<p><strong>Background</strong></p><p>International transfer pricing has been a highlighted issue during the last decades as country after country has revised and introduced new transfer pricing laws as a respond to the expanded globalization. Several countries are adopting similar approaches and the prime guiding principles are provided by the Organization for Economic Co-Operation (OECD). The international law as well as the laws of all 30 member countries is based on the OECD Guidelines.</p><p><strong>Purpose</strong></p><p>The purpose of this master’s thesis is to describe differences and similarities regarding the transfer pricing regulations in China and Sweden and to explain how a Swedish multinational enterprise (MNE) have to utilize and adjust their transfer pricing strategy when trading with group companies in China. The results then conclude into a step model for strategic transfer pricing.</p><p><strong>Result</strong></p><p>The differences between the regulations are mainly uncovered in the definition of associated parties and associated interest. The differences in the regulations are thus of minor importance and does not affect a Swedish MNE to any major extent. The challenging area is instead the conflict between the tax authority and the customs service. To enable this study, three Swedish MNEs are used as a case study. We discovered that all had very different transfer pricing strategies even though they are within the same industry and two of them even within same range of products. Out of this we made the conclusion that the strategy chosen is not just depending on what product or service you trade with but also the aim and purpose, the range of products and the structure of the company. International transfer pricing is a very complex issue that goes into nearly all business operations. The concept of transfer pricing can thus be broken down and simplified if the demands from the company is minor.</p>

Background International transfer pricing has been a highlighted issue during the last decades as country after country has revised and introduced new transfer pricing laws as a respond to the expanded globalization. Several countries are adopting similar approaches and the prime guiding principles are provided by the Organization for Economic Co-Operation (OECD). The international law as well as the laws of all 30 member countries is based on the OECD Guidelines. Purpose The purpose of this master’s thesis is to describe differences and similarities regarding the transfer pricing regulations in China and Sweden and to explain how a Swedish multinational enterprise (MNE) have to utilize and adjust their transfer pricing strategy when trading with group companies in China. The results then conclude into a step model for strategic transfer pricing. Result The differences between the regulations are mainly uncovered in the definition of associated parties and associated interest. The differences in the regulations are thus of minor importance and does not affect a Swedish MNE to any major extent. The challenging area is instead the conflict between the tax authority and the customs service. To enable this study, three Swedish MNEs are used as a case study. We discovered that all had very different transfer pricing strategies even though they are within the same industry and two of them even within same range of products. Out of this we made the conclusion that the strategy chosen is not just depending on what product or service you trade with but also the aim and purpose, the range of products and the structure of the company. International transfer pricing is a very complex issue that goes into nearly all business operations. The concept of transfer pricing can thus be broken down and simplified if the demands from the company is minor.

Thesis (M.Com. (Taxation))--University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Accountancy, 2015. / Could not copy abstract

Deviations from arm’s length prices (prices charged between independent persons) charged between connected cross-border companies are corrected by primary transfer pricing adjustments, effected by the tax authorities of a country, resulting in secondary transactions classified as constructive loans, constructive dividends or constructive equity contributions. Tax could be imposed on the secondary transaction, giving rise to a secondary adjustment. For years of assessment commencing on 1 April 2012 secondary transactions, previously regarded as constructive dividends with Secondary Tax on Companies, were amended to be treated as constructive loans with interest adjustments. The primary research problem addressed by this literature study was to establish whether the constructive loan is the appropriate treatment of secondary transfer pricing transactions in the South African context and if not, whether the other alternatives suggested by the Organisation for Economic Co-operation and Development (“OECD”) guidelines should be considered. The OECD suggests that a transaction should be characterised in accordance with its substance. Determination of the subjective economic substance may be established by the motives of multinational groups for setting transfer prices. Multinational groups could have various motives for setting transfer prices that deviate from the arm’s length principle, influencing the economic substance of secondary transactions. In order to determine if the treatment of a secondary transaction, as a constructive loan, would be appropriate and reflect the economic substance of adjustments arising as a result of these motives, the characteristics of each alternative were analysed. The characteristics determined for each of the alternatives were then applied to the economic substance arising from a motive, to determine the appropriateness of each of the alternatives as a secondary transaction. Based on the motives for entering into these transactions, an analysis was performed. The findings led to the conclusion that in the case of the economic substance of transactions, which give rise to transfer pricing adjustments, a constructive dividend appears to be the appropriate treatment for a secondary transaction in most circumstances, as opposed to the constructive loan currently applied by South Africa. Constructive loans or constructive equity contributions may be reflective of the economic substance in exceptional circumstances. The study makes recommendations that South Africa should consider amending the current treatment of a secondary transaction as a constructive loan, to a constructive dividend. It was also recommended that overlapping criteria in the dividend definition be eliminated and that further research should be undertaken in order to determine how the exceptional circumstances for characterisation as a constructive loan or constructive equity contribution, should be provided for in the Income Tax Act (58 of 1962). / MCom (South African and International Taxation), North-West University, Potchefstroom Campus, 2014

