The US cannabis industry encounters substantial tax challenges stemming from the classification of cannabis as a Schedule I controlled substance and the implications of section 280E of the Internal Revenue Code. To mitigate the adverse tax treatment imposed by this section, cannabis companies can employ various transfer pricing strategies. Vertical integration strategies, which allow companies to segregate activities across distinct business units within different industry verticals, serve to maximize the cost of goods sold calculation while minimizing the impact of section 280E. However, it is essential to recognize that such strategies also subject cannabis companies to transfer pricing regulations under section 482 of the Internal Revenue Code. Adequate transfer pricing documentation plays a crucial role in supporting pricing structures and minimizing tax exposure.
{"title":"Transfer Pricing Implications for the Cannabis Industry","authors":"S. Castro Jurado","doi":"10.59403/evc60t","DOIUrl":"https://doi.org/10.59403/evc60t","url":null,"abstract":"The US cannabis industry encounters substantial tax challenges stemming from the classification of cannabis as a Schedule I controlled substance and the implications of section 280E of the Internal Revenue Code. To mitigate the adverse tax treatment imposed by this section, cannabis companies can employ various transfer pricing strategies. Vertical integration strategies, which allow companies to segregate activities across distinct business units within different industry verticals, serve to maximize the cost of goods sold calculation while minimizing the impact of section 280E. However, it is essential to recognize that such strategies also subject cannabis companies to transfer pricing regulations under section 482 of the Internal Revenue Code. Adequate transfer pricing documentation plays a crucial role in supporting pricing structures and minimizing tax exposure.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":" 9","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141668716","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article analyses the Starbucks case solely from a transfer pricing standpoint, without delving into the merits or discussion on State aid. The analysis is based on the four-step transfer pricing framework: accurate delineation of the transaction, recognition of the transaction, selection of the most appropriate transfer pricing method, and application of the selected method. The article focuses exclusively on the European entities of the Starbucks group that were part of the State aid discussion.
{"title":"Brewing Transfer Pricing: Unravelling the Starbucks Case","authors":"A. Padwalkar","doi":"10.59403/1ffxc60","DOIUrl":"https://doi.org/10.59403/1ffxc60","url":null,"abstract":"This article analyses the Starbucks case solely from a transfer pricing standpoint, without delving into the merits or discussion on State aid. The analysis is based on the four-step transfer pricing framework: accurate delineation of the transaction, recognition of the transaction, selection of the most appropriate transfer pricing method, and application of the selected method. The article focuses exclusively on the European entities of the Starbucks group that were part of the State aid discussion.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":"29 36","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141354467","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Although location benefits are discussed in the OECD Transfer Pricing Guidelines 2022 and the UN Practical Manual on Transfer Pricing for Developing Countries 2021, they play no or only a minor role in German transfer pricing practice. However, it can be assumed that this will change, as a Germany’s Federal Tax Court provides guidance on the consideration of location benefits and even requires them to be taken into account.
{"title":"Location Benefits in Transfer Pricing","authors":"G. Bestelmeyer, S. Kluge, D. Probst","doi":"10.59403/3vckxb5","DOIUrl":"https://doi.org/10.59403/3vckxb5","url":null,"abstract":"Although location benefits are discussed in the OECD Transfer Pricing Guidelines 2022 and the UN Practical Manual on Transfer Pricing for Developing Countries 2021, they play no or only a minor role in German transfer pricing practice. However, it can be assumed that this will change, as a Germany’s Federal Tax Court provides guidance on the consideration of location benefits and even requires them to be taken into account.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":"23 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141118074","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Is it possible for MNEs to achieve tax certainty when using the profit split method? Recent case law demonstrates a growing controversy surrounding the profit split method application, with tax authorities becoming more proficient at challenging its use.
