addition, Analogic Corp. reported that it accrued interest by $1.8 million partly due to settling a transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... audit in Denmark.

They were among nine companies reporting issues related to transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... to the SEC in September 2017. An alphabetized list follows.

Analogic Corp., a health care and security technology company based in Peabody, Mass., said it’s uncertain tax positions reduced by $0.5 million due to the settlement of a transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... audit. It also reported that it accrued interest by $1.8 million in fiscal year 2017 “as a result of the closing of statutes of limitation for fiscal year 2013 for domestic entities, the remeasurement of uncertain tax benefits in open years, and settlement of a transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... audit in Denmark.”

Brocade Communications Systems Inc., a San Jose, Calif.-based technology firm, said it recorded an operating loss before tax and a net discrete benefit from releasing reserves after settling transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... issues with the Geneva Tax AdministrationTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... during the nine months ended July 29, 2017.

CH2M Hill Companies Ltd., an Englewood, Colo.-based engineering firm, said it received a 280.8 percent tax benefit for 2016, due in part to the release of valuation allowance from foreign net losses as a result of a change to its transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... strategy.

Cisco Systems, Inc., a San Jose, Calif.-based networking equipment company, said its unrecognized tax benefits at July 29, 2017, may decrease by about $100 million in the next 12 months if transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... issues are resolved.

Cooper Companies Inc., a Pleasanton, Calif.-based medical equipment company, said the British tax authorityTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... has looked into whether it applies to the U.K. diverted profits tax, including a review of its 2015 transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of....

Dell Technologies Inc., an information technology company based in Round Rock, Texas., said the Internal Revenue Service’s Office of Appeals is reviewing the company’s federal income taxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable...tax returnsA Tax Return is a formal statement filed by an individual or entity that details income, expenses, and other pertinent tax information to a tax authority. Its primary purpose is to assess tax liability, determine refunds owed, or highlight outstanding taxes due. Tax returns may include information about earnings, capital gains, allowable deductions, and credits, depending on the tax regulations... for 2007-09. It also said the IRS issued a report related to those years during the fiscal year ended Feb. 3, 2017, and that the agency proposed adjustments mostly related to transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of....

Harris Corp, an international communications equipment company based in Melbourne, Fla., reported tax fees of $1.23 million in fiscal year 2017 “related to tax complianceTax Compliance refers to the adherence of individuals and businesses to the tax laws and regulations of a specific jurisdiction. It encompasses the timely and accurate filing of tax returns, the payment of tax liabilities, and ensuring that all tax-related obligations are met as stipulated by legislation. Compliance involves more than just submitting tax forms; it includes maintaining accurate financial..., including foreign and domestic return preparation and transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... studies,” as well as $2.38 million related to tax planningTax planning is the process of organising and structuring one’s financial affairs in a manner that legally minimises tax liabilities while ensuring compliance with relevant tax laws. The primary objective of tax planning is to reduce the amount of taxes paid, optimise the use of available tax benefits, and preserve wealth. It can be applied at various levels, including personal... and advisory services.

Keysight Technologies, Inc., an electronic measurement service company based in Santa Rosa, Calif., said it reduced its deferred tax liabilityTax liability represents the total amount of tax owed by an individual or business to a tax authority, whether local, national, or international. This obligation arises through various forms of income, profits, or transactions subject to taxation laws and regulations. Understanding tax liability is essential for compliance and efficient financial management for corporations and individuals. It influences how businesses structure... by $9 million during the third quarter of 2017 to comply with transfer pricing policiesTransfer Pricing Policies refer to the rules and methods established by multinational enterprises (MNEs) to determine the pricing of transactions between related parties, such as subsidiaries or divisions of the same company. These transactions may involve the transfer of goods, services, intellectual property, or financial arrangements. Transfer pricing policies are essential for ensuring that intercompany transactions adhere to the arm’s....

Nutanix Inc., a San Jose, Calif.-based cloud computing company, reported a $11.8 million positive adjustment for transfer pricing in the fiscal year that ended July 31, 2017.

Sasol Faces Prolonged South African Battle Over $969M Tax Bill

• Potential tax charge of 11.6 billion rand follows 1.2 billion rand disputed charge;
• Sasol will appeal to South Africa’s Supreme Court after tax court rules against it.

By Marcia Klein

A tax disputeTax Disputes arise when there is a disagreement between taxpayers and tax authorities regarding the interpretation or application of tax laws. These disputes may concern various issues such as the accuracy of a tax return, the eligibility for tax deductions or credits, the correct amount of tax liability, or transfer pricing adjustments. Tax disputes can lead to lengthy legal proceedings... over a potential 11.6 billion rand ($878 million) tax charge between South Africa-based international chemicals and energy company Sasol and the country’s tax collector will play out in South Africa’s Supreme Court of Appeal within the next 12 months.

This follows a previous dispute with the South African Revenue ServiceThe South African Revenue Service (SARS) is the official tax authority responsible for the administration and enforcement of tax laws in South Africa. It plays a crucial role in managing the country’s fiscal policy by collecting revenue, administering customs, and ensuring compliance with tax legislation. Established under the South African Revenue Service Act, No. 34 of 1997, SARS functions independently... (SARSThe South African Revenue Service (SARS) is the official tax authority responsible for the administration and enforcement of tax laws in South Africa. It plays a crucial role in managing the country’s fiscal policy by collecting revenue, administering customs, and ensuring compliance with tax legislation. Established under the South African Revenue Service Act, No. 34 of 1997, SARS functions independently...) over a 1.2 billion rand tax assessmentA tax assessment is a formal determination made by a tax authority to calculate the amount of tax an individual or entity owes. It is a comprehensive evaluation based on financial records, declared income, expenses, deductions, and any applicable tax laws or regulations. Tax assessments may arise from routine self-assessments by taxpayers, or they may be conducted by revenue authorities... for 2005-12 that Sasol challenged but lost in the tax court June 30.

