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Changing market trends in the Energy, Utilities and Resources industry have led to business transformation in the sector, with increasing transfer pricing and international tax considerations. Particularly in the light of continued development of international tax regulations, it is key to explore and highlight some of the tax touchpoints covered in this upcoming series of articles.

Transformation in Energy, Utilities and Resources (“EU&R”) is accelerating as the market participants are looking ahead to the disruption of carbon-heavy businesses and seek to reach maximum operational efficiency by reducing costs and creating value. A key challenge for all the EU&R players relies on their capacity to anticipate change and shape the future rather than only react. This has led to an increased focus on implementing cost-reduction initiatives, integrating digital transformation, entering into new strategic alliances / joint-ventures, or completing M&As as the relative growth, size and profitability of the industry players change. As a result, the EU&R sector, often takes the lead for innovative ways of working.

These trends have resulted in a change in the way the operations are carried out on a global basis, with a redistribution of the functions, risks and assets between the entities, impacting the intragroup flows and tax liabilities through transfer pricing concepts.

This transformation has coincided with continuing volatility to commodity prices and significant changes in international tax law and approaches, such as through the OECD Base Erosion and Profit Shifting initiative and resulting clarifications to OECD Principles, UN Manual, DTT Model and PE attribution papers (among others).

In June 2019, at our EU&R TP Seminar, we discussed a number of the transfer pricing and international tax issues / pressures being suffered by the industry. In light of the ongoing industry transformations and International tax developments, now is a good time to explore and highlight some of the international tax touchpoints to consider. Through a series of articles, we will share the experiences we have gained to help navigate this transformation, some of the topics to look forward to include: