scholarly journals Transfer Pricing in International Markets: Problems of Information Support

2019 ◽  
Vol 8 (2) ◽  
pp. 3845-3849
Keyword(s):  
Transfer Pricing ◽  
International Markets ◽  
Financial Accounting ◽  
Information Support ◽  
Main Principle ◽  
Arm’S Length Principle ◽  
Pricing System ◽  
Transfer Prices ◽  
Document Flow

the article characterizes the transfer pricing in international markets, analyzes the “arm’s length principle” as the main principle of taxation of interdependent companies, the motivation of transfer pricing participants, the main features of the transfer pricing practice, and the system regulating the transfer pricing at the interstate level. Based on analyzing various aspects of information support for the transfer pricing system, it has been proved that the best approach to improving it is to establish a permanent document flow to substantiate the level of transfer prices and to further draw up management, financial and tax reports. The novelty of the study consists in the recommendations on the sequence of actions to form a unified system of document flow, and management and financial accounting that would provide management with the information on all transactions with affiliates

scholarly journals TRANSAKSI DENGAN PIHAK BERELASI DAN PRAKTIK TRANSFER PRICING DI INDONESIA

2021 ◽  
Vol 2 (2) ◽  
pp. 34-52
Author(s):  
Raymondo Sitanggang ◽  
Amrie Firmansyah
Keyword(s):  
Content Analysis ◽  
Stock Exchange ◽  
Transfer Pricing ◽  
Accounting Standards ◽  
Financial Statements ◽  
Multinational Companies ◽  
Financial Accounting ◽  
Manufacturing Companies ◽  
Arm’S Length Principle ◽  
State Finance

This study aims to review transactions conducted by multinational companies operating in Indonesia related to transfer pricing activities. This study uses qualitative methods using two approaches, content analysis, and interviews. The content analysis aims to obtain related party disclosure information in the financial statements as stipulated in PSAK No. 7 (2015). The data used in the financial statements of manufacturing companies in the consumer goods industry sector are included in multinational companies and listed on the Indonesia Stock Exchange from 2014-2017. Meanwhile, interviews were conducted to confirm the data obtained through content analysis. The informant in the interview is one of the Polytechnic of State Finance STAN lecturer, who has academic expertise in international tax accounting and transfer pricing. This study concludes that, in general, multinational companies operating in Indonesia have disclosed related party information in their financial statements. Furthermore, the assessment of the fairness of transactions with related parties related to transfer pricing is based on the arm's length principle. The results of this study indicate the need for broader disclosure of financial accounting standards in Indonesia and the harmonization of taxation regulations in Indonesia with tax regulations in other countries related to transfer pricing practices.     Penelitian ini bertujuan untuk untuk mengulas transaksi-transaksi yang dilakukan oleh perusahaan multinasional yang beroperasi di Indonesia terkait dengan aktivitas transfer pricing. Penelitian ini menggunakan metode kualitatif dengan menggunakan dua pendekatan, yaitu content analysis dan wawancara. Content analysis bertujuan untuk mendapatkan informasi pengungkapan pihak-pihak yang berelasi dalam laporan keuangan sebagaimana diatur dalam PSAK No. 7 (2015). Data yang digunakan adalah laporan keuangan perusahaan manufaktur sektor industri barang konsumsi yang termasuk dalam kategori perusahaan multinasional dan terdaftar di Bursa Efek Indonesia dari tahun 2014-2017. Sementara itu, wawancara dilakukan dengan tujuan untuk mengkonfirmasi data-data yang diperoleh melalui content analysis. Informan dalam wawancara adalah salah satu dosen Politeknik Keuangan Negara STAN yang memiliki keahlian akademis dalam akuntansi perpajakan internasional dan transfer pricing. Penelitian ini menyimpulkan bahwa secara umum perusahaan multinasional yang beroperasi di Indonesia telah mengungkapkan informasi pihak-pihak berelasi dalam laporan keuangannya. Selanjutnya, penilaian kewajaran transaksi dengan pihak berelasi terkait dengan transfer pricing berdasarkan arm’s length principle. Hasil penelitian ini mengindikasikan perlunya pengungkapan yang lebih luas dalam standar akuntansi keuangan di Indonesia dan harmonisasi peraturan perpajakan di Indonesia dengan peraturan perpajakan di negara lain-lain terkait dengan praktek transfer pricing.  

