Any case selected for a simultaneous examination will generally involve a taxpayer or taxpayers having operations either through affiliates or through permanent establishments in the two States. The factors taken into consideration in determining whether a case is selected for simultaneous tax examination may include, inter alia:
- (a)
- indication of tax avoidance and evasion; (b)
- indication of substantial non-compliance with tax law in the two States; (c)
- indication of a manipulation of transfer prices to the potential detriment of the two States; (d)
- indication of other forms of international tax planning which, if countered successfully, may generate additional tax yield in the two States; (e)
- indication that the economic performance of a taxpayer or related taxpayers, over a period of time, is significantly worse than it might be expected, for instance: (i)
- the economic performance does not reflect appropriate profits when measured against sales, total assets, etc; (ii)
- in cases where the taxpayer consistently shows losses, especially long-term losses; (iii)
- in cases where the taxpayer, regardless of profitability, paid little or no tax over the relevant period; (f)
- existence of transactions involving tax havens; (g)
- situations where the competent authorities consider it is in the interest of the tax administrations concerned, in order to promote international tax compliance.
