Profit Split, the Future of Transfer Pricing? Arm’s Length Principle and Formulary Apportionment Revisited from a Theoretical and a Practical Perspective

Kroppen, Heinz-Klaus; Dawid, Roman; Schmidtke, Richard

doi:10.1007/978-3-642-25980-7_13

Cited by 4 publications

(3 citation statements)

References 25 publications

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“…In the context of determination of intangibles transaction reasonableness, difficulties to collect independent comparable data often arise. This is especially true when the contributed intangibles are uniqe and of value (Kroppen et al, 2012). Basically, the five transfer pricing methods have equal opportunities to be used in transfer pricing analyses involving intangibles or rights in intangibles.…”

Section: Beps Action Plan Item 8: Intangiblesmentioning

confidence: 99%

Analysis of PSM after implementation of CbCR policy in Indonesia

Hendrawan

Royhan

Saragih

et al. 2021

JAAI

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The Country-by-Country Reporting (CbCR) policy requires that multinational enterprises report financial information of all of their business group members globally. The presence of the information within such policy framework should be reviewed as to whether it will be useful for the Profit Split Method (PSM) implementation. This research used a qualitative approach with data collection techniques including indepth interview. The results indicate that in the future, the PSM will grow in urgency with the development of multinational enterprises and the Anti-BEPS (Base Erosion and Profit Shifting) project. However, the PSM implementation in Indonesia at the present time is still rare due to particular difficulties encountered by both taxpayers and tax authorities. CbCR data alone is not sufficient to be used as a basis for the PSM implementation. Nevertheless, CbCR can still be used by taxpayers as a basis for the PSM implementation in collaboration with other data and information.

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Section: Beps Action Plan Item 8: Intangiblesmentioning

confidence: 99%

Analysis of PSM after implementation of CbCR policy in Indonesia

Hendrawan

Royhan

Saragih

et al. 2021

JAAI

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“…In this context, the internal transfer price that is separate from the one for tax reporting can induce the first‐best profits of the firm [4, 28]. In addition, it has been suggested that a profit‐splitting mechanism can serve as an alternative to transfer pricing methods [34, 47]. They find that a firm may achieve the first‐best firm‐wide profit in the decentralized system with this mechanism and then allocate the profit to each division according to some standards.…”

Section: Introductionmentioning

confidence: 99%

Impact of transfer pricing methods for tax purposes on supply chain performance under demand uncertainty

Huh¹,

Park²

2013

Naval Research Logistics

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Transfer pricing refers to the pricing of an intermediate product or service within a firm. This product or service is transferred between two divisions of the firm. Thus, transfer pricing is closely related to the allocation of profits in a supply chain. Motivated by the significant impact of transfer pricing methods for tax purposes on operational decisions and the corresponding profits of a supply chain, in this article, we study a decentralized supply chain of a multinational firm consisting of two divisions: a manufacturing division and a retail division. These two divisions are located in different countries under demand uncertainty. The retail division orders an intermediate product from the upstream manufacturing division and sets the retail price under random customer demand. The manufacturing division accepts or rejects the retail division's order. We specifically consider two commonly used transfer pricing methods for tax purposes: the cost‐plus method and the resale‐price method. We compare the supply chain profits under these two methods. Based on the newsvendor framework, our analysis shows that the cost‐plus method tends to allocate a higher percentage of profit to the retail division, whereas the resale‐price method tends to achieve a higher firm‐wide profit. However, as the variability of demand increases, our numerical study suggests that the firm‐wide and divisional profits tend to be higher under the cost‐plus method than they are under the resale‐price method. © 2013 Wiley Periodicals, Inc. Naval Research Logistics, 2013

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“…41 See e.g. Hellerstein and McLure (2004); Sorensen (2004); Kroppen, Dawid and Schmidtke (2012). and Formula Apportionment…”

Section: Empirical Evidence On Tax Planning Under Separate Accounting...mentioning

confidence: 99%

Beiträge zur empirischen Untersuchung von Aufkommens- und Verhaltenswirkungen der Unternehmensbesteuerung

Klett¹

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Abdruck mit freundlicher Genehmigung des Verlags Dr. Otto Schmidt. mit Hilfe unternehmensbezogener Mikrodaten Abbildung 2: Änderung des Gewerbesteueraufkommens (in Prozent) durch Maßnahmen der Unternehmensteuerreform 2008 Die Maßnahmen im Bereich der Gewerbesteuer schlagen auch auf die Einkommensteuer durch. Zentrale Bedeutung hat hier die Erhöhung des Gewerbesteueranrechnungsfaktors. Sie wird kompensiert durch die Senkung der Gewerbesteuermesszahl und die Streichung des Abzugs der Gewerbesteuer als Betriebsausgabe. Aufkommenserhöhend wirkt ferner die Anhebung des Spitzensteuersatzes auf 45 Prozent. Unterstellt man die Besteuerung des verbleibenden Nachversteuerungsbetrags am Ende des Betrachtungszeitraums, gleichen sich die Aufkommenswirkungen von Thesaurierungsbegünstigung und Nachversteuerung nahezu vollständig aus (Abbildung 3).

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Profit Split, the Future of Transfer Pricing? Arm’s Length Principle and Formulary Apportionment Revisited from a Theoretical and a Practical Perspective

Cited by 4 publications

References 25 publications

Analysis of PSM after implementation of CbCR policy in Indonesia

Analysis of PSM after implementation of CbCR policy in Indonesia

Impact of transfer pricing methods for tax purposes on supply chain performance under demand uncertainty

Beiträge zur empirischen Untersuchung von Aufkommens- und Verhaltenswirkungen der Unternehmensbesteuerung

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