ITR \ Apr 2014 \ Frank Schöneborn
Frank Schöneborn, looks at the practical problems in the implementation of Operational Transfer prices, illustrating the new tax risks stemming from these problems and showing how holistic management can be the solution.
In recent times recurring public debates on Transfer Pricing and potential shift of profits abroad have been taking place, prompted by some prominent tax avoidance models. The OECD’s base erosion and profit shifting (BEPS) initiative is only one of the most recent developments in this field; Transfer Pricing has become the domain of tax experts around the world for many years. This trend increases the pressure on tax authorities to prevent abusive arrangements and to protect their tax revenues. The introduction of increasingly complex regulations with more and more documentation requirements for international companies is proof of that. The same applies for the recently published public consultation on TP documentation and country-by-country reporting (CbCR) as part of the BEPS initiative. On the corporate side, tax departments have prepared themselves accordingly and defend existing Transfer Pricing systems and methods based on intensive documentation work.
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