scholarly journals The Role of Pricing in Taxation of Business Enterprises

2019 ◽  
pp. 40-53
Author(s):  
O. YURCHENKO ◽  
О. SVYRYDA
Keyword(s):  
Property Rights ◽  
Transfer Pricing ◽  
Market Price ◽  
Value Added ◽  
Tax Base ◽  
Legal Form ◽  
Transfer Prices ◽  
Business Enterprises ◽  
Economic Transaction

The problem of pricing is elaborated with respect to setting the tax base for calculating tax obligations (taxes and duties) assessed and paid by business enterprises by the general tax system. The role of the regular market price when calculating the tax base for national taxes (profit tax, value added tax, excise tax and tax on incomes of physical persons) is highlighted. It is shown that valuation of assets (property rights) is the process of estimating their cost on the date of valuation by the established procedure. The valuation can be performed by entities charged with valuation (legal entities, physical persons – entrepreneurs, state power bodies or local power bodies). Subject to valuation are assets (movable and immovable) and property rights (e. g. intellectual property rights, rights for use of nature resources etc.). The cases of obligatory expert valuation of assets are clarified in the course of the study; the valuation phases are substantiated in conformity to the national standards on valuation of assets and property rights. The notion of transfer pricing, occurring in time of transactions involving residents and non-residents that are subject to control by tax bodies in order to combat minimization of income tax, is defined. Economic transactions with a non-resident counterparty are identified as controlled ones by a payer of profit tax, when their result has no effect for a taxation object. An economic transaction will be identified as a controlled one, when it complies with two criteria set by the Tax Code of Ukraine: cost criterion (the volume of annual income and the volume of transactions with a counterparty) and status criterion (what is non-resident, whether or not it is related with a Ukrainian tax payer, where it is registered, what is its organizational and legal form, whether or not it pays profit tax and by what rate). The controlled transactions are subject to audit for the compliance of their prices with “arm’s length” principles, with the possibility of adjusting a transaction price for purposes of profit taxation in case of noncompliance.     International and national law establishes five main methods for price determination in the controlled transactions. The choice of method and texted party depends on the essence of transaction and the character of its parties’ interactions. The article gives a description of methods for calculating transfer prices used by tax bodies for auditing the correctness of estimated profit tax in the controlled transactions. The authors believe that the top one is the method of comparative non-controlled price, because it can be used when performing transactions on sales of goods with mass-scale demand, for which it is easier to find the data on analogous transactions of other companies on the commodity market and compare the conditions of such economic transactions.         

scholarly journals INFLUENCE OF TRANSFER PRICES ON TAX EVASION

2021 ◽  
Vol 21 (1) ◽  
Author(s):  
Vedran Šupuković
Keyword(s):  
Tax Evasion ◽  
Transfer Pricing ◽  
Market Price ◽  
Value Added ◽  
Tax Base ◽  
Tax Rate ◽  
Objective Evidence ◽  
Transfer Prices ◽  
The Subject ◽  
Business Entities

In recent years, transfer (internal) prices have become the subject of interest of many theorists and regulators, both for determining their effects on business and for the possibility of exploiting tax evasion. The foundations for the functioning of transfer pricing are given in the OECD guidelines, and further elaborated through national tax laws and regulations for their application. This regulatory framework treats all relevant entities, circumstances and conditions of transfer pricing, identification and explanation of transfer pricing methodology, and providing objective evidence on the application of the principle of independence and setting other conditions in transactions between related companies, all in order to prevent tax evasion and proven application of legal regulations in the field of transfer pricing. Since transfer prices are linked to decentralized related business entities consisting of parent companies and branches (organizational units or centers of responsibility) operating in the same or another country, tax evasion is done through the transfer of profits from a country with a high tax burden to a country with a lower tax rate. In addition, tax evasion is performed by reducing the tax base for value added tax, which is the difference between the transfer (non-market) price and the market price. Transfer price is formed using methods that are classified into two groups: classical transaction methods or transaction profit methods. Which method will be applied from these two groups depends on the adopted policy of the business entity. In principle, methods that are in line with the nature of the business of the business entity and that can determine the tax base in the most objective way should prevail. In practice, a method is chosen that results in maximizing profits and minimizing tax liabilities, which further leads to a better competitive position of the business entity, improvement of market position and increase of market shares. The subject of observation are all transactions between related parties on the basis of direct and indirect agreements, contracts, agreements and similar business relationships that affect the tax base, namely transactions with assets, services, financial transactions, capital transactions (purchase and sale of securities and shares ) and other similar transactions. The purpose of this paper is to investigate whether transfer prices are in line with the principle of marketability, regardless of the applied calculation method. The aim of this paper is to eliminate all possibilities of tax evasion in transactions between the parent company and subsidiaries within the group. In order to achieve the stated goal and purpose, the basic hypothesis of the work is set, which states that the application of different methods of calculating transfer prices affects the amount of the tax base. Proof of this hypothesis will be done on a case study example. The obtained results can serve as a basis for the commitment of the business entity for the appropriate method of calculating transfer prices. This excludes the individual goals of the business entity and the primacy given to one of the basic goals of taxation: achieving efficiency and fairness.

