3. Addressing Challenging Transfer Pricing Items which Arose from BEPS - Enrique Rayon
Value Chain Analysis A new look at the Supply Chain Contract R&D Co. Shared Services Co. Sales Services Co. Contract Manufacturing Co. Principal Co. Customers Procurement Co. Logistics / Warehousing Co. : Sales of Products : Provision of Services Transfer Pricing | 2017
Profit Split • Transactional profit split method, OECD TPGs Chapter II, Section C • The guidance is undergoing revisions as mandated by BEPS Action 10 to clarify the application of the profit split method in the context of global value chains • The profit split method is not a one-sided method like the TNMM • It is a two-sided (or more) method, i.e., two or more companies transacting and making non-routine contributions in the transaction (i.e., integrated transactions involving IP or high-value services) • Focus is on the total profit associated with the intercompany transaction • Allocates a portion of total profits to each entity based on relative functions, risks, and assets • May apply when Traditional Transaction Methods do not apply • It is not a formulary apportionment method Transfer Pricing | 2017
- Page 1 and 2: Thinking about your business is a b
- Page 3 and 4: Introduction • “The BEPS projec
- Page 5 and 6: Transfer Pricing Documentation •
- Page 7: Value Chain Analysis Conventional S
- Page 11 and 12: Profit Split π Typical Allocation
- Page 13: Thank you for your attention. Trans
Value Chain Analysis<br />
A new look at the Supply Chain<br />
Contract R&D<br />
Co.<br />
Shared Services<br />
Co.<br />
Sales Services<br />
Co.<br />
Contract<br />
Manufacturing<br />
Co.<br />
Principal Co.<br />
Customers<br />
Procurement<br />
Co.<br />
Logistics /<br />
Warehousing<br />
Co.<br />
: Sales of Products<br />
: Provision of<br />
Services<br />
<strong>Transfer</strong> <strong>Pricing</strong> | 2017
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