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Transfer Pricing and Corporate Taxation: Problems, Practical Implications and Proposed Solutions
BWP 1474
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Corporate tax liabilities are potentially much higher than they would be under a more transparent and predictable transfer pricing regime.
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- National tax authorities individually determine multinational ?rms’ country-speci?c tax liabilities by applying one or more sanctioned transfer pricing methodologies. These methodologies are founded on basic assumptions about market structure and ?rm behavior that are rarely empirically valid. Moreover, for the most part, the transfer pricing methodologies now in vogue were developed before the Internet became a dominant factor in the world economy, and hedge and private equity funds transformed ?nancial and commodities markets. For these reasons, multinational ?rms are unable to accurately anticipate their tax liabilities in individual countries, and remain at risk of double taxation. Uncertainties in corporate tax liability are extremely costly, both for individual corporations and from an economy-wide perspective. Firms pay exorbitant fees to have tax attorneys, accountants and economists prepare the documentation required by tax authorities to substantiate their intercompany pricing practices and defend their tax positions on audit. Corporate tax liabilities are also potentially much higher than they would be under a more transparent and predictable transfer pricing regime (due to the potential for double taxation and penalties), and investors’ returns are reduced accordingly. The FASB’s Interpretation No. 48, Accounting for Uncertainty in Income Taxes (released on July 13, 2006), has motivated multinational ?rms to increase their reserves substantially (in many cases at the insistence of their au- tors), reducing the total funds available for productive investment. 1 The current transfer pricing regimes are embodied in the OECD Guidelines, individual OECD member countries’ interpretations thereof, the U. S.
| Publisher | Springer |
| Publication date | October 11, 2008 |
| Edition | 2009th |
| Language | English |
| File size | 2.0 MB |
| Enhanced typesetting | Not Enabled |
| X-Ray | Not Enabled |
| Word Wise | Enabled |
| Print length | 208 pages |
| ISBN-13 | 978-0387781839 |
| Page Flip | Not Enabled |
| Item Weight | 1 lbs (450 grams) |
Product Description
Transfer Pricing and Corporate Taxation: Problems, Practical Implications and Proposed Solutions
Customer Questions & Answers
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Question:
What are the risks of double taxation?
Answer: Double taxation occurs when a multinational firm is taxed in multiple countries for the same income, leading to increased costs and reduced profitability. -
Question:
How can firms reduce their tax liabilities?
Answer: Firms can analyze their transfer pricing methodologies and seek more transparent and predictable solutions to mitigate risks and lower tax obligations. -
Question:
What is the impact of outdated transfer pricing methodologies?
Answer: Outdated methodologies fail to accommodate changes in market dynamics, resulting in inaccurate tax liabilities and increased operational costs.
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BWP 1474
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Features & Benefits
- Understand the complexities of transfer pricing and corporate taxation.
- Gain insights into the risks of double taxation for multinational firms.
- Learn about the high costs associated with current corporate tax liabilities.
- Discover the impact of outdated methodologies in a digital economy.
- Explore proposed solutions for a more predictable tax environment.
- Maximize investor returns by minimizing excessive corporate tax costs.
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