Sasol announced in an Aug. 22 full-year earnings statement that there could be a potential tax exposure of 11.6 billion rand for the 2013-14 tax years relating to its international crude oil procurement activities through its Sasol Oil unit.

It has already faced a similar charge relating to Sasol Oil’s international crude oil procurement activities for 2005-12 and has indicated there could be potential adjustments to taxable incomeThe tax base is a fundamental concept in taxation, representing the total amount of economic activity or assets upon which a tax is levied. It is the foundation upon which governments calculate the amount of tax owed, based on factors like income, property value, sales, or corporate profits. Understanding the tax base is essential for tax professionals, businesses, and policymakers,... and an additional tax liabilityTax liability represents the total amount of tax owed by an individual or business to a tax authority, whether local, national, or international. This obligation arises through various forms of income, profits, or transactions subject to taxation laws and regulations. Understanding tax liability is essential for compliance and efficient financial management for corporations and individuals. It influences how businesses structure... including interest and penalties of 1.2 billion rand for the periods 2005-14.
The supreme court Aug. 14 granted Sasol’s application for leave to appeal the June 30 tax court ruling.

Further Tax Obligations

Sasol also warned that further possible obligations may arise for the 1999-2004 and 2015-17 tax years.
Chief financial officer Paul Victor, speaking at the Aug. 22 release of Sasol’s financial results, said the ongoing dispute related to international crude oil procurement for its Natref refinery in Sasolburg, South Africa.

He said the 11.6 billion rand tax issue was “based on different grounds” than the earlier dispute, and largely related to the deduction of costs not being allowed in the assessment of taxable profits. In its results statement, Sasol said the 2013 to 2014 tax assessmentA tax assessment is a formal determination made by a tax authority to calculate the amount of tax an individual or entity owes. It is a comprehensive evaluation based on financial records, declared income, expenses, deductions, and any applicable tax laws or regulations. Tax assessments may arise from routine self-assessments by taxpayers, or they may be conducted by revenue authorities... was based “on varying tax principles, unrelated to the principles of the [tax court] judgment referred to above,” but Sasol wouldn’t elaborate.
“The matter is before the court,” Matebello Motloung, media relations specialist at Sasol, said Aug. 23 in an e-mail to Bloomberg BNA. “Therefore we cannot disclose more than we already have in our SENS [Stock Exchange News Service] announcement.”

Transfer PricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of...?

“This is really a transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... issue,” said Wade Napier, analyst at Avior Capital Markets. “Sasol would purchase crude oil from a supplier via a subsidiary in the U.K. Typically, it would declare revenue and expense costs against that revenue, but SARSThe South African Revenue Service (SARS) is the official tax authority responsible for the administration and enforcement of tax laws in South Africa. It plays a crucial role in managing the country’s fiscal policy by collecting revenue, administering customs, and ensuring compliance with tax legislation. Established under the South African Revenue Service Act, No. 34 of 1997, SARS functions independently... is not classifying the cost of the crude that Sasol is purchasing as an expense.”

Sasol’s dispute with the tax authorityTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... comes after Kumba Iron Ore, Anglo American’s iron ore producer, announced Feb. 3 that it had settled a tax disputeTax Disputes arise when there is a disagreement between taxpayers and tax authorities regarding the interpretation or application of tax laws. These disputes may concern various issues such as the accuracy of a tax return, the eligibility for tax deductions or credits, the correct amount of tax liability, or transfer pricing adjustments. Tax disputes can lead to lengthy legal proceedings... between its Sishen Iron Ore subsidiary and SARSThe South African Revenue Service (SARS) is the official tax authority responsible for the administration and enforcement of tax laws in South Africa. It plays a crucial role in managing the country’s fiscal policy by collecting revenue, administering customs, and ensuring compliance with tax legislation. Established under the South African Revenue Service Act, No. 34 of 1997, SARS functions independently... for 2.5 billion rand.

SARSThe South African Revenue Service (SARS) is the official tax authority responsible for the administration and enforcement of tax laws in South Africa. It plays a crucial role in managing the country’s fiscal policy by collecting revenue, administering customs, and ensuring compliance with tax legislation. Established under the South African Revenue Service Act, No. 34 of 1997, SARS functions independently... didn’t immediately respond to requests for comment.

Sasol has replied to SARSThe South African Revenue Service (SARS) is the official tax authority responsible for the administration and enforcement of tax laws in South Africa. It plays a crucial role in managing the country’s fiscal policy by collecting revenue, administering customs, and ensuring compliance with tax legislation. Established under the South African Revenue Service Act, No. 34 of 1997, SARS functions independently... on the more recent assessment, Victor said, and is “awaiting feedback.”
“We have a constructive relationship,” he said, adding that both parties will rely on the processes available “to amicably resolve” the issue.

“It is best to allow the legal process to run. We believe we have firm grounds to stand on, as does SARSThe South African Revenue Service (SARS) is the official tax authority responsible for the administration and enforcement of tax laws in South Africa. It plays a crucial role in managing the country’s fiscal policy by collecting revenue, administering customs, and ensuring compliance with tax legislation. Established under the South African Revenue Service Act, No. 34 of 1997, SARS functions independently...,” he said, adding that the issue should reach court within 12 months.