Can the integration of a tax-compliant transfer pricing system into the management control system be successful?

2019 ◽  
Vol 15 (2) ◽  
pp. 198-230 ◽  
Author(s):  
Katrin Hummel ◽  
Dieter Pfaff ◽  
Benedikt Bisig
Keyword(s):  
Control System ◽  
Internal Control ◽  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Tax Compliance ◽  
Management Control ◽  
Management Control System ◽  
Content Type ◽  
Pricing System ◽  
Transfer Prices

Purpose This paper aims to draw on Adler and Borys’ (1996) concept of an enabling use of bureaucracy to examine how the integration of a single-book tax-compliant transfer pricing system into the management control system is related to the perceived success of that transfer pricing system. Design/methodology/approach Based on survey data from Swiss multinational firms, the authors test a structural equation model. In addition, the authors conduct interviews with executives from three multinational enterprises. Findings The authors find that the integration of a tax-compliant transfer pricing system into the management control system may be perceived to be successful in achieving both tax compliance and internal (control) purposes. This is particularly true when the transfer pricing system is transparent and can be amended in the case of fundamental management control problems. Research limitations/implications The typical shortcomings of a survey-based research apply to this study. Future research could build on this model and more closely investigate the relationship between transfer pricing system integration and an enabling use of the transfer pricing system. Practical implications Based on this study’s findings, the authors recommend that a strong integration of tax-compliant transfer prices into the management control system should be accompanied by internal transparency and the ability to repair the transfer pricing system. Originality/value Prior research on the integration between transfer pricing and management control systems has either been analytical or based on case studies. This cross-sectional analysis provides reliable insights into different levels of integration, use and the success of transfer pricing systems.

scholarly journals Revised OECD Transfer pricing Guidelines and the Czech tax policy

2011 ◽  
Vol 59 (4) ◽  
pp. 301-308
Author(s):  
Veronika Solilová
Keyword(s):  
Czech Republic ◽  
Tax Policy ◽  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Practical Application ◽  
The Czech Republic ◽  
Arm’S Length Principle ◽  
Transfer Prices

In applying the international principles to the taxation of Multinational Enterprises, one of the most difficult issues that have arisen is the establishment for tax purposes of appropriate transfer prices. Transfer prices are significant for both taxpayers and tax administrations because they determine in large part the income and expenses, and therefore taxable profits, of associated enterprises in different tax jurisdictions. The Committee on Fiscal Affairs, which is the main tax policy body of the OECD, has issued a number of reports relating to the transfer pricing issues. The most important are the Transfer pricing Guidelines for multinational enterprises and tax authorities which was published in 1995. These Guidelines focus on the application of the arm’s length principle to evaluate the transfer pricing of associated enterprises, the analysis of the methods for evaluating whether the conditions of commercial and financial relations within Multinational Enterprises satisfy the arm’s length principle and discussion of the practical application of those methods. Simply, these Guidelines focus on the main issues of principle that arise in the transfer pricing area. The Committee on Fiscal Affairs continues its work in this area, on 22 July 2010 approved and released the proposed revisions to Chaps. I through III of these Guidelines and simultaneously published a new Chap. IX related to business restructuring. The revisions are the result of several years of work on comparability and the use of profit-based methods. The revised text will have a significant impact on the application of transfer pricing analysis and transfer pricing methods. The paper is focused on significant changes of newly approved Guidelines with aim to evaluate how the Czech Republic began applying the principles set out in the revised text of these Guidelines.

scholarly journals TRANSFER PRICING OF TRANSNATIONAL CORPORATIONS

2021 ◽  
Vol 116 (3) ◽  
pp. 85-97
Author(s):  
HLADIY Iryna
Keyword(s):  
World Economy ◽  
System Analysis ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Transnational Corporations ◽  
Sources Of Information ◽  
Advantages And Disadvantages ◽  
Arm’S Length Principle ◽  
Pricing System ◽  
The World

