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Overseas owned companies mining in Australia

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Can someone help me get my head around this: When a company sells a product overseas they receive payment - simple. What happens when an overseas company exports a product, say coal, overseas to its parent company who uses this product to produce energy or whatever? Is there a payment at market prices of any kind? Is the product 'sold' or just 'transferred' without payment?:confused:
 

tinhat

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Transfer pricing is something the ATO are always on the lookout over because it can be a way for overseas parents to dodge tax in Australia. So by tax law the "arms length" rule applies to trade between local subsidiaries and their overseas parents where the transactions should reflect market conditions as if the parties were at arms length from each other.

http://en.wikipedia.org/wiki/Transfer_pricing
http://www.ato.gov.au/content/54621.htm

I don't know if this is something that ASIC is supposed to deal with though.
 
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Thanks for the reply. Read the links - have a better understanding now. People were telling me that the resource goes overseas to the parent company with no income in return. I was sure this could not be the case. No doubt they tax minimise the deal!!
 

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