Deviations from arm’s length prices (prices charged between independent persons) charged between connected cross-border companies are corrected by primary transfer pricing adjustments, effected by the tax authorities of a country, resulting in secondary transactions classified as constructive loans, constructive dividends or constructive equity contributions. Tax could be imposed on the secondary transaction, giving rise to a secondary adjustment. For years of assessment commencing on 1 April 2012 secondary transactions, previously regarded as constructive dividends with Secondary Tax on Companies, were amended to be treated as constructive loans with interest adjustments. The primary research problem addressed by this literature study was to establish whether the constructive loan is the appropriate treatment of secondary transfer pricing transactions in the South African context and if not, whether the other alternatives suggested by the Organisation for Economic Co-operation and Development (“OECD”) guidelines should be considered. The OECD suggests that a transaction should be characterised in accordance with its substance. Determination of the subjective economic substance may be established by the motives of multinational groups for setting transfer prices. Multinational groups could have various motives for setting transfer prices that deviate from the arm’s length principle, influencing the economic substance of secondary transactions. In order to determine if the treatment of a secondary transaction, as a constructive loan, would be appropriate and reflect the economic substance of adjustments arising as a result of these motives, the characteristics of each alternative were analysed. The characteristics determined for each of the alternatives were then applied to the economic substance arising from a motive, to determine the appropriateness of each of the alternatives as a secondary transaction. Based on the motives for entering into these transactions, an analysis was performed. The findings led to the conclusion that in the case of the economic substance of transactions, which give rise to transfer pricing adjustments, a constructive dividend appears to be the appropriate treatment for a secondary transaction in most circumstances, as opposed to the constructive loan currently applied by South Africa. Constructive loans or constructive equity contributions may be reflective of the economic substance in exceptional circumstances. The study makes recommendations that South Africa should consider amending the current treatment of a secondary transaction as a constructive loan, to a constructive dividend. It was also recommended that overlapping criteria in the dividend definition be eliminated and that further research should be undertaken in order to determine how the exceptional circumstances for characterisation as a constructive loan or constructive equity contribution, should be provided for in the Income Tax Act (58 of 1962). / MCom (South African and International Taxation), North-West University, Potchefstroom Campus, 2014

The purpose of this study is to answer the research question of how a service company (ServiceCo) could achieve a transfer price of its services. This is of particular interest, due to the growth of service firms that have rapidly increased and surpassed the manufacturing firms, as well as the dominant logic shifting towards services. However, the problem with this field of study is that transfer pricing with regards to the service industry, is a rather unexplored phenomenon in which the guidelines and theories are mostly directed towards manufacturing firms. This study uses a single case study approach where ServiceCo’s organizational characteristics were analyzed in order to attain the information required to understand how ServiceCo could achieve a transfer price of its services. Furthermore, this study uses the Eccles (1983) MAP and the OECD Guidelines, as well as incorporating Porter’s (1985) value chain. This study assesses that ServiceCo, in its current state, uses a sub-optimal transfer pricing method of its services. Therefore, a change in the transfer pricing method was suggested to ServiceCo. Given the organizational characteristics of ServiceCo, the results led to the conclusion that ServiceCo could benefit from a residual analysis in the profit split method, in which an actual full cost plus mark-up compensation could be used on its routine functions, and the residual profit could be split between the entities based on the intangible assets employed, functions performed and the risks carried.

