We had the pleasure of speaking to Todd Bergmann at TP Minds America 2016. Todd, a Global Transfer Pricing Controversies Manager at Ford, discussed BEPS, controversy and other challenges facing the Transfer Pricing industry in 2016.
Apart from BEPS, what developments/changes/cases within transfer pricing is most exciting to you at the moment?
First, I’d like to start off by stating that while BEPS developments may be described as “exciting”, I would say they can also be characterized as “challenging”. I’ve been practicing in the transfer pricing area for approximately fifteen years now and this is easily the most significant change I’ve experienced in this time period. In 2016, our transfer pricing department is facing a significant additional workload to implement these changes, which will require significant participation at all levels.
As far as other developments go, I would say that the “truce” between India and the United States was a very welcome and needed development. Unfortunately, India is very good at creating transfer pricing controversies and their system can be very slow in resolving these controversies. It was a welcome sight when we heard the news that the MAP process was up and running. In fact, we were able to close a couple of our cases recently. Going forward, the fact that companies can now seek a bilateral APA between the U.S. and India should provide an important tool in solving future controversies.
What are you observing in the transfer pricing controversy world?
I’ve been in my job for around eight years now, and in that time I’ve noticed that transfer pricing audits are growing in frequency and in the number of countries auditing these issues, too.
My annual inventory has doubled over the past eight years in terms of the cases we’re managing. Many governments are utilizing transfer pricing audits to increase tax revenues to offset economic reduction. With the implementation of BEPS initiatives, the expectation is that the number of countries doing this will grow further. The only question is to what extent and how we will successfully manage these controversies.
What are the biggest challenges you face?
BEPS is not here yet, but one of the biggest challenges that I face has to do with the fact that authorities around the world are getting “bogged down” with an ever-growing caseload.
A look at current MAP or APA statistics shows a substantial growth in the backlog over the past several years. Generally, our MAP or APA filings from the last few years have moved much more slowly than in years past. One of the two governments is usually slower and both sides are not moving the MAPs or APAs out quickly, as they have to get the older cases out to comply with their timelines. With the implementation of BEPS we can only anticipate that this delay problem will get worse.
Hopefully, something like the BEPS Action Plan 15 will help alleviate this as we go forward.
Prior to this position he held various positions within Ford’s tax department involving International Tax, Domestic Tax and Financial Reporting for Income Taxes. Before joining Ford, he spent several years with Arthur Young (now E&Y) in their tax department; where he earned his CPA. Todd earned his BBA in Accounting at the University of Michigan and MS in Taxation at Walsh College.