ADIT global tax professional - ADITextra by Extratax Training

ADITextrathe blog for ADIT International Tax candidates. Achieving ADIT makes you a truly global tax professional, ready for the challenges of today’s international tax landscape.

Speaking recently, a former head of a Big 4 tax practice described how multinational enterprises ‘think globally, but operate locally’. Through studying ADIT, you develop your expertise in international tax law, ready to advise global clients.

Read on to learn about the topics covered in this week’s online ADIT International Tax classes. The spotlight for this edition of ADITextra is on Transfer Pricing Guidance on Financial Transactions.

 

1. Transfer Pricing

In Tuesday’s session, James (Jimmy) Ryan continued looking at loans and other financial transactions. As the OECD’s Transfer Pricing Guidance on Financial Transactions was only released in February 2020, it remains topical and, therefore, highly examinable. You can learn more about this topic, and watch part of Jimmy’s class, in the Spotlight section below.

 

To build the expertise to pass the ADIT exams, you have to gain the knowledge and learn how to apply it by practicing past paper questions. By running live classes with small numbers, we make this skillset a focus of our study programmes.

 

For the weekly assignment, the Transfer Pricing class are submitting two past paper questions for Jimmy’s feedback:

  • Q1 December 2018 – transfer pricing for a global financial services business.
  • Q2 December 2018 – transfer pricing implications of loans, hedging and guarantee fees.

 

If you want to practice these questions to test your understanding, you’ll find the past exam papers and suggested solutions here.

 

Jimmy Ryan ADIT – Global Tax Professional

Maintaining your expertise as a global tax professional requires continuous effort, particularly in the fast-paced area of Transfer Pricing. Jimmy participated in an advanced transfer pricing programme earlier this year to deepen his knowledge. He enthusiastically shares his expertise with his students to develop their skills, both for the ADIT exams and their global tax careers.

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax class, Jimmy discussed important global tax topics from the ADIT syllabus:

  • The application of double tax treaties to e-commerce

  • The interaction of double tax treaties and domestic law

  • Approaches to applying a double tax treaty

  • The interpretation of double tax treaties

  • Conventions for administrative assistance in tax administration

 

ADIT Exam Preparation

How are your studies for Principles of International Tax progressing? Are you ready to start attempting past paper questions? When you’re undertaking self-study, it can be difficult to know when to start practicing past papers. If you begin too early, you may find yourself confused & disheartened. On the other hand, starting too late means you won’t have enough time to learn how to apply your knowledge and work on your exam technique.

 

We’re now 11 weeks away from the June exams. The time will pass quickly and, if you haven’t already done so, now is the time to get a study plan in place. For more help getting prepared, check out our recent article for the CIOT’s Study Advance newsletter.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

3. UK Tax

Thursday’s UK tax class with Extratax Training’s founder Catriona Loughran covered the following areas of the syllabus:

  • Attribution of Profits to a Permanent Establishment

  • Diverted Profits Tax (DPT):

    • DPT aims to deter and counteract the diversion of profits from the UK by large groups that either:
      • use arrangements or entities which lack economic substance to exploit tax mismatches either through expenditure or the diversion of income within the group, or
      • seek to avoid creating a UK permanent establishment that would bring a foreign company into the charge to UK Corporation Tax (an avoided PE).
    • The Diverted Profits Tax legislation is contained in Finance Act 2015.
    • DPT is a separate tax from Corporation Tax, with its own administrative rules and procedures. The current rate of DPT is 25%.
  • Offshore Receipts in respect of Intangible Property (ORIP) 

 

Finance Act 2019 introduced the ORIP rules. They were examined in December 2020. One of the optional 15-mark questions in Part C provided a scenario and asked candidates to:

  • Outline the background and scope of the Offshore Receipts in respect to Intangible Property (ORIP) rules introduced in April 2019, and provide a high level analysis of how they might apply to the group in the question.

 

The suggested solutions for the December 2020 exam paper have not yet been published. When they are published, you should look at the answer to this question, as it is likely to provide you with a good explanation of the ORIP rules.

 

ADIT UK Tax – Distance Learning Course

Although we’re no longer accepting bookings for this semester’s United Kingdom Taxation course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’re launching a limited edition beta-testing version of these materials as part of our distance learning course next week.

 

The UK distance learning course was written by Catriona Loughran FCA CTA ADIT and other global tax professionals, including:

 

If you are interested in joining the distance learning course for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

Thursday was also the second week of tuition classes for the US Taxation course with Ishali PatelIf you missed it, you can watch Ishali explain the US residency test for individuals in last week’s ADITextra.

 

Moving on, this week Ishali covered the following topics:

  • Foreign tax credits

  • Foreign currency rules, including virtual currencies

  • Entity classification

    • Branch
    • Subsidiary
    • Domestic hybrid entity
    • Reverse domestic hybrid entity
  • Corporate groups & consolidated returns

 

The good news is that you are not too late to join us for the US Tax option. Plus, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on Transfer Pricing

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the recently released OECD guidance on financial transactions.

 

You should make sure that you’re comfortable to answer questions on the application of the guidance, including:

  • Whether a purported loan should be regarded as a loan?

    • Consider the balance of debt & equity funding.
    • Would an independent entity have leant the money in the first place?

 

  • Economically relevant characteristics of actual financial transactions:

    • What are the contractual terms?
    • Performing a functional analysis, from both the lender’s and the borrower’s perspective.
    • Looking at the economic circumstances, such as currency, location, business sector, timing of transactions, macroeconomic trends.

 

You are allowed to take a bound copy of the OECD Transfer Pricing Guidelines into your ADIT Transfer Pricing paper as a permitted book. However, if you are using an older copy of the TPG or the 2020/21 version of the Kees Van Raad ‘Materials on International & EU Tax Law‘, the new Chapter 10 will not be included.

 

If you want to use a self-printed version of the OECD’s report on ‘Transfer Pricing Guidance on Financial Transactions‘ as your permitted text, you must obtain individual, written dispensation from the CIOT for each exam. Therefore, you should contact the CIOT at education@adit.org for further advice and instructions. You can find further guidance on self-printed books here.

 

Watch & Learn

Watch part of this week’s Transfer Pricing class for highlights of the ‘Transfer Pricing Guidance on Financial Transactions‘.

 

 

We wish you luck with studying for ADIT – enhancing your standing as a global tax professional.

 

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

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