scholarly journals Development and Role of the Subsistence Minimum in the Payrolls Legislation in Slovakia from year 1993

2021 ◽  
Vol 129 ◽  
pp. 09011
Author(s):  
Zuzana Kubaščíková ◽  
Zuzana Juhaszová ◽  
Miloš Tumpach ◽  
Renáta Stanley
Keyword(s):  
Slovak Republic ◽  
Value Added ◽  
Subsistence Level ◽  
Tax Base ◽  
National Regulation ◽  
Subsistence Minimum ◽  
History Of ◽  
Constructive Criticism ◽  
The Given

Research background: The subsistence minimum category is used in the Slovak Republic in determining several wage and tax categories. In this paper I analyze whether the set standard of living is sufficient with regard to the development of the average wage since 1993 to the present day. Subsequently, the quantities that are based on the subsistence level - non-taxable amounts of the taxpayers’ tax base are also analyzed. The results of the analysis show that the distance between the subsistence level and the level of non-taxable parts has gradually increased. The topic of payrolls and related wage variables is a complex and ever-changing topic. Not many authors in Slovakia pay attention to it, and due to constant changes in the given area, the findings of publications and papers is also limited. Purpose of the article: This paper deals with general theoretical, legal and historical starting points and links between non-taxable parts and the subsistence minimum. The paper presents a cross-section of the history of the application of non-taxable parts in the Slovak Republic. Methods: The method used in the paper is that of hypotheses determination and testing. Findings & Value added: This paper also analyzes the state of national regulation and development trends in the area. In addition to constructive criticism, the article also contains suggestions for improving the current situation.

scholarly journals Entrepreneurship and the Legal Form of Businesses: The Role of Differences in Beliefs

2016 ◽  
Vol 0 (0) ◽  
Author(s):  
Oscar Gutiérrez ◽  
Pedro Ortín-Ángel
Keyword(s):  
Theoretical Model ◽  
Property Rights ◽  
Financial Constraints ◽  
Basic Assumption ◽  
Legal Form ◽  
Legal Forms

AbstractEntrepreneurship has been considered a way to implement interpersonal authority, i. e., to convince other persons to use their resources in an alternative way to the optimal one in accordance with their beliefs. This paper presents a theoretical model that relates the above assumption with the following two questions: (i) how and why financial constraints can prevent the implementation of entrepreneurial projects; and (ii) how creditors’ priorities provided by the different legal forms of the business can reduce the financial requirements for implementing the firm. The attractiveness of such an explanation lies in its capacity to justify a wide array of features of firms (entrepreneur origin, property rights, authority, financial constraints and creditor priorities) from a single basic assumption: agents have different beliefs about how production should be organized.

scholarly journals Tariff elimination versus tax avoidance: free trade agreements and transfer pricing

2021 ◽  
Author(s):  
Hiroshi Mukunoki ◽  
Hirofumi Okoshi
Keyword(s):  
Free Trade ◽  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Free Trade Agreements ◽  
Value Added ◽  
Trade Agreement ◽  
Rules Of Origin ◽  
A Value ◽  
Transfer Prices

