Contents - AL-Tax

114 7 Performance of Intercompany Servicesto the degree of specialized skills required, we would look to different servicessafe harbors. It should be noted, that an analysis of market structure and dynamicswould still be necessary to establish whether, in the course of providing CRM, R&Dand engineering services, USS had developed a valuable customer-based intangibleasset, on which it should earn a separate return.7.6 ComparisonOur analysis of this case under the current services regulations is rather burdensome,and there is no assurance that the IRS and other taxing authorities would accept ourchoice of methods and sample selection procedures. Moreover, considering the vastnumber of multinational firms that must establish arm’s length fees for intercompanyservices of various kinds, the burden, viewed from a broader perspective, isenormous. The numerical standards approach, which would provide a number ofsafe harbor ranges for services requiring different skill levels, would eliminate muchof this work.In contrast to the dwindling number of standalone U.S. distributors, independentservices providers have proliferated over the past decade, as firms have increasinglyoutsourced non-core functions. As such, taxing authorities would have considerabledata on which to draw in establishing safe harbor ranges. However, even with suchsafe harbor ranges in place, it would still be important to ascertain whether individualservices providers developed valuable intangible assets, such as establishedcustomer relationships, in the course of rendering services, and, if so, to determinehow much income should be ascribed to these assets.