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There is an overlap between the transfer pricing concepts that apply under tax and under customs regimes. This thesis aims to demonstrate (i) that customs and tax laws often share common principles in respect of related-party transactions; (ii) that transfer pricing as agreed to under one discipline should be recognized under the other; (iii) that the OECD Transfer Pricing Guidelines constitute a body of rules that is appropriate to supplement the related party provisions of the GATT/WTO Valuation Code ("GVC"); and (iv) that such guidelines are generally in accordance with the provisions of the GVC and its general principles and objectives. This thesis also analyzes the tax and customs value of imported goods, and identifies which additions to or deductions from customs value might have to be taken into account in comparing tax and customs results. The thesis concludes with an analysis of the circumstances and conditions under which the introduction of transfer pricing compensatory adjustments to transaction value would be consistent with Article 1 of the GVC.

Pas de résumé / Doctorat en droit / info:eu-repo/semantics/nonPublished

For the last decades, transfer pricing has been one of the most important issues for both tax authorities and multinational corporations. On the one hand, tax authorities, despite their counter-measures, have not been able to cope with international tax avoidance or evasion using transfer pricing by multinational corporations owing to the deficiency of tax systems and the inability of tax administrations and this has resulted in a huge revenue loss to the coffers of their countries. On the other hand, while multinational corporations have been using transfer pricing as vehicles to maximize their overall after-tax profits as a group, they have been suffering intolerable administrative burdens and double taxation caused by enforcement of counter-measures by tax authorities. The basic principle for transfer pricing taxation legislation is the "arm's length principle", that transactions between parties that are not dealing at arm's length should be carried out for tax purposes under terms and at a price that one could reasonably have expected in similar circumstance had the parties been dealing at arm's length. This principle has been endorsed by the OECD, Canada, the U.S. and other developed countries, however, common specific guidelines under this principle have not been established among tax authorities and even multinational corporations themselves cannot always find an arm's length price acceptable to tax authorities. Since the OECD Committee on Fiscal Affairs issued the report "Transfer Pricing and Multinational Enterprises" in 1979, tax authorities, multinational corporations and tax practitioners have been making strenuous efforts to find a reasonable and practical transfer pricing taxation system and to coordinate its enforcement, all of which enables tax authorities to recover or keep their fair share of revenue and protect multinational corporations from double taxation. At present, the situation already shows some improvements due to efforts for the harmonization of guidelines among tax authorities, and due to multinational corporations' application of transfer pricing policy in a more self-restricted manner, and more appropriate advice from tax practitioners. However, there is still room for possible improvements. In Canada, there have been no guidelines other than the Income Tax Act which provides general principles of transfer pricing taxation, and actual enforcement has been based on the internal assessing guideline of Revenue Canada. But, on February 27, 1987 Revenue Canada issued Information Circular 87-2. Although an information circular does not carry any legal weight, it is expected that the circular will eliminate taxpayers' uncertainty and augment tax compliance. On the other hand, in Japan, despite its export-oriented economy, the Japanese tax authorities have not been keeping pace with the internationalization of economic activities. Having introduced anti-tax haven legislation in 1978, Japan in 1986 introduced transfer pricing taxation legislation. Although fairly concrete pricing methods have been written into legislation in order to permit the reasonable enforcement of the new system, there is much to be learned from the experience of the "advanced" countries. Above all, Canada's experience could be useful, as the provisions of the new Japanese transfer pricing taxation legislation are similar to those of the Canadian Income Tax Act and both countries have several similarities in terms of their relationship with the U.S. In this thesis, after reviewing the background to these problems, I will discuss the Canadian transfer pricing taxation system and its enforcement by looking at each type of intra-group transaction and the corresponding adjustment and mutual agreement procedure system. Then I will compare the Canadian approach and Japanese approach. Possible improvements will be dealt with in the conclusion. Since there has been little jurisprudence in this area, the discussions are primarily based on the tax authorities' perspectives and the OECD reports. / Law, Peter A. Allard School of / Graduate

A research report submitted to the Faculty of Commerce, Law and Management in partial fulfilment of the requirements for the degree of Master of Commerce (specialising in Taxation) / The popularity of hybrid instruments as a tax planning technique has grown over the years. There is an increasing global awareness on the use of these instruments and on addressing the tax gaps created by these instruments. South Africa introduced significant amendments to the legislation on hybrid debt instruments, ahead of many countries around the globe. This research report examines hybrid debt instruments and the tax concerns which have created the need for specific tax legislation addressing such instruments. It considers tax policies proposed by the international tax fraternity, global trends in changes to tax policies and South Africa‘s stance on such tax policies. The amended section 8F and new section 8FA of the Income Tax Act are included in this consideration. Key words: arrangement, debt, deductible, dividend, equity, host country, interest, hybrid debt instrument, hybrid interest, home country, tax / MT2017