AbstractWe explore the new roles of rules of origin (ROO) when multinational enterprises (MNEs) manipulate their transfer prices to avoid a high corporate tax. The ROO under a free trade agreement (FTA) require exporters to identify the origin of exports to be eligible for a preferential tariff rate. We find that a value-added criterion of ROO restricts abusive transfer pricing by MNEs. Interestingly, an FTA with ROO can induce MNEs to shift profits from a low- to high-tax country. Because the ROO augment tax revenues inside FTA countries, they can transform a welfare-reducing FTA into a welfare-improving one.

scholarly journals The influence of international offshore jurisdictions on the pricing strategy

VUZF Review ◽  
2021 ◽  
Vol 6 (4) ◽  
pp. 79-90
Author(s):  
Оlena Chukurna ◽  
Larysa Radkevych ◽  
Liliya Rudyk
Keyword(s):  
Transfer Pricing ◽  
Pricing Strategy ◽  
Pricing Mechanism ◽  
Pricing Process ◽  
Transfer Prices ◽  
National Economies ◽  
The Impact ◽  
The Relationship ◽  
A Company

The article analyzes the causes of offshore jurisdictions and identifies the effects of offshore on national economies. An analysis of the implementation of export-import operations carried out by offshore companies in order to influence the pricing process. The pricing mechanism with affiliates within offshore jurisdictions was presented. It was substantiated the role of offshore banks in the implementation of the pricing mechanism. It was presented the pricing mechanisms within offshore jurisdictions. It has been made an analysis of the impact of transfer pricing within offshore jurisdictions. It was substantiated the economic mechanism of pricing. The international experience of regulation of offshore jurisdictions and the system of controlling the operations of affiliates was analyzed. It was substantiated the mechanisms of functioning of offshore zones and companies operating in offshore jurisdictions. The relationship between agreements concluded within offshore jurisdictions in the following areas is established and substantiated: the agreement is concluded between two independent companies in case of underpricing; the agreement is concluded between the companies connected with the capital relations (affiliated companies) at understatement of the price; agreements between two independent companies in case of overpricing; agreements between affiliated companies in case of overpricing. It was justified the use of the transfer pricing mechanism within offshore jurisdictions. Transfer prices allow you to withdraw capital from the country, as well as hide the profits of companies from taxation. The following ways of minimizing taxation are systematized: registration of a company that concentrates profits in a jurisdiction with lower taxation; concentration of profits in companies that are unprofitable according to management accounting; the use of front companies as sales companies in which profits are concentrated; non-payment of taxes as a result of illegal liquidation of the enterprise - the taxpayer, where the profit is concentrated. The basis of tax minimization is the use in the transaction of a price that deviates from the market.

scholarly journals Blockchains, Property Rights and Health Technology Assessment in the Pharmaceutical and Device(s) Industries

2018 ◽  
Vol 9 (4) ◽  
pp. 1
Author(s):  
Paul Langley ◽  
Robert E Martin
Keyword(s):  
Property Rights ◽  
Health Technology Assessment ◽  
Health Information ◽  
Technology Assessment ◽  
Health Management ◽  
Value Added ◽  
Health Technology ◽  
Health Data ◽  
Blockchain Technology

Ongoing concerns with the security of health information, both from the perspective of the individual patient as well as health systems has led to increased attention being given to the potential role of blockchain technology in the secure storage of health information through encryption, the integration of diverse health record systems and the vesting of property and access rights to health data in the patient. While the security offered by blockchain technology has long been recognized in the finance sector with the emergence of a range of cryptocurrencies as a medium of exchange and store of value, demonstrating the value of blockchain technology in health management and health technology assessment has yet to be achieved. In this commentary, a number of questions are raised as to the potential value offered by blockchain technology as a complement to existing electronic medical record systems. Chief among these are: (i) the allocation of property rights as a necessary precondition for blockchain uptake; (ii) access and incentives for active as opposed to passive blockchain membership; (iii) monetization of blockchain access; (iv) capturing data from within the blockchain and the possibility of value added data; (v) the potential for blockchain platforms in formulary evaluations; (vi) the blockchain as a managed market for health data; and (vii) the role of intermediation in blockchain management.   Article Type: Commentary