Background. In the context of globalization, transnational corporations have turned into highly concentrated points of the world economy and the principal markets for goods and services. It is under such conditions that a comprehensive research of the pricing system within the framework of their activities is relevant. Analysis of recent research and publications has revealed that the process of setting prices for products within their activities in different countries and the development of innovations in domestic legislation require in-depth study. The aim of the article was to study possible transfer pricing systems for TNCs in order to eliminate risks when calculating the exact cost of products and avoid possible situations of non-payment of due taxes. Materials and methods. A set of general scientific methods of cognition is applied: inductive, deductive, system analysis, theoretical generalization, formal-logical, analysis and synthesis. Results. The transfer pricing system is becoming the key direction in the process of planning and profit maximization. The methods of setting the transfer price are legally enshrined in the current Tax Code of Ukraine. However, the use of these methods is a top priority for checking compliance with the «arm’s length»principle. It is determined that in order to comply with this principle, it is necessary to compare controlled and uncontrolled transactions, based on the criterion of tax benefits, as well as to analyse all the advantages and disadvantages that they create. Conclusion. The issue of proper transfer pricing plays a leading role in the export or import of goods. Particular attention should be paid to the sources of information indicated by taxpayers and used in order to ensure compliance with the requirements for justification in the documentation on transfer pricing compliance with the conditions of controlled transactions with the arm’s length principle. Prospects for further research are to provide practical recommendations for compliance of the legal and regulatory framework for transfer pricing with the requirements of the world economy in the direction of preventing the implementation of tax avoidance schemes.

scholarly journals Transfer pricing and safe harbours

2013 ◽  
Vol 61 (7) ◽  
pp. 2757-2768 ◽  
Author(s):  
Veronika Solilová
Keyword(s):  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Competent Authority ◽  
Partial Solution ◽  
The Czech Republic ◽  
Advantages And Disadvantages ◽  
Arm’S Length Principle ◽  
Transfer Prices ◽  
Audit Standards ◽  
Safe Harbours

Transfer prices are significant for both taxpayers and tax administrations because they determine in large part taxable profits of associated enterprises in different tax jurisdictions. Moreover, in the context of taxation, transfer prices must be complied with the arm’s length principle. However, Multinational Enterprises have been faced daily by conflicting rules and approaches to applying the arm’s length principle, burdensome documentation requirements, inconsistent audit standards and unpredictable competent authority outcomes. Therefore, the Committee on Fiscal Affairs launched another project on the administrative aspects of transfer pricing in 2010. On 16 May 2013 as a partial solution of this project was approved by the OECD Council the Revised Section E on Safe Harbours in Chapter IV of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Authorities. The paper is focused on significant changes of newly approved chapter IV of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Authorities, further on analysis of practice in this area, on advantages and disadvantages of safe harbours for taxpayers and competent authorities with aim to suggest recommendations on use of safe harbours in the Czech Republic.

scholarly journals TRANSFER PRICING FOR COORDINATION AND PROFIT ALLOCATION

2012 ◽  
Vol 01 (06) ◽  
pp. 07-26
Author(s):  
Jan Thomas Martini
Keyword(s):  
Transfer Pricing ◽  
Profit Center ◽  
Profit Allocation ◽  
Arm’S Length Principle ◽  
Transfer Prices ◽  
One Step ◽  
Minority Interests ◽  
Pricing Schemes ◽  
Positive Effect ◽  
Central Management

This paper examines coordination and profit allocation in a profit-center organization using a single transfer price. The model includes compensations, taxes, and minority interests of two divisions deciding on capacity and sales. The analysis covers arm’s length transfer prices which are either administered by central management or negotiated by the divisions. Administered transfer prices refer to past transactions and therefore maximize firm-wide profit net of divisional compensations, taxes, and minority profit shares only for given decentralized decisions. From an ex-ante perspective, it is shown that adverse effects on coordination may result in inefficient divisional profits of which all stakeholders suffer. We motivate a positive effect of advance pricing agreements, intra-firm guidelines, and restrictive treatments of changes in the firm’s accounting policy. By contrast, negotiations ignore compensations, taxes, and minority shares but yield efficient divisional profits. Negotiations seem compelling as they perfectly reflect the arm’s length principle. Moreover, common practices such as arbitration or one-step pricing schemes allow the firm to engage in manipulation at the expense of other stakeholders.

