QANTM Valuations - FAST30 Webinar Series

Intangible Value in the Tax Spotlight

https://youtu.be/siYnzYhomFE

Intangible assets such as software, technology, brands and data are major drivers of enterprise value. As a result, tax authorities are highly focussed on how these assets are identified, priced and valued in a range of commercial situations. This can have significant tax consequences for businesses of any size, not only multinationals.

After laying out the intangibles landscape, the presenters provided an overview of when tax needs a price for the hard-to-value, followed by a snapshot of valuation standards, guidelines and common pitfalls in tax valuations.

Speakers:

Neil Pereira - Director, Pereira Consulting.

Tim Heberden - Managing Principal – Valuations, QANTM Valuations

You will learn, in this 30-minute session presentation:

• Tax authorities’ spotlight on ‘hard-to-value’ intangibles.

• Tax triggers for intangible asset valuations.

• Valuation pitfalls and best practice in the context of standards and guidelines.

• Conducting defensible valuations while navigating differing valuation requirements across tax, accounting and regulatory frameworks.

Key themes from the session

• A wide range of tax situations require valuations

Business restructures, IP migrations, related party pricing, cost contribution agreements and other transactions can require defensible valuations of intangible assets.

• Tax valuations should be aligned with standards and guidelines

In addition to IVS, consideration should be given to jurisdiction specific guidance, (which in Australia includes the ATO’s Market Valuation for Tax Purposes, APES 225 ‘Valuation Standards’ and case law) and to OECD Transfer Pricing Guidelines. A valuation prepared for financial reporting may not meet tax requirements.

• Intangibles should be identified with specificity and an assessment made of their functional, legal and financial characteristics

Valuations require clear identification of the underlying rights and an assessment of their earnings potential and risk. IP assets can comprise several distinct legal rights and the ownership of these rights can vary between jurisdictions.

• As flagged by the OECD, “hard-to-value” intangibles present additional challenges and risks

Where future commercial outcomes are uncertain, tax authorities can use hindsight as presumptive evidence. This increases the need for contemporaneous, probability-weighted valuations that reflect evidence and expectations existing at the valuation date.

Practical takeaway

The final message is the importance of getting on the front foot regarding intangible asset tracking, understanding tax triggers, and ensuring valuations are fit for purpose.