The Importance of Transfer Pricing
| The Importance of International Transfer Pricing | Country Case: Argentina | | | |
International Accounting – ACG6255
Professor Robert McGee
Philip Archer |
Table of Contents 1. Abstract 2. Transfer Pricing Overview 3. Defining Transfer Prices 4. Arm’s Length Principle 5. Pricing Methods 6.1. Comparable Uncontrolled Price Method (CUP) 6.2. Comparable Uncontrolled Transaction Method 6.3. Resale Price Method (RPM) 6.4. Cost-Plus Pricing Method (CPM) 6.5. Transactional Net Margin Method (TNMM) 6.6. Profit-Split Methods (PSM) 6.7. Advance Pricing Agreement (APA) 6. Argentina Overview 7. Transfer Pricing Rules in Argentina 8. Conclusion 9. References
1. Abstract
Transfer pricing has been the main concern for multinational companies around the world as they continue to integrate their activities. The Unite States and the Organization for Economic Co-operation and Development (OECD) have developed regulations and guidelines, respectively, to guarantee that all intra-company transactions fall under the arm’s length principle. Transfer pricing methodologies have been defined and widely accepted by governments all over the world. However countries, like Argentina, have extended and adapted the OECD guidelines to fit their internal market and specific operations that take place locally. On the other hand, multinational companies continue to find ways to be more efficient by integrating operations and relocating income. In terms of taxes, there is a shift from tax coping to tax planning. Ultimately, complete and accurate documentation of transfer pricing is essential to avoid complications in case of a tax audit. 2. Transfer Pricing Overview
The history of transfer pricing initiated in the United States (US) during the first half of the 20th century because of a reorganization movement of American companies that occurred in that period. Consequently,
International Accounting – ACG6255
Professor Robert McGee
Philip Archer |
Table of Contents 1. Abstract 2. Transfer Pricing Overview 3. Defining Transfer Prices 4. Arm’s Length Principle 5. Pricing Methods 6.1. Comparable Uncontrolled Price Method (CUP) 6.2. Comparable Uncontrolled Transaction Method 6.3. Resale Price Method (RPM) 6.4. Cost-Plus Pricing Method (CPM) 6.5. Transactional Net Margin Method (TNMM) 6.6. Profit-Split Methods (PSM) 6.7. Advance Pricing Agreement (APA) 6. Argentina Overview 7. Transfer Pricing Rules in Argentina 8. Conclusion 9. References
1. Abstract
Transfer pricing has been the main concern for multinational companies around the world as they continue to integrate their activities. The Unite States and the Organization for Economic Co-operation and Development (OECD) have developed regulations and guidelines, respectively, to guarantee that all intra-company transactions fall under the arm’s length principle. Transfer pricing methodologies have been defined and widely accepted by governments all over the world. However countries, like Argentina, have extended and adapted the OECD guidelines to fit their internal market and specific operations that take place locally. On the other hand, multinational companies continue to find ways to be more efficient by integrating operations and relocating income. In terms of taxes, there is a shift from tax coping to tax planning. Ultimately, complete and accurate documentation of transfer pricing is essential to avoid complications in case of a tax audit. 2. Transfer Pricing Overview
The history of transfer pricing initiated in the United States (US) during the first half of the 20th century because of a reorganization movement of American companies that occurred in that period. Consequently,
References: Argentina. Administración Federal De Ingresos Públicos - AFIP. Taxes. Web. 07 Apr. 2012. <http://www.afip.gov.ar/home/index.html>. Argentina 2012 Index of Economic Freedom. Publication. Http://www.heritage.org/. Web. 07 Apr. 2012. <http://www.heritage.org/index/country/argentina?query=argentina:+index+of+economic+freedom> Background Note: Argentina Choi, Frederick D.S., and Gary K. Meek. "Chapter 12 - International Taxation and Transfer Pricing." International Accounting. 7th ed. Upper Saddle River: Pearson Education, 2011. 430-61. Print. Hobster, John, and Thomas Borstell IFRS vs Argentine GAAP. Publication. Ernest & Young, 19 July 2011. Web. 08 Apr. 2012. http://www.ey.com/Publication/vwLUAssets/IFRS_vs_Argentina_GAAP_2011/$FILE/IFRS_vs_Argentina_GAAP_2011.pdf. International Transfer Pricing - Argentina. Publication. PwC, 17 Mar. 2012. Web. 07 Apr. 2012. <http://www.pwc.com/gx/en/international-transfer-pricing/assets/argentina.pdf>. PwC. Tax Services. Transfer Pricing: Pricing Knowledge Network (PKN).Http://www.pwc.com/gx/en/index.jhtml?ld=no. 16 June 2011. Web. 07 Apr. 2012. <http://www.pwc.com/gx/en/tax/transfer-pricing/pkn-archives.jhtml/?IsIssue=ISSUE>. "Transfer Pricing Country Profiles - Argentina." Http://www.oecd.org. Organization for Economic Co-operation and Development - OECD, 18 Feb. 2009. Web. 07 Apr. 2012. <http://www.oecd.org/dataoecd/0/10/38360110.pdf>. "Transfer Pricing in a Recession." PwC. Web. 07 Apr. 2012. <http://www.pwc.com/gx/en/tax/publications/economic-uncertainty-recession.jhtml>. "Transfer Pricing Methods." Http://www.oecd.org. Organization for Economic Co-operation and Development - OECD, 01 July 2010. Web. 07 Apr. 2012. <http://www.oecd.org/dataoecd/41/7/45765701.pdf>. United States of America. Internal Revenue Service. Development of IRC section 482 Cases. 01 May 2006. Web. 07 Apr. 2012. <http://www.irs.gov/irm/part4/irm_04-061-003.html>.