Key Changes in MAP Guidance

What Has Changed?

• Updated MAP Guidance: The 2026 edition of the OECD MAP manual offers detailed, practical guidance for resolving international tax disputes between jurisdictions. The updated manual now includes 59 best practices developed by competent authorities in the FTA MAP Forum.
• Introduction of MAP Arbitration: For the first time, the manual includes best practices and guidance related to MAP arbitration, providing a structured approach for jurisdictions new to the process.
• Procedural and Organizational Updates: The manual offers extensive procedural advice and addresses key organizational considerations, including staffing and solution-oriented strategies for resolving disputes.

What Has Not Changed?

• Fundamental MAP Process: While the procedural guidance and best practices have been updated, the core principles of the MAP process remain unchanged. The MAP continues to serve as a tool for resolving transfer pricing and other tax disputes between jurisdictions through mutual agreement.
• Ongoing Compliance Expectations: The general compliance expectations for companies involved in tax disputes remain unchanged. Companies must still ensure they are prepared to engage in MAPs and cooperate with tax authorities during the dispute resolution process.

Key Developments in Latvia’s Transfer Pricing Regulations

1. Who is Affected:

• Companies with controlled transactions involving related nonresident parties where the total transaction value exceeds €250,000 in the previous financial year must submit the report.
• The report will include detailed information about intercompany transactions, including goods, services, and financial transactions with related parties.

2. Report Submission Deadline for 2025:

• The deadline for submission of the controlled transactions report for the 2025 financial year is December 31, 2026.
• This gives companies a full year to prepare the necessary documentation and submit it to the SRS.

3. Penalties for Non-Compliance:

• Companies failing to submit the report within 30 days of an SRS request could face penalties.
• The penalty is up to 1% of the transaction value, with a maximum penalty of €100,000. This is a significant deterrent for non-compliance.

Key Changes and Impact

What Has Changed?

• DAC8 Implementation: This directive mandates the automatic exchange of information regarding cryptoassets among EU member states. It aims to improve compliance, reduce tax evasion, and enhance financial transparency.
• DAC9 Implementation: This directive facilitates the exchange of information related to Pillar Two, allowing tax authorities in the EU to share tax data concerning multinational corporations’ tax rates and profits in real-time.

What Has Not Changed?

• Ongoing Compliance Requirements: The core compliance obligations for Transfer Pricing documentation remain unchanged. Companies must still ensure that they are maintaining comprehensive and defensible Transfer Pricing documentation, even with the introduction of these new reporting requirements.
• Audit and Documentation Standards: Tax authorities will continue to enforce high standards of documentation, and failure to provide this information when requested will still attract penalties.

Why This Matters for Pillar Two Compliance in France

France is among the first EU jurisdictions to publish detailed operational guidance for the GIR. This signals a shift from conceptual Pillar Two rules to hands-on implementation and enforcement, with strict timelines and technical expectations. For many groups, this will be their first real test of Pillar Two data readiness.

Key Details of the Filing Requirements

Required Returns:

• Qualified Domestic Minimum Top-Up Tax (QDMTT)
• Income Inclusion Rule (IIR)
• Undertaxed Profits Rule (UTPR)

Filing Deadline:

• Returns must be submitted within 15 months after the end of the fiscal year.
• For the transitional year, there is an 18-month filing period.
• The deadline is the same as for the GIR, ensuring timely and coordinated submissions across these interconnected filings.

Even Without Top-Up Tax Liability:

• Mandatory filing even if there is no top-up tax liability for the respective year.
• This ensures uniform reporting of all qualifying tax positions, regardless of whether a top-up tax is triggered.

Online Submission:

• The Elster e-filing platform is the designated portal for submitting Pillar Two returns.
• Taxpayers will need to ensure that their systems and data are compatible with the platform’s XML filing requirements.

New Local File Thresholds: What’s Changed?

Starting in 2026, Cyprus will increase the Local File threshold for preparing transfer pricing documentation based on transaction size:

• €10 million for financial transactions
• €5 million for goods transactions
• €2.5 million for other categories of controlled transactions

Why This Matters for MNEs

• Companies involved in large cross-border transactions may see a reduced administrative burden, as only those exceeding the new thresholds need to prepare a Local file.
• For smaller transactions, businesses can still be required to comply with transfer pricing documentation but may not need to create a full Local file.

Key Areas Clarified by the Proposed Amendments

The proposed changes focus on several technical but high-impact areas:

1. Income and Tax Allocation for Cross-Border Entities

• Clarifies how income and related taxes should be allocated between jurisdictions
• Aims to reduce mismatches where income is recognized in one country but taxed in another
• Particularly relevant for groups with complex cross-border operating structures

Why it matters:
Incorrect allocation can distort effective tax rate (ETR) calculations and trigger unintended top-up tax exposure.

2. Deferred Tax Calculations

• Provides additional guidance on how deferred tax assets and liabilities should be treated under Pillar Two
• Aligns domestic rules with OECD principles on timing differences

Why it matters:
Deferred tax treatment can significantly impact Pillar Two outcomes, especially for capital-intensive or loss-making entities.

3. Treatment of Losses

• Clarifies how losses should be carried forward and reflected in Pillar Two calculations
• Addresses timing and utilization issues that commonly arise in multinational groups

Why it matters:
Misalignment between accounting losses and Pillar Two rules may delay or reduce the benefit of loss relief in minimum tax computations.

4. Foreign Tax Credits

• Refines how foreign tax credits are recognized for Pillar Two purposes
• Aims to prevent double counting or inappropriate offsets

Why it matters:
Foreign tax credit treatment directly affects whether a jurisdiction falls below the minimum tax threshold.

5. Hybrid and Flow-Through Entities

• Updates definitions and classification rules
• Clarifies how these entities are treated when computing Pillar Two income and taxes

Why it matters:
Hybrid and flow-through structures are particularly sensitive under minimum tax rules and often attract scrutiny from tax authorities.

What Has Changed: DMTT Annual Return Is Now Available

The NBR has enabled the DMTT annual return functionality, allowing in-scope groups to begin preparing their filings.

Who Is Affected?

MNE groups that:

• Meet the €750 million consolidated revenue threshold
• Have met that threshold in at least two of the four preceding fiscal years
• Are subject to Bahrain’s DMTT regime

Before accessing the return, groups must submit a revenue test notification confirming threshold eligibility.

Why These Poland Tax Updates Matter for Transfer Pricing

Poland is one of the EU jurisdictions with high audit intensity and detailed reporting expectations. Recent changes suggest a dual approach:

Procedural relief where compliance burden was excessive

Continued strictness where economic substance or abuse risk is identified

For Transfer Pricing teams, this means simpler mechanics in some areas, but no reduction in scrutiny.

Why 2026 Is a Turning Point for Transfer Pricing

The year 2026 is not about one single reform—it’s about overlapping frameworks coming into force at the same time. Transfer pricing is now directly influenced by:

• Global minimum tax rules
• Public disclosures
• Trade and tariff policy
• Digitalisation and new business models

Strategic reality: Transfer pricing can no longer be planned in isolation. It must work side-by-side with global tax, finance, and operational strategy.