The shutdown of part of the global economy is putting corporate treasuries under massive pressure. Group treasurers provide liquidity to the group together with their external financial partners and group entities located around the world. The tools in place (cash pooling, revolving credit facilities, lines of all types…) are working at full capacity and demonstrate their benefits and resilience.
For several years, the treasury operations have often been framed in the transfer pricing policy. However, in these survival operations, cash requirements increase and exceptional intragroup cash transactions may take place.
In February 2020, the OECD published the result of years of work on group financing: “Transfer Pricing Guidance on Financial Transactions”. It is an extension of the work of the BEPS programme on interest deductibility (action 4) and transfer pricing and documentation issues (actions 8-10).
Let us urge our treasury colleagues to keep in mind that the intragroup transactions of 2020 may one day (in 2/3 years) be audited by tax administrations in the light of the OECD guidance, including the guidance published in February 2020. This audit will take place at a time when the immensity of the 2020 economic and health catastrophe may (hopefully) no longer be critical.
Here are some tips we give to treasurers to help them avoid falling into funding transfer pricing traps. We would expect that most of these tips are already applied, so we have prepared brief reminders:
Charles Lienard and David Abrehart
.png "Through the Looking Glass: An Insight into the Loan Market Association")
Discover what the Loan Market Association (LMA) does, its purpose, how they produce their forms of documentation and how they interact with borrowers.
Read
Here are some key aspects of what the bank of the future might look like.
Read.png "The LEI: Unlocking the Benefits of a Secure Payments Ecosystem for Corporate Treasurers")
The EACT has been advocating for a digital identity for Corporates for many years now. We believe that, Corporates, like individuals, must have a single identity which help them to identify itself and identify third parties as well in this digital era.
Read.png "LkSG Relevant for Treasury on a Case-by-case Basis")
The Supply Chain Due Diligence Act (LkSG) creates the legal framework to improve the protection of the environment and human rights along German supply chains. GACT spoke to Dr. Julia Sitter (White & Case LLP) about the relevance and need for action by treasury departments.
Read.png "CMU, The Come-Back!")
The Capital Market Union, which was one of the main objectives of the Vander Leyen Commission, is back in the limelight, and is likely to become a priority for the next Commission next summer.
Read