Analyzing Transfer Prices Impact at European Level on Romanian Companies

2020 ◽  
Vol 26 (2) ◽  
pp. 52-57
Author(s):  
Mihaela Paraschiva Luca ◽  
Cătălin Florin Zeti ◽  
Ioan Cosmin Pițu ◽  
Bianca Cristina Ciocănea
Keyword(s):  
Data Analysis ◽  
Scientific Literature ◽  
Transfer Pricing ◽  
Multinational Companies ◽  
European Level ◽  
Profit Shifting ◽  
Tax Base ◽  
Fiscal Reforms ◽  
Transfer Prices ◽  
The Impact

AbstractAt present, due to the current project of the Organization for Economic Cooperation and Development, with regard to tax base erosion and profit shifting (OECD BEPS), as well as with regard to the impact of global fiscal reforms in development, in transfer pricing, fiscal authorities are the ones in control in relationship with companies. Within this context, the present study presents and analyses the influences of the transfer pricing current environment at European level in the case of Romanian companies. Realizing a detailed and deep documentation of the existing scientific literature in this field and using a comparative data analysis lead to the conclusion that the diminishing in impact of these influences may be accomplished by the finding of new solutions by multinational companies through which they should manage accordingly the associated risk of transfer pricing and prevent the eventual misunderstandings with regard to fiscal authorities.

scholarly journals Analisis Implementasi Kebijakan Harga Transfer Pada CV ABC Yogyakarta

2020 ◽  
Vol 16 (1) ◽  
pp. 90-103
Author(s):  
Tatik
Keyword(s):  
Transfer Pricing ◽  
Market Price ◽  
Qualitative Approach ◽  
Primary Data ◽  
Case Study Method ◽  
External Market ◽  
Market Prices ◽  
Contribution Margin ◽  
Transfer Prices

This study aims to analyze the implementation of transfer pricing policies on CV ABC Yogyakarta. This research uses a qualitative approach with a case study method. The data used are primary data sourced from direct observation, and documentation of financial records. The results showed the transfer price set by the company using the market price method. Market prices are considered an appropriate method of determining transfer prices because products transferred between divisions are in the external market as well. However, in the calculation of the contribution margin of the Division that transfers the product it needs to be re-evaluated. Overheads have not yet been calculated in calculating the contribution margin.

scholarly journals The Role Of Independent Commissioners In Moderating The Effect Of Transfer Pricing, Capital Intensity And Profitability Towards Tax Aggressivity

2021 ◽  
Vol 19 (2) ◽  
pp. 181
Author(s):  
Nuryatun Nuryatun ◽  
Susi Dwi Mulyani
Keyword(s):  
Stock Exchange ◽  
Transfer Pricing ◽  
Capital Intensity ◽  
Analysis Tool ◽  
Manufacturing Companies ◽  
Tax Aggressiveness ◽  
Management Actions ◽  
Transfer Prices ◽  
Tax Payments

<p>Tax is a sector that plays an important role in the economy. The largest state revenue must continue to be increased so that the country's growth and development can run well. But for business tax as a burden. Therefore, it is only natural to try to avoid the tax burden. Management actions planned to minimize corporate tax payments through tax aggressiveness activities are common among companies throughout the world. This study aims to see the role of independent commissioners in moderating the effect of transfer pricing, capital intensity and profitability on tax aggressiveness. The population and sample in this study are manufacturing companies listed on the Indonesia Stock Exchange (BEI) for the 2016-2018 period. The sampling method used was purposive sampling. The analysis tool used is panel data regression analysis. The results showed that 1). Capital intensity and profitability each have a positive effect on tax aggressiveness. 2). Transfer prices and independent commissioners are not subject to tax aggressiveness. 3). Independent commissioners can moderate weaken the influence of capital on tax aggressiveness. 4). Independent Commissioners as measured by the Total Board of Commissioners divided by the Independent Commissioners (KI) are unable to assess or weaken the relationship between transfer pricing profitability and tax aggressiveness.</p>

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