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Section 263A was added to the Internal Revenue Code by the Tax Reform Act of 1986. This code section applies inventory capitalization rules more uniformly across many industries and strictly increases the cost charged to inventory for tax purposes by increasing the number of cost allocations required [Seago, 1987]. The Treasury thought the changes would increase the economic efficiency of the tax system. These changes, called uniform capitalization, are analyzed by a mathematical model in this dissertation. The results reverse the conventional wisdom of the Treasury and show that the changes lead to less, not more efficient behavior and, under some reasonable assumptions, this inefficiency leads to decreases in inventory holding and production. This dissertation contains the development of a mathematical model of uniform capitalization, performs an economic analysis of the model, and advances the conclusion that uniform capitalization causes productively inefficient behavior. The provisions of §263A that required more costs to be allocated and more industries to be covered created the inefficiency. The results show that the rules are uniform, but uniformly bad, because productive efficiency is decreased. The uniformity of the system is not the problem. The increased number of cost allocations required is the problem with §263A. Uniform capitalization has no affect on allocative efficiency because it changes the tax treatment of input, not outputs. This dissertation also contains the development of a mathematical model of firm output and inventory holding decisions and advances the conclusion that under LIFO inventory and some reasonable cost assumptions, production and inventory holding decrease because the inefficient tax act increases production costs. The mathematical results are consistent with the intuition developed. / Ph. D.

Thesis (MComm)--Stellenbosch University, 2001. / ENGLISH ABSTRACT: In this study, the income tax implications of the acquisition of a debenture at a discount is investigated. The purpose of this study is determine whether the proceeds from the redemption or disposal of the above-mentioned debenture are of a revenue or capital nature. It is customary for companies to issue debentures in order to obtain long term finance. These debentures may be issued at a discount. There exists a general uncertainty in the academic literature regarding the income tax implications of the acquisition of a debenture at a discount to the face value thereof. Section 24J of the Income Tax Act includes a discount in the definition of "interest". There is no general definition of the words "interest" and "discount" in the Income Tax Act. The lack of a statutory definition of these words contributes to the uncertainty regarding the income tax treatment of the sale or redemption of a debenture. The following aspects are discussed: (a) the revenue or capital nature of the proceeds on redemption and transfer of a debenture; (b) the provisions of section 24J of the Income Tax Act; and (c) the provisions of capital gains tax. In order to determine the revenue or capital nature of the proceeds on redemption or transfer of a debenture, the following aspects are discussed: • The attributes of a debenture from an economic and legal perspective. The factors that determine the value of the discount of a debenture are considered from an economic viewpoint. • The guidelines that apply in general to determine the revenue or capital nature of accruals are considered with specific reference to the guidelines laid down by the South African courts. A distinction is drawn between the guidelines that consider the intention of the taxpayer and those guidelines that operate independently of the intention of the taxpayer. • The general guidelines are then applied to the proceeds on redemption or transfer of a debenture. The ordinary meaning of interest and the meaning of the interest in the Income Tax Act are considered. The relation between a discount and interest is examined. Case law from England, Australia and Canada are also considered. The writer comes to the conclusion that a discount that realises on redemption of a debenture is in the nature of interest. The discount is revenue derived from capital productively employed and therefore not of a capital nature. The proceeds from the transfer of a debenture is not of a capital nature if it is a gain made by an operation of business in carrying out a scheme for profit making. The writer is of the opinion that section 24J influences the application of the general principles. The writer is of the opinion that the objective test should be applied to determine the nature of the accrual amount in terms of section 24J. The accrual amount will include a proportional amount of the discount. The objective test should be applied irrespective of whether the debenture is held until redemption or transferred before redemption. The provisions of section 24J should be applied before the capital gain or capital loss is determined in terms of the Eight Schedule to the Income Tax Act. The proceeds from disposal must be reduced by any amount of the proceeds that was included in gross income or taken into account in determining the taxable income of a person. The base cost of a debenture acquired at a premium must be reduced by the amount of the premium that was allowed as a deduction in determining the taxable income of the holder of a debenture. / AFRIKAANSE OPSOMMING: In hierdie studie word die inkomstebelastinggevolge van die verkryging van 'n skuldbrief teen 'n diskonto ondersoek. Die doel van hierdie studie is am te bepaal of die opbrengs met die aflossing en verkoop van sodanige skuldbrief van 'n inkomste- of kapitale aard is. Een van die gebruiklikste metodes vir 'n maatskappy am langtermynleningsfondse te bekom, is deur die uitreiking van skuldbriewe. Skuldbriewe kan teen 'n diskonto uitgereik word. Daar bestaan "n algemene onsekerheid in die beskikbare literatuur met betrekking tot die inkomstebelastinggevolge van "n skuldbrief wat teen "n diskonto verkry is. Artikel 24J van die Inkomstebelastingwet sluit spesifiek 'n diskonto by die omskrywing van "rente" in. Die Inkomstebe/astingwet bevat egter nie 'n algemene omskrywing van die woorde "rente" en "diskonto" nie. Die gebrek aan 'n statutere omskrywing van bogenoemde woorde dra by tot die onsekerheid van die inkomstebelastinggevolge van die aflossing of verkoop van 'n skuldbrief. Die skrywer oorweeg die volgende: (a) die inkomste- of kapitale aard van die opbrengs met aflossing en verkoop van "n skuldbrief; (b) die bepalings van artikel 24J van die Inkomstebelastingwet; en (c) die bepalings van die kapitaalwinsbelasting-wetgewing. Ten einde die inkomste- of kapitale aard van die opbrengs met aflossing en verkoop van 'n skuldbrief te bepaal, word die volgende aspekte bespreek: • Die eienskappe van 'n skuldbrief vanuit "n ekonomiese- en regsoogpunt. Die faktore wat die waarde van die diskonto van "n skuldbrief be'invloed, word vanuit In ekonomiese oogpunt oorweeg. • Die riglyne wat algemeen ter sprake is by die bepaling van die inkomste- of kapitale aard van toevallings. Daar word spesifiek na die riglyne soos deur die Suid-Afrikaanse geregshowe neergele, verwys. In Onderskeid word kortliks getref tussen die riglyne wat vereis dat In belastingpligtige se doel met betrekking tot In bate vasgestel word en daardie riglyne wat onafhanklik van In belastingpligtige se doel toegepas word, • Die algemene riglyne word op die opbrengs met aflossing en verkoop van In skuldbrief toegepas. Die gewone betekenis van rente asook die betekenis van rente ingevolge die Inkomstebelastingwet word oorweeg. Die verband tussen In diskonto en rente word ondersoek. Engelse, Australiese en Kanadese regspraak word oorweeg. Die skrywer kom tot die gevolgtrekking dat In diskonto wat met die aflossing van In skuldbrief realiseer, rente van aard is. In Diskonto wat met aflossing realiseer is In bedrag voortgebring deur kapitaal produktief aan te wend en dus nie van In kapitale aard nie. In Opbrengs met die oordrag van In skuldbrief is nie van In kapitale aard nie indien dit verkry is uit die beoefening van In besigheidshandeling in die uitvoering van In skema van winsbejag. Die skrywer is van mening dat artikel 24J die toepassing van die algemene riglyne be'invloed. Die skrywer is van mening dat die objektiewe riglyn toegepas moet word am die aard van toevallingsbedrae soos ingevolge. artikel 24J bereken vas te stel. In Toevallingsbedrag sluit In proporsionele gedeelte van In diskonto in. Die objektiewe riglyn moet toegepas word ongeag of 'n skuldbrief tot op die aflosdatum gehou word of daarvoor oorgedra word. Die bepalings van artikel 24J moet toegepas word voordat die kapitaalwins of - verlies ingevolge die Agtste Bylae bereken word. Die opbrengs moet verminder word met enige bedrag wat by bruto inkomste ingesluit word of in ag geneem word by die vasstelling van belasbare inkomste. Die basiskoste van 'n skuldbrief wat teen 'n premie verkry is moet aangepas word met die bedrag van die premie wat reeds in ag geneem is am die belasbare inkomste van die houer van 'n skuldbrief te bepaal.