{"title":"Recent Case Law on the Application of the Profit Split Method","authors":"Guzenko","doi":"10.59403/3bj3bxz","DOIUrl":"https://doi.org/10.59403/3bj3bxz","url":null,"abstract":"Is it possible for MNEs to achieve tax certainty when using the profit split method? Recent case law demonstrates a growing controversy surrounding the profit split method application, with tax authorities becoming more proficient at challenging its use.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":" 10","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140997642","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The recent European Commission proposal for a transfer pricing directive comes after years of attempts to claim the existence of illegal State aids allegedly granted by Member States to multinational enterprises (MNEs) that were deemed to have been provided through advance pricing agreements. However, the Court of Justice of the European Union has consistently denied the Commission’s assumptions and clarified that no autonomous arm’s length principle, different from that of the OECD, was identifiable under EU law. In this article, the author analyses the major transfer pricing cases scrutinized by the European Commission and their connection to the Commission’s attempt to introduce a European arm’s length standard by reverting to the directive procedure after having failed to prove the existence of such a standard over a ten-year-long judicial battle.
{"title":"A Decade-Long Crusade against Transfer Pricing Rulings Turns into a Proposal for a Transfer Pricing Directive: A European Attempt to Introduce a Harmonized EU Arm’s Length Standard?","authors":"G. Felici","doi":"10.59403/2dnk3je","DOIUrl":"https://doi.org/10.59403/2dnk3je","url":null,"abstract":"The recent European Commission proposal for a transfer pricing directive comes after years of attempts to claim the existence of illegal State aids allegedly granted by Member States to multinational enterprises (MNEs) that were deemed to have been provided through advance pricing agreements. However, the Court of Justice of the European Union has consistently denied the Commission’s assumptions and clarified that no autonomous arm’s length principle, different from that of the OECD, was identifiable under EU law. In this article, the author analyses the major transfer pricing cases scrutinized by the European Commission and their connection to the Commission’s attempt to introduce a European arm’s length standard by reverting to the directive procedure after having failed to prove the existence of such a standard over a ten-year-long judicial battle.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":"31 16","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140671955","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
While the Internal Revenue Service has long scrutinized cross-border intercompany transactions, state tax authorities are increasingly focusing on state transfer pricing. This trend poses new challenges for company groups operating in multiple states. In states with separate tax reporting, each entity within an affiliated group is treated as a separate taxpayer for state income tax purposes, which can lead to profit shifting by manipulating transfer prices between affiliated entities in different states. In this regard, state tax authorities are taking a more proactive approach to examine and audit state transfer pricing positions. Recent significant state transfer pricing case law highlights the importance of preparing and maintaining adequate documentation to support intercompany transactions during state audits. Specifically, preparing an adequate transfer pricing study can be crucial for risk management by minimizing potential challenges from state tax authorities.
{"title":"Transfer Pricing State Audits on the Upswing","authors":"S. Castro Jurado, E. Mullen, J. Bonk, Z. Hussain","doi":"10.59403/3skrxaq","DOIUrl":"https://doi.org/10.59403/3skrxaq","url":null,"abstract":"While the Internal Revenue Service has long scrutinized cross-border intercompany transactions, state tax authorities are increasingly focusing on state transfer pricing. This trend poses new challenges for company groups operating in multiple states. In states with separate tax reporting, each entity within an affiliated group is treated as a separate taxpayer for state income tax purposes, which can lead to profit shifting by manipulating transfer prices between affiliated entities in different states. In this regard, state tax authorities are taking a more proactive approach to examine and audit state transfer pricing positions. Recent significant state transfer pricing case law highlights the importance of preparing and maintaining adequate documentation to support intercompany transactions during state audits. Specifically, preparing an adequate transfer pricing study can be crucial for risk management by minimizing potential challenges from state tax authorities.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":" 3","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140687485","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article summarizes the evolution of the CSA Regulations since their inception until the present and describes how three court cases may have influenced their evolution in the past or may still influence these regulations for the future. It also presents some of the main challenges that may arise regarding future intangible assets’ valuation.
