World trade of goods and services is based upon the global supply chain and logistics management, and its flow is determined by the drivers of supply chain management. For a company to be successful in the new millennium where a paradigm shift has taken place it becomes necessary that its supply...

We discuss the dispute resolution procedures employed by the U.S. Internal Revenue Service (IRS) to resolve and avoid transfer pricing disputes. The IRS has enforced transfer pricing rules for decades and its experience can act as a guide for the KSA to consider the procedures to manage transfer...

In this Part 3, we explore the KSA’s historic approach to penalties and the motivation to develop transfer pricing-specific penalties. For sake of illustration, we will review the IRS reasons for enactment of transfer pricing-specific penalties, the substance of those penalties, and the IRS...

The arm’s length principle (ALP) is the cornerstone of multinational enterprises’ (MNEs) profit taxation. However, despite extensive improvements by the OECD’s Base Erosion and Profit Shifting (BEPS) Project, two aspects of the ALP has been widely criticized. First, market jurisdictions...

Using data on the operations of U.S. parent firms and their foreign affiliates between 1982 and 1994, this paper examines the extent to which tax minimizing behavior influences intrafirm trade. The results indicate that taxes have a substantial influence on intrafirm trade flows between U.S....

On 5th October 2015, the OECD along with G20 finally released a fifteen-point action plan on their project on Base Erosion and Profit Shifting (BEPS). Issues related to transfer pricing formed a major part of this final report, with BEPS Action Plan 8-10 focusing on it exclusively. The actions...

This paper discusses the conceptual framework of delineation the concept of value creation in the context of international taxation. It is about discussing different approaches to facilitate an alignment of value creation and profit allocation. Thus, the paper is explicitly not discussing...

Members of the Organization for Economic Cooperation and Development (OECD) have set themselves to work together to eliminate, albeit reduce to the barest minimum, the impact of aggressive tax planning, base erosion and profit shifting, consumption tax, dispute resolution, exchange of...

The view that the transfer pricing problem vanishes under universal destination-based cash flow taxation (DBCFT) is based on how firms behave in perfectly competitive markets. We show that the neutralizing effect DBCFT has on transfer price incentives fails once multinational firms are...