Expansion of the Profit-Split Method: The Wave of the Future
7 Pages Posted: 13 Apr 2015
Date Written: March 30, 2015
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: Suggested Citation