Multinational enterprises have been widely accused of using aggressive tax planning schemes to avoid paying tax all over the world. The purpose of this study is to analyse the methods used by multinational enterprises in the context of business restructurings to shift profits from high to low tax jurisdictions. Transactions between associated entities have generally been manipulated by applying non-arm’s length prices to these transactions, as well as devising agreements where the economic substance varies from the form of the transaction. The study aims to investigate some of the practical challenges faced by tax administrators in the application of the arm’s length principle. The study was conducted based on a literature review, as well as analysing specific examples reported in newspapers where multinational enterprises have used aggressive tax planning schemes to shift profits. International case law was also analysed to evaluate some of the factors considered by the courts in the determination of the arm’s length price. It was found that multinational enterprises definitely use aggressive tax planning schemes to shift profits. The practical challenges in the determination of arm’s length prices, complexity of the transactions involved, as well as a lack of resources, especially in the developing nations, are some of the factors that cause tax administrators to battle to find a solution to deter and detect these schemes. Other methods such as the unitary taxation method and the country by country reporting concept have been brought forward as alternatives to the arm’s length principle. These alternatives have been proposed in an effort to find a solution to the challenges posed by the arm’s length principle. Specific measures have also been recommended for developing nations’ tax administrators to resolve the issues that they currently experience in this context. / Thesis (MCom (South African and International Taxation))--North-West University, Potchefstroom Campus, 2013

Multinational enterprises have been widely accused of using aggressive tax planning schemes to avoid paying tax all over the world. The purpose of this study is to analyse the methods used by multinational enterprises in the context of business restructurings to shift profits from high to low tax jurisdictions. Transactions between associated entities have generally been manipulated by applying non-arm’s length prices to these transactions, as well as devising agreements where the economic substance varies from the form of the transaction. The study aims to investigate some of the practical challenges faced by tax administrators in the application of the arm’s length principle. The study was conducted based on a literature review, as well as analysing specific examples reported in newspapers where multinational enterprises have used aggressive tax planning schemes to shift profits. International case law was also analysed to evaluate some of the factors considered by the courts in the determination of the arm’s length price. It was found that multinational enterprises definitely use aggressive tax planning schemes to shift profits. The practical challenges in the determination of arm’s length prices, complexity of the transactions involved, as well as a lack of resources, especially in the developing nations, are some of the factors that cause tax administrators to battle to find a solution to deter and detect these schemes. Other methods such as the unitary taxation method and the country by country reporting concept have been brought forward as alternatives to the arm’s length principle. These alternatives have been proposed in an effort to find a solution to the challenges posed by the arm’s length principle. Specific measures have also been recommended for developing nations’ tax administrators to resolve the issues that they currently experience in this context. / Thesis (MCom (South African and International Taxation))--North-West University, Potchefstroom Campus, 2013

The master´s thesis deals with the issue of setting transfer prices for management services between associated enterprises. The thesis contains a theoretical definition of basic concepts and analysis of legislation. The content of the analytical part of the thesis is the analysis of the current state and analysis of case law. The theoretical background is applied in the practical part to a model example which is determined by setting transfer price for management services between internal associated enterprises.

The text discusses the Framework for the Implementation of the Corporate Sustainability Due Diligence Directive (CSDD) proposed by the European Union. The directive, aligned with UN and OECD guidelines, imposes obligations on companies to ensure respect for human rights and the environment. The due diligence obligation involves identifying and addressing the negative impacts of business activities, establishing internal complaint mechanisms, and publicly communicating efforts. The directive emphasizes integrating these activities into corporate policies and strategic decisions throughout the value chain. Companies must assess and address negative impacts in their supply chains, with measures tailored to the severity, likelihood, size, resources, and capabilities of the undertaking. The text highlights the complexity of sustainability as a long-term, multifaceted process, calling for collective responsibility from various stakeholders to navigate challenges in ecological and digital transitions, social inclusion, and energy and food security.