The Future of International Transfer Pricing: Practical and Policy Opportunities
3rd Annual Tax Policy & Practice Symposium
February 07 - 08, 2002
The Ritz-Carlton Hotel, Washington DC
|10:00AM - 12:30PM||
|12:30PM - 12:45PM||
|12:45PM - 1:45PM||
Transfer Pricing Policy in the International Tax System - Past and Present
This keynote presentation will provide an historic overview of transfer pricing policy and the rapid escalation in the burdens of transfer pricing compliance that have been imposed on multinational corporate taxpayers in the past decade. It will focus on the specific tensions created as countries seek to preserve their existing aggregate tax base. It will also focus on the question: does the armÕs length standard as it is currently applied produce policies that are fair, efficient, and cost effective?
|1:45PM - 3:30PM||
Practical Steps Toward Consistent International Application of Methodological Norms
Principled application of transfer pricing rules requires identification of and agreement on a transfer pricing methodology. This presentation will be conducted in two panels. Panel I, General Transfer Pricing Issues, will examine general application issues associated with Transfer Pricing methodology. It will examine the potential for simplifying dispute resolution by standardizing methodological approaches across countries. It will also examine whether traditional transactional methods, espoused in the law and guidelines of most countries, can be used as a practical matter to resolve intercompany pricing disputes. In addition, the panel will examine the strengths and shortcomings of profits-based methodologies, exploring the practical possibility of further standardization in the international application of profits-based methods. The second panel, Special Methodological Issues, will examine specific issues associated with transfer pricing applications. Among the items to be considered will be whether internationally accepted safe haven approaches can be developed for common related party relationships, such as distribution and contract manufacturing arrangements.
|3:45PM - 4:45PM||
Fact Development and the Policies of Transfer Pricing Documentation
Notable among the legal developments of recent years is a proliferation of documentation and penalty regimes in numerous countries. The ostensible objective of these regimes is to identify sufficient information on which to base reasoned transfer pricing enforcement decisions. This presentation will address the question of whether standardization and simplification of documentation requirements is possible and how taxpayers can coordinate their efforts to respond to disparate requirements of numerous countries.
|4:45PM - 6:00PM||
Application of Transfer Pricing Rules to Branches and Permanent Establishments
Advances in communications and computer technology raise the possibility that more taxpayers may be deemed to have a taxable presence outside their country of residence. The OECD is actively considering how the transfer pricing rules should be applied to the question of allocating income to branches and other permanent establishments. What has traditionally been a concern principally for financial institutions that operate internationally in branch form has become an issue of importance to all taxpayers. The tensions created in this process might well result in fundamental changes to OECD transfer pricing guidelines applicable to non-branch operations. This presentation will examine the impact of technology development and the resulting policy changes that the OECD project on transfer pricing rules should address.
|6:30PM - 9:00PM||
Reception and Dinner with Keynote Address
|10:15AM - 11:45AM||
Adequacy of International Dispute Resolution Mechanisms
To an increasing extent, transfer pricing disputes are resolved through country-to-country negotiation in the competent authority process. The increasing number of such disputes is taxing the administrative resources of national tax administrations. Domestic political imperatives make it increasingly difficult for countries to concede revenue base reductions. The process itself seems to provide an advantage to the country that is the first mover. The bilateral APA process has been successful, but suffers from many of the same backlog problems. This presentation will consider whether existing institutions are capable of dealing with the increased flow of disputes, and what additional steps could be taken to ensure that transfer pricing disputes are fully resolved promptly and consistently.
|11:30AM - 1:30PM||
Luncheon with Keynote Address
|1:30PM - 3:15PM||
Removing the Obstacles to the Development of an Efficient International Tax System - Future
This presentation will discuss the future of international transfer pricing and the obstacles to increased efficiencies that can be brought to international taxation. In addition, discussions with regards to the broader application of the armÕs length standard, and the increased existence to the problems associated with pricing electronic commerce transactions will be highlighted.
|3:15PM - 4:00PM||
|68:0PM - 10:00AM||
Issues Unique to Intellectual Property
At the heart of many prominent transfer pricing disputes from G.D. Searle to UPS is an argument over the situs and value of intellectual property assets. Indeed, while recent methodological developments have principally focused on other issues, it was primarily concern over intellectual property-related issues that motivated the U.S. Treasury to embark on a policy of increased transfer pricing enforcement activity following the 1986 Tax Reform Act. This presentation will examine the current state of transfer pricing for intellectual property and the prospects for mitigating potential controversy in the future.