Expansion of the Profit-Split Method: The Wave of the Future

7 Pages Posted: 13 Apr 2015

See all articles by Jeffery M. Kadet

Jeffery M. Kadet

University of Washington - School of Law

Date Written: March 30, 2015

Abstract

Recognizing the reality that multinational corporations are centrally managed and not groups of entities that operate independently of one another, the OECD base erosion and profit-shifting project is considering expanded use of the profit-split method. This article provides background on why expanded use of the profit-split method is sorely needed. In particular, resource-constrained tax authorities in many countries are unable to administer or intelligently analyze and contest transfer pricing results presented by multinational groups. Most importantly, this article suggests a simplified profit-split approach using set concrete and objective allocation keys for commonly used business models that should be welcomed by multinational groups and tax authorities alike.

Keywords: BEPS, Transfer Pricing, TP, International Taxation

JEL Classification: H21, H25, K34, E62

Suggested Citation

Kadet, Jeffery M., Expansion of the Profit-Split Method: The Wave of the Future (March 30, 2015). Available at SSRN: https://ssrn.com/abstract=2593548 or http://dx.doi.org/10.2139/ssrn.2593548

Jeffery M. Kadet (Contact Author)

University of Washington - School of Law ( email )

William H. Gates Hall
Box 353020
Seattle, WA 98105-3020
United States

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