At the end of November, OECD published the latest statistics on the Mutual Agreement Procedure (“MAP”), which cover virtually all such cases around the world. According to those statistics, Finland stands out with speedy resolutions and the taxpayers are the overwhelming winners of the MAPs which focus on transfer pricing. As to other MAP cases, there is still room for improvement in both speed and outcome. Nevertheless, at least in international comparison, a MAP procedure in Finland is a noteworthy option for dispute resolution.
The amended transfer pricing adjustment provision in section 31 of the Tax Assessment Procedure Act extends the scope of the national provisions to be in line with the OECD transfer pricing guidelines. In previous case law, the Supreme Administrative Court had held, for example, that disregarding or recharacterizing transactions is not possible unless the general anti-avoidance rule is applicable. The amendments aim to provide more room for the Tax Administration to adjust transactions as provided for in the OECD guidelines.
The regulation is set to enter into force on 1 January 2022.
The SAC has issued a precedent (KHO 2021:171), which concerned the constitution of a permanent establishment in Finland. The case concerned a Swedish company, belonging to a foreign group operating in the pharmaceutical industry. The Swedish company was responsible for many regional activities, such as sales, marketing, customer service and product development. The company had three employees in Finland, who marketed the products to doctors and other experts. The employees did not sign or negotiate contracts or receive orders from clients. The company had no premises in Finland.
Partner, Corporate Taxation, PwC Finland
Tel: +358 (0)20 787 7841