The development of fiscal controls over international transfer pricing

Bertram, Heloise Marika (1999). The development of fiscal controls over international transfer pricing. University of Birmingham. M.Sc.

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Growth of multinational enterprises (MNEs) has resulted in rapid increases in the number of cross-border, inter-related transactions. Manipulation of the 'international transfer prices' (ITP) of these transactions enables MNEs to shift profits between jurisdictions and minimise global taxation.

In 1935, the US presented the arm's length principle (ALP), believing transactions between related companies should earn equally to identical transactions between independent companies.

Attempts, predominantly by the US and OECD, to control transfer pricing methods (TPMs) based on the now universally acknowledged, although increasingly inappropriate and outdated, ALP have resulted in the adoption of overwhelmingly prescriptive, increasingly demanding and punitive measures.

Advance pricing agreements (APAs) were introduced to resolve ITP disputes involving tax authorities and MNEs, offering opportunities to openly negotiate acceptable TPMs in advance. APAs in their current form, however, are complex, time-consuming and demand sensitive information disclosure. APAs appeal to MNEs suffering only the most costly ITP

A major concern for MNEs with operations in different tax jurisdictions is double taxation. This is alleviated firstly, through the harmonisation of world-wide adopted US regulations and OECD guidelines; secondly, the maintenance and expansion of treaty networks, facilitating inter-governmental communication on MNEs; and finally, the introduction of 'last resort’ arbitration services.

Type of Work: Thesis (Masters by Research > M.Sc.)
Award Type: Masters by Research > M.Sc.
College/Faculty: Schools (1998 to 2008) > School of Business
School or Department: Birmingham Business School, Department of Accounting and Finance
Funders: None/not applicable
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HG Finance


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