The implementation of integrated business models and the development of national and multinational groups has been a trend for over 30 years. Many MNEs (Multinational Enterprises) reach a high level of vertical integration in order to ensure economies of scale and higher efficiency. In more detail, a group can be structured from companies incorporated in … Read more
The arm’s length principle treats the members of a multinational group as operating in separate entities, rather than as inseparable parts of a single unified business. Therefore, it is required multinational enterprises (MNEs) to follow the same pricing policy for intra-group and uncontrolled transactions, under comparable circumstances. Otherwise, the controlled companies shall take the necessary … Read more
Transfer Pricing (TP) guidelines generally require associated entities to invoice each other appropriately so as to correspond to the value of the goods transferred or services provided whenever an intra-group transaction takes place. The basis for determining proper compensation is, in most cases, the arm’s length principle. In a nutshell, the arm’s-length principle requires that … Read more
On the 6th of November 2017 the European Commission will discuss the implementation of Common Consolidated Corporate Tax Base (CCCTB) in an effort to create a standard set of rules which will govern how European companies will be taxed. Fundamentally, CCCTB will provide a framework for the calculation of the taxable profits. However, this will … Read more
1. Introduction A trаnѕfеr price is thе price at which goods оr ѕеrviсеѕ аrе trаnѕfеrrеd form one рrосеѕѕ or dераrtmеnt to аnоthеr or fоrm one mеmbеr оf a grоuр to another. Trаnѕfеr pricing is used whеn divisions оf аn оrgаnizаtiоn need tо charge оthеr divisions оf thе оrgаnizаtiоn for gооdѕ or services thеу provide tо … Read more
Transfer pricing methodology in Management Fee agreements could turn to be very problematic for related party transactions. The main reason is that the agreements are not usually based on specific financial terms, but the service provider is charging a gross amount on a monthly on annual basis, without provisioning the amount of work which is … Read more
Introduction This Chapter provides a background discussion of the arm’s length principle, which is the international transfer pricing standard that OECD member countries have agreed should be used for tax purposes by MNE groups and tax administrations. The Chapter discusses the arm’s length principle, reaffirms its status as the international standard, and sets forth guidelines … Read more
The objective of IAS 24 Standard is to ensure that an entity’s financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances, including commitments, with such parties. Related party … Read more
The selection of a transfer pricing method always aims at finding the most appropriate method for a particular case. For this purpose, the selection process should take account of the respective strengths and weaknesses of the OECD recognised methods. “Traditional transaction methods” and “transactional profit methods” can be used to establish whether the conditions imposed … Read more
REPUBLIC OF CYPRUS MINISTRY OF FINANCE Ref. No.: 05.13.001 Interpretative Circular 3 — Income Tax June 30th, 2017 To all Assessing Staff Tax treatment of intra-group back-to-back financial arrangements 1. Definitions 1. This Circular applies to any company carrying out group financing transactions (hereinafter referred to as a group financing company) meaning any entity that … Read more