{"title":"US Court Cases and Intangible Assets Valuations","authors":"A. Nadais","doi":"10.59403/3c129mm","DOIUrl":"https://doi.org/10.59403/3c129mm","url":null,"abstract":"This article summarizes the evolution of the CSA Regulations since their inception until the present and describes how three court cases may have influenced their evolution in the past or may still influence these regulations for the future. It also presents some of the main challenges that may arise regarding future intangible assets’ valuation.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":" 40","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140690866","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This two-part article examines whether the valuation of intangibles prepared based on accounting standards or transfer pricing guidelines would also comply with the requirements for valuing intellectual property rights under section 19B of the Singapore Income Tax Act 1947. The article highlights potential issues that could result in value misalignment, largely due to differences in the definition of intangibles, basis of value and other valuation considerations. It also provides suggestions to bridge these potential gaps and to enhance valuation certainty for the tax amortization regime in Singapore.
{"title":"Finding the Nexus in Accounting and Transfer Pricing Valuations for Tax Amortization of Intellectual Property Rights in Singapore – Part 1","authors":"R. Goh","doi":"10.59403/242m4zw","DOIUrl":"https://doi.org/10.59403/242m4zw","url":null,"abstract":"This two-part article examines whether the valuation of intangibles prepared based on accounting standards or transfer pricing guidelines would also comply with the requirements for valuing intellectual property rights under section 19B of the Singapore Income Tax Act 1947. The article highlights potential issues that could result in value misalignment, largely due to differences in the definition of intangibles, basis of value and other valuation considerations. It also provides suggestions to bridge these potential gaps and to enhance valuation certainty for the tax amortization regime in Singapore.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":"8 1part2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140713996","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The article discusses the recent case law on the German relocation of functions rules and the practical implications for multinational companies with regard to the legal situation both before and after the revision of the relocation of functions rules in 2022.
{"title":"Recent Case Law on the Relocation of Functions Rules","authors":"S. Karnath, H. Brugger","doi":"10.59403/3re7475","DOIUrl":"https://doi.org/10.59403/3re7475","url":null,"abstract":"The article discusses the recent case law on the German relocation of functions rules and the practical implications for multinational companies with regard to the legal situation both before and after the revision of the relocation of functions rules in 2022.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":"67 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140729372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The international tax landscape has undergone significant changes with the introduction of the OECD’s Pillar Two GloBE rules, which aim to establish a global minimum corporate tax rate of 15%. This initiative is part of a broader effort to address the tax challenges arising from the digitalization of the economy and to curb the shifting of profits to low or no-tax jurisdictions. A critical aspect of these rules is their interplay with transfer pricing rules, a domain that has long been a cornerstone of international tax planning for multinational enterprise (MNE) groups. In this article, the authors analyse the points of convergence between Pillar Two GloBE rules and transfer pricing, the implications for MNE groups and a way forward.
{"title":"Interplay between Pillar Two and Transfer Pricing Rules","authors":"S. Bilaney, S. Nori","doi":"10.59403/3y0sz3w","DOIUrl":"https://doi.org/10.59403/3y0sz3w","url":null,"abstract":"The international tax landscape has undergone significant changes with the introduction of the OECD’s Pillar Two GloBE rules, which aim to establish a global minimum corporate tax rate of 15%. This initiative is part of a broader effort to address the tax challenges arising from the digitalization of the economy and to curb the shifting of profits to low or no-tax jurisdictions. A critical aspect of these rules is their interplay with transfer pricing rules, a domain that has long been a cornerstone of international tax planning for multinational enterprise (MNE) groups. In this article, the authors analyse the points of convergence between Pillar Two GloBE rules and transfer pricing, the implications for MNE groups and a way forward.","PeriodicalId":517680,"journal":{"name":"International Transfer Pricing Journal","volume":"74 14","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140371300","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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