Presentation delivered by Cynthia Hoffman, International Tax Director, Bloomin' Brands, Inc. and Niraja Srinivasan, Executive Director, Transactions Pricing, Dell Inc.

1. Transfer Pricing
Latest Updates
NIRAJA SRINIVASAN, DELL TECHNOLOGIES
CYNTHIA J. HOFFMAN, BLOOMIN’ BRANDS, INC.
SEPTEMBER 27, 2016
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2. Transfer Pricing Highlights
Base Erosion & Profit Shifting (“BEPS”)
 OECD Published 15 Actions/Guidelines
Proposed Treasury Regulations Under
Section 385
 Related Party Financing Arrangements
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3. Base Erosion & Profit Shifting (“BEPS”)
 Broadly Aimed at Aligning Taxable Income with Value Creation
 4 Actions Related Specifically to Transfer Pricing
 Action 13 – Transfer Pricing Documentation & Country by Country
Reporting
o Aimed at Reporting Transparency
 Action 8 – Intangible Asset Structuring
 Action 9 – Risk and Capital
 Action 10 – High Risk Transactions
o Actions 8-10 Aimed at setting Standards for Substance
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4. BEPS Action 13 Guidance
Action 13 focuses on Transfer Pricing Documentation and Includes the
Country-by-Country Report (CbCR).
 Three-tier framework
providing information on
global allocation of income,
economic activity and
intercompany pricing across
a company’s global
operations.
 Applies to all multinational
enterprises (MNEs) with
aggregate annual revenue
in excess of $900m.
Tier One: Master File
Overview of Business and Tax/TP Model, IP, Key Drivers of
Profit – by Product Line and Geography
Tier Two: Local File
Tier Three: Country by Country (“CBCR”)
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Summary of Financial + HR Data to Calculate Allocation of
Income by Jurisdiction
Legal Entity TP Report, Tying LE Pre-Tax Income to its
Operations and Risk Profile

5. Country by Country Reporting
In General:
 Tables 1 and 2 can be publicly disclosed (UK Proposal, Sept 2016)
 Voluntary Disclosure May Push Submission timeline to early 2017 (FYE and
country dependent)
 Disclosure formats and info sharing mechanism still not clear
 Required to reconcile with regulatory and statutory reporting
 Build Tools to assist with reconciling
 Timing of statutory financial statements may be too late to comply
 Tie all together with 5471 & Transfer pricing documentation and reports,
legal documentation and accounting
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6. Country by Country Reporting
 IRS issued final regulations, effective for US MNE parent with tax
year beginning on or after June 30, 2016
 IRS issued draft Form 8975 in August 2016
 For tax years beginning before June 30, 2016, US ultimate
parent can voluntarily file
 Required to reconcile with 5471, statutory F/S filings, and
Regulatory Filings
 Building Tools to map US GAAP or Local Stat accounts to CBCR
fields
 Timing of CBCR submission and statutory financial statements may
be too late to comply
 Standing up X-functional Teams for multiple CBCR prep each year
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What are
companies
doing now?

7. Country by Country Reporting
Assessing Audit Risk/Defense
Ratio Comparisons
Formulary Apportionment scenarios
Anticipating questions that will come
from tax authorities
Drafting responses and TP
documentation
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What are
companies
doing now?

8. BEPS – What’s Next?
Actions 8, 9, 10 Substance
Transfer Pricing Outcomes and Value Creation
Action 8 -
Intangibles
New definition
of intangibles
New guidance
on HTV
intangibles
Action 9 – Risk &
Capital
Control over risk
Capacity &
functionality to
manage risks
Action 10 – High-
risk Transactions
Intra-group
Services
Low-tax
Jurisdictions
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9. US 482 Regs vs. OECD BEPS Positions on IP
482-7 – Cost Sharing
based on Reasonably
Anticipated Benefits
482-9 – Cost Plus
Remuneration for R&D
Service Providers; Legal
& Economic Ownership
separation is respected
OECD BEPS
Focus on Value
Creation
Economic Ownership
asserted over Legal
Ownership
Value-creating entities
across the supply chain
are entitled to share of
profit
US 482 and OECD BEPS
A Balancing Act
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10. Monitoring BEPS … What’s Hot, What Not (Yet)
Action 1 Taxation of Digital Economy
Action 2 Hybrid Mismatches
Action 3 CFC Rules
Action 4 Interest Deductions
Action 5 Counter Harmful Tax Practices
Action 6 Abusing Treaty Benefits
Action 7 Artificial Avoidance of PE
Action 8 Intangible Asset Structures
Action 9 Risk and Capital
Action 10 Other High Risk Transactions
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11. Monitoring BEPS … What’s Hot, What Not (Yet)
Action 13 TP Documentation and CbCR
Action 14 Dispute Resolution Mechanisms
Action 15 Multilateral Instrument
Action 11 Measuring BEPS compliance
Action 12 Mandatory Disclosure Rules
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12. Transfer Pricing Highlights
Base Erosion & Profit Shifting (“BEPS”)
 OECD Published 15 Actions/Guidelines
Proposed Treasury Regulations Under
Section 385
 Related Party Financing Arrangements
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13. Proposed Treasury Regulations – Section 385
Contemporaneous documentation requirement (Prop. Reg. Sec. 1.385-2)
 Applies to “large expanded groups to “expanded group indebtedness” (“EGI”)
 Effective for debt instruments issued on or after date finalized regulations are issued
 Documentation prepared within 30 days after issue date (or date becomes EGI)
 Penalty for failure is recharacterization of debt as equity
 Identify WHO performs documentation
 Satisfaction of document requirements does not ensure debt treatment (it is a
minimum standard)
“Significant Modification” – deemed new debt issuance
Issued April 4, 2016 Application to Related Party Financing
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14. “Expanded Group Indebtedness”
Add Other Entities, including held indirectly
Foreign
Tax
Exempt
Affiliated Group (1504(a))
Ownership of 80%
vote, OR
Ownership of 80%
value
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15. “Expanded Group Indebtedness”
US Parent
US Sub
Foreign
Sub
US Sub
US
Partnership
Foreign
Sub
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Loan USD

16. Documentation Requirements –1.385-2(b)(2)
Legally binding
obligation
Creditor’s right to
enforce terms
Evidence of ability
to repay at
issuance & annually
Timely interest &
principal payments
with default
provisions
Four categories of
documents required for
related party financing
instruments to be
respected as debt
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17. Documentation Requirements -1.385-2(b)(2)
 Special Documentation Required – Revolvers & Cash Pools
 Enabling and governing documents and agreements must be maintained
• BOD resolutions, credit agreements, etc.
• On-going operations of the arrangement or services
 Trade Payables? Open Accounts?
 How much documentation is enough?
 Controlled Partnerships (> 80% of capital and profits interest)
 Treated as members of the expanded group
 Treated as an partnership equity interest if debt treated as stock
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18. Other Issues Facing TP
Intra-company Management fees
 Non-Deductible Expenses (Brazil management fees)
 Documentation Supporting Benefits (Mexico, India)
 Local taxes (VAT) on IC charges can drive up real expenses
 Withholding tax documentation
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19. Questions? 19