scholarly journals Theoretical and Practical Assessments of Transfer Prices. Legal Evidence from Romanian Case Law

2020 ◽  
Vol 26 (40) ◽  
pp. 1-18
Author(s):  
Florin Cornel Dumiter ◽  
Ștefania Amalia Jimon
Keyword(s):  
Transfer Pricing ◽  
Case Law ◽  
International Taxation ◽  
Fine Tuning ◽  
International Regulation ◽  
Economic Implications ◽  
Legal Evidence ◽  
Permanent Establishment ◽  
Arm’S Length Principle ◽  
Transfer Prices

AbstractTransfer pricing represents the mainstream agenda in the light of tax law, lato sensu, and international taxation, stricto sensu. At the international level, there can be an emphasis on several problems related to taxation: double taxation, double non – taxation, permanent establishment, business profits, residence criteria, arm's length principle, mutual agreement procedure, dispute resolution of tax conflicts. However, the problem of transfer pricing has more profound judicial and economic implications. The main objective of this paper is to evaluate and assess the underlying features and characteristics of transfer prices in the economical and judicial actual context. The operational objectives are related to a quid pro quo analysis regarding the fine-tuning aspects of transfer pricing in the digital taxation era. The case law presented in this article tackles the main problems of applying transfer pricing international regulation upon Romanian tax jurisprudence. The conclusion of this article highlights the need, mutadis mutandis, for a tax policy agenda revealing a strengthened fiscal and financial environment towards the creation of a new proper fiscal space.

scholarly journals Substitution across profit shifting methods and the impact on thin capitalization rules

2021 ◽  
Author(s):  
Gideon Goerdt ◽  
Wolfgang Eggert
Keyword(s):  
Multinational Firms ◽  
Transfer Pricing ◽  
Multinational Firm ◽  
Profit Shifting ◽  
Goods And Services ◽  
Internal Goods ◽  
Transfer Prices ◽  
Debt Shifting ◽  
The Impact ◽  
Thin Capitalization

AbstractThin capitalization rules limit firms’ ability to deduct internal interest payments from taxable income, thereby restricting debt shifting activities of multinational firms. Since multinational firms can limit their tax liability in several ways, regulation of debt shifting may have an impact on other profit shifting methods. We therefore provide a model in which a multinational firm can shift profits out of a host country by issuing internal debt from an entity located in a tax haven and by manipulating transfer prices on internal goods and services. The focus of this paper is the analysis of regulatory incentives, $$(i)$$ ( i ) if a multinational firm treats debt shifting and transfer pricing as substitutes or $$(ii)$$ ( i i ) if the methods are not directly connected. The results provide a new aspect for why hybrid thin capitalization rules are used. Our discussion in this paper explains why hybrid rules can result in improvements in welfare if multinational firms treat methods of profit shifting as substitutes.

Application of transfer pricing as a management accounting tool in the project management system

2021 ◽  
pp. 43-53
Author(s):  
N. P. Agafonova
Keyword(s):  
Project Management ◽  
Management Accounting ◽  
Transfer Pricing ◽  
Information Support ◽  
Sufficient Information ◽  
Project Management System ◽  
Management Concept ◽  
Modern Economic ◽  
High Level ◽  
The Cost

Modern economic conditions, due to the high level of competition, lead to the need to search for internal reserves to improve the efficiency of economic entities, one of the solutions to this problem can be considered the application of the management concept “project management”. However, its full implementation is impossible without sufficient information support, which is eliminated as a result of the use of various management accounting tools, one of which is transfer pricing. The article presents the results of a study on the use of transfer education in determining the cost of implementing an agricultural project.

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