Place of transfer pricing in the tax system

Problem setting. The approach proposed by the legislator to the definition of the tax system as a set of national and local taxes and fees in the procedure established by the TC of Ukraine, constitutes the tax system of Ukraine (para. 6.3 of Article 6 of the TC of Ukraine), raises the question of the place of transfer pricing in the tax system. If you approach the tax system as a set of taxes and fees, the transfer pricing is actually excluded from the tax system. Analysis of recent researches and publications. Among the scientists involved in the research of the tax system, it is possible to distinguish M. Kucheryavenko, D. Getmantsev, N. Pryshva, O. Barin and others. Some problems of legal regulation of transfer pricing were dealt with by M. Mishin, M. Bondarenko, K. Broyakov and others. The target of the research is to analyze and determine the place of transfer pricing in the tax system. Article’s main body. The article is devoted to determining the place of transfer pricing in the tax system. We propose our own view on the tax system. It is stated that a broad approach to understanding the tax system excludes contradictions laid down in para. 6.3 of Article 6 of the TC of Ukraine. Conclusions and prospects for the development. Transfer pricing involves the application of special methods for determining the compliance of the conditions of the controlled transaction with a certain criterion – the “arm’s length” principle, drawing up and submitting reports, exercising control and bringing to responsibility for violation of transfer pricing requirements. The legislative approach to the content of the tax system as an aggregate of taxes and fees actually excludes transfer pricing from the tax system. Instead, our proposed broad approach eliminates such contradiction.

The Harmonisation of Transfer Pricing: the Obstacles, the Arm's Length Principle and the OECD Guidelines

<p>This essay argues that the complete harmonisation of transfer pricing rules with the arm’s length principle is unattainable for three reasons. First, states are not under a legal obligation to apply the principle outside of treaty or domestic law. Second, the theoretical shortcomings of the principle are creating a divergence from the OECD guidelines on how the principle should be applied. Third, the perception held by states that multinational enterprises are not paying a fair share of tax is also creating a divergence from the OECD guidelines on the principle. The resultant divergence is a significant obstacle to transfer pricing harmonisation.</p>

The Harmonisation of Transfer Pricing: the Obstacles, the Arm's Length Principle and the OECD Guidelines

<p>This essay argues that the complete harmonisation of transfer pricing rules with the arm’s length principle is unattainable for three reasons. First, states are not under a legal obligation to apply the principle outside of treaty or domestic law. Second, the theoretical shortcomings of the principle are creating a divergence from the OECD guidelines on how the principle should be applied. Third, the perception held by states that multinational enterprises are not paying a fair share of tax is also creating a divergence from the OECD guidelines on the principle. The resultant divergence is a significant obstacle to transfer pricing harmonisation.</p>

Transfer Pricing Audit Challenges and Dispute Resolution Effectiveness in Developing Countries with Specific Focus on Zimbabwe

Base erosion and profit shifting activities of multinational enterprises (MNEs) have been a hot issue globally. Topical among the strategies employed by MNEs has been the issue of transfer pricing (TP). Developing countries are argued to be significantly affected by TP manipulation resulting in substantial tax revenues being lost. As a response to curb the unfavourable impacts of transfer mispricing, most developing countries have adopted the OECD TP guidelines and enacted TP legislation to regulate TP activities. The arm’s length principle is the core of TP legislation, yet it has brought challenges for tax administrators and their auditors in enforcing and assessing compliance respectively leading to disputes. In view of the ever-changing business world and continuous efforts by MNEs to minimise their tax obligations through income shifting, it was imperative to assess the factors affecting the effectiveness of TP audits and dispute resolutions as measures to enhance compliance and enforcement in developing countries, with specific reference to Zimbabwe. Findings include the lack of clarity in TP legislation, resource constraints and complexity of transactions, lack of expertise as well as the shortage of comparable data. Developing countries are encouraged to formulate clear TP regulations and invest in the capacitation of revenue authorities.

Ethical and Legal Responsibility of Multinational Corporate Groups for a Fair Share of Taxes

This paper deals with the question whether there are reasons to deem multinational corporate groups ethically or legally responsible for paying their fair share of taxes. Ethical concepts argue that companies should generally be held responsible, but these findings contradict the mainstream market theory that understands companies as legal fictions and therefore not ethically but merely legally responsible. In contrast, we base our argumentation on the political-cultural market theory. We find that this theory provides reasons to ascribe an ethical responsibility for paying their fair share of taxes to multinational corporate groups. We argue, moreover, that this ethical responsibility also speaks for a legal responsibility. The prevailing tax law, particularly the arm's length principle, does generally not see groups as tax subjects. This currently missing legal responsibility gives reasons to rethink tax law. Therefore, we analyze whether the OECD Pillar One proposal may be an alternative to existing law.

4 Conceptual Problems

The last chapter of the book reviews whether the international tax regime has been a success or a failure and based on these remarks, it is assessed what the reasons are for potential success and potential failure. Afterwards, reference is made to three of the most pressing issues in the current international tax regime. This includes measures against aggressive tax planning, specific issues triggered by the taxation of the digital economy, and a discussion of whether it would better to switch from the arm’s length principle to a formulary system. The chapter will also cover some of the most recent proposals to change the current international tax regime as part of the Pillar 1 and Pillar 2 work of the Inclusive Framework.

TRANSFER PRICING OF TRANSNATIONAL CORPORATIONS

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.

TRANSAKSI DENGAN PIHAK BERELASI DAN PRAKTIK TRANSFER PRICING DI INDONESIA

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.

Media policy in Greenland

This article describes the historical development of media policy in Greenland, and the shifts in the underlying normative and causal ideas that legitimise media policy. I argue that media policy reflects changes in Greenland's political system. Specifically, under colonial rule, Greenlandic media was state run and media was seen as an instrument to educate the population. Gradually, with the introduction of home rule, a paradigm shift took place, whereby media was seen as a vital instrument to strengthen Greenlandic language and identity. At the same time, normative ideas of media independence appeared which called for institutionalisation of the arm's length principle. Due to the influence and institutional spill-over from Denmark, I argue, Greenlandic media policy fit rather well into the “Nordic media model” although media policy in Greenland is mostly formulated without long-term or broad political agreements.