Contents - AL-Tax

xContents3.5.3 SummaryandPracticalImplications ................... 323.6 Proposed Cost-Sharing Regulations and Coordinated Issue Paper . . 323.6.1 Income Method . .................................... 353.6.2 Acquisition Price Method . . . ......................... 363.6.3 MarketCapitalizationMethod ........................ 363.6.4 Critique ........................................... 373.7 Global Dealing Regulations and Notice 94–40 . . . . .............. 413.7.1 Circumstances in Which the Proposed Global DealingRegulations and Notice 94–40 Apply . . . . . ............. 413.7.2 Description of Notice 94–40 and Proposed GlobalDealingRegulations ................................ 433.7.3 Underlying Economic Rationale . . . . . .................. 453.7.4 CritiqueofFormularyMethod ........................ 453.7.5 SummaryandPracticalImplications ................... 48Part IIAlternative and Supplementary Approaches to Transfer Pricing4 Some Alternative Approaches to Transfer Pricing ................. 514.1 Modified Comparable Uncontrolled Price Method .............. 534.2 Numerical Standards . . . .................................... 544.3 Required Return on Debt and Equity Capital . .................. 554.3.1 Required Return on Equity . . ......................... 564.3.2 CostofDebt ....................................... 604.3.3 Non-CashChargesandInvestment..................... 614.3.4 Data Requirements . . ................................ 614.3.5 Summary.......................................... 614.4 JointVenture-BasedProfitSplit.............................. 624.5 Financial or Tangible Asset-Based Profit Split .................. 634.6 Franchise Model . . . . . . . .................................... 634.7 Summary................................................. 64Part IIICase Studies5 Intercompany Sale of Diamonds ................................. 675.1 SummaryofKeyFacts ..................................... 685.1.1 Historical Dominance of De Beers . . . .................. 685.1.2 The Decline of De Beers’ Role and the Emergence ofParallelPrimaryMarkets ............................ 695.1.3 Producers’ and Sightholders’ Branding and DesignDevelopment Initiatives . . . . . ........................ 725.1.4 Pricing Dynamics: Primary, Secondary and Retail Markets 755.1.5 Functional Analysis of FP, IS and USS . . . .............. 775.2 TransferPricingIssues ..................................... 79