International transfer pricing-compliance and documentation, Managerial Accounting

International transfer pricing

Transfer pricing is a perennial issue, within the international tax community (Richard Casna, Accounting and Business, in the year February 1988).

As multinationals become more sophisticated in employing transfer pricing techniques in their tax planning, the revenue authorities have increased their scrutiny of arrangements, putting transfer pricing at the forefront of international tax concerns.

It naturally follows that if profits can be shifted from a high tax jurisdiction to one of low tax through transfer pricing, the tax authorities will respond with rules designed to curtail tax avoidance and ensure tax payer compliance.

Revenue authorities around the globe have become more adept at countering the “profit-shifting” aspects of transfer pricing practices and are strengthening their statutory powers with ever more extensive and complex legislation and regulations.

To strengthen the tax authorities’ position, regulations typically introduce specific rules to determine arms’ length prices and require that tax payers maintain very extensive records documenting the methods used to determine their transfer prices (which often necessitates the employment of teams of both in-house and outside counsel, accountants and economists). Provision is made as well for the imposition of very stringent penalties in cases of non-compliance.

To achieve these ends, the statutes generally focus on guidelines set out by the OECD’s Committee on Fiscal Affairs (the tax policy body of the OECD), first in its 1979 document “Transfer pricing and multinational Enterprises” and the 1995-1996 “Transfer pricing Guidelines for Multinational Enterprises and Tax Administrations.” These guidelines usually stipulate the parameters of the arm’s length pricing standard and the methodology to be followed in achieving arm’s length prices.

The practitioner as adviser to multinationals which faces the complexities of transfer pricing legislative and regulatory controls has therefore to simply consider the statutes in each country/state carefully, comply with the rules and maintain extensive documentation.

Posted Date: 12/8/2012 5:29:00 AM | Location : United States







Related Discussions:- International transfer pricing-compliance and documentation, Assignment Help, Ask Question on International transfer pricing-compliance and documentation, Get Answer, Expert's Help, International transfer pricing-compliance and documentation Discussions

Write discussion on International transfer pricing-compliance and documentation
Your posts are moderated
Related Questions
The assignment model Consider the situation of assigning m jobs (or workers) to n machines. A job i(= 1,2,3 ...m) when assigned to machine j(= 1,2,3 ...n)  acquires a cost Cij.

I need help making sure I did my accounting assignment correctly

Sean Corp. issued a $60,000, 10 year bond at the face rate of 8% annually on 1/1/X0. The market rate was 10%. How much cash will the bond investors receive at the end of the first

Select Appropriate Alternative Courses of Action In practice, decision-making includes choosing among competing alternative courses of action and choosing the alternative which

Compute the ending balance in the Work in Process inventory account. Assume that this balance consists entirely of goods started during the year. If $32,200 of this balance is dire

Activity based costing versus traditional costing Following are the main differences between activity based costing system and traditional costing system: Explain  1) Und

Do you think the food industry in general has equivocated on food labeling? Are all foods labeled natural in the same way? Has modern society subverted the concept of nature?

Calculate the charges for single and double rooms assuming that the authority wishes to make a RM10, 000 profits an accommodation

Explain Skimming pricing It is one of the most commonly discussed pricing method is the skimming pricing. This pricing method to the firm's desires to skim the market by sellin

Exercises 2-1, 2-2, 2-3, 2-4 Problem 2-14 I didn’t write every question down out of the book just questions 2-1, and 2-2. Exercise 2-1 classifying manufacturing cost. Your boat,