M.Comm. / The purpose of this study is to determine the meaning of 'arm's length transactions' as stated in the Income Tax Act, Act 58 of 1962. Although the meaning of arm's length transactions have been properly interpreted by our courts, no guidelines or policy documents pertaining to this concept, have been issued by the South African Revenue Services in as far as it relates to transfer pricing. Several of the developed countries have adopted the guidelines of the Organisation of Economic Co-ordination and Development regarding transfer prices and the arm's length principle in respect of international transactions. The substance of arm's length transactions : The concept of arm's length is not easy to state: it is not unlike the proverbial elephant which could easily be recognised, but could not be defined. It can be defined by reference to the terms of the transaction in question, or by reference to the relationship between the parties to it, or by reference to both of these factors. Normally, parties enter into an arm's length transaction when each party: • Is independent of the other; and • Strives to get the utmost possible advantage from the transaction for himself. The effects of an arm's length transaction are: • The rights and obligations created by the transaction are more likely to be regarded as normal than abnormal; and • The means and manner employed in entering into the transaction are more likely to be normal than abnormal. It is clear that the meaning of arm's length is defined, but that the effect of such transactions will depend on the facts of each case. What may be normal in one case can be abnormal in another depending on the underlying facts. Although South African transfer pricing legislation includes the arm's length principle in respect of international transactions, legislation on transfer pricing should be more clear as to what is normal or abnormal in respect of international transactions.

published_or_final_version / Law / Master / Doctor of Legal Studies