International Taxation - Transfer Pricing

International Taxation - Transfer Pricing Research Paper example
Masters
Research Paper
Finance & Accounting
Pages 8 (2008 words)
Download 0
In the corporate and financial market, transfer pricing is one of the controversial issue which is being debated at large. In international taxation, transfer pricing has become a heated issue. Corporation on one hand see it as a legitimate tool for tax evasion and tax avoidance, while on the other hand, the regulators and legislators, see it as unlawful and is frowned upon…

Introduction

For the purpose of the subject under consideration, it is also assumed that the subsidiary company in the aforementioned group structure is a foreign company and the Parent is a local company. When the companies in the group structures are involved in transactions with each other, they put a price on the transaction. This price is termed as the ‘transfer price’. This can further be illustrated with the help of the following example: Company A, the parent company, is situated in USA and its subsidiary company, Company B is situated in UK. Suppose that Company A has outsourced its financial activities to its subsidiary company, which means that Company A does not have any staff which are performing finance related activities (such as preparing financial statement, filing tax return, involved in budgeting etc.) instead the finance department of Company B is performing these activities for Company A and in return is charging a fee. Although the owners of both Company A and Company B are the same, but still one company is charging a fee for performing a particular service to another company in the capital structure. Transfer pricing is not a legal activity in its substance, but its misuse can label it as abusive. ...
Download paper
Not exactly what you need?

Related papers

Taxation
50,760.34 Salary - Tax - NIC Tax brackets Income 10% (starting rate for savings only) 0 - ?2,560 20% for basic rate 0 - ?35,000 40% for higher rate ?35,001 - ?150,000 50% for additional rate Over ?150,000 (HM revenue and Customs 480 (2011) The liability of income tax payable from the above computation is ?25,718.3. A deduction of personal allowance of 7,475 is made in the year 2011/2012 (Great…
Responsibility Accounting and Transfer Pricing
Required: a. Calculate depreciation expense and book value of the metal press under both historical cost and price-level-adjusted historical cost. For the historical cost, the metal fabrication press would depreciate $43,500 per year ($522,000/12). In terms of the book value of the metal fabrication press under historical cost, the net book value would be $217,500 ($522,000-($43,500*7). In…
Taxation and Housing Issues
Hence, in order to understand the economic feasibility of a particular country, a close analysis of the prevailing issues on taxation and housing is necessary. This paper will critically analyze various issues pertaining to taxation and housing in the United Kingdom, United States, and United Arab Emirates. Issues relating to taxation and housing in the UK The economic spectrum of the United…
International Taxation Essay
Essentially, this means that a multinational company with hundreds of companies worldwide is not regarded as a single economic entity but rather as an amalgam of independent tax paying companies1. There has been intense debate on whether it would be wise for the international taxation to be changed to allow for the holding company to pay the group’s consolidated tax. The proponents of this…
Assignment 3: International Taxation and Foreign Tax Credits
This will in effect be a form of double taxation (Hines & Rice, 1994). A strategy for a US-Based taxpayer to repatriate earnings from the foreign markets and avoid or mitigate the U.S. tax impact on repatriation Lots of profits that most taxpayers in the U.S attribute to mitigate or avoid taxes should be taxed up to about 35% when they are repatriated. In this context, the client can repatriate…
Assignment 4: Transfer Pricing
The U.S. has an aggressive transfer pricing policy environment as administrators and legislators pursue to lure foreign investment. Transfer prices entail changes made between controlled (or related) entities such as branches and companies that can be either wholly or majority owned by a parent company. The paper explores diverse scenarios of transfer pricing that an entity can pursue to minimize…
International Taxation - International Taxation and Foreign Tax Credits
However, in reality the U.S. government ignores this concept of neutrality and imposes taxation on profits earned by U.S. companies in any country outside the border. Thus, U.S. companies who seek to spread businesses overseas are burdened with a combination of tax systems. Such companies are required to pay taxes to the U.S. Government as well as the government of the countries where they are…