Expansion of the Profit-Split Method
Author | : Jeffery M. Kadet |
Publisher | : |
Total Pages | : 7 |
Release | : 2015 |
ISBN-10 | : OCLC:1306587778 |
ISBN-13 | : |
Rating | : 4/5 (78 Downloads) |
Book excerpt: Recognizing the reality that multinational corporations are centrally managed and not groups of entities that operate independently of one another, the OECD base erosion and profit-shifting project is considering expanded use of the profit-split method. This article provides background on why expanded use of the profit-split method is sorely needed. In particular, resource-constrained tax authorities in many countries are unable to administer or intelligently analyze and contest transfer pricing results presented by multinational groups. Most importantly, this article suggests a simplified profit-split approach using set concrete and objective allocation keys for commonly used business models that should be welcomed by multinational groups and tax authorities alike.