- Cover
- Contents
- Title
- Copyright
- Dedication
- Preface
- Part One: Country-By-Country Analysis
- Chapter 1: Introduction
- Chapter 2: Australia’s Risk Assessment Transfer Pricing Approach
- Introductory Issues
- Transfer Pricing Reviews
- Documentation Requirements
- Preparation of the Documentation File
- Applying the Arm’s Length Principle
- Simplified Approach to Doing a Benchmarking Study
- Four Steps for Testing International Transfer Prices
- Decision Tree
- How the ATO Scores Risk
- Scoring the Three Levels
- Score Graph
- Outcome of Transfer Pricing Review or Audit
- Audits Taking Place in Low-Risk Situations
- Transfer Pricing Review Process
- Categorizing the Results of the Transfer Pricing Review
- How the Australian Transfer Pricing Audit Procedure Works
- Australia’s Four-Step Process for Businesses
- Chapter 3: Profit Attribution for a Dependent Agent’s Permanent Establishment in Australia
- Permanent Establishment Concepts in Australia
- Profit Attribution Concepts in Australia
- The ATO’s Operational Approach
- Determining Functional Analysis for a Permanent Establishment
- Comparative Analysis for the Permanent Establishment
- Application of the Resale Price Method
- Application of the Cost Plus Method
- Using a Transactional Net Margin Method
- Using a Profit Split Method
- Toll Manufacturers
- Four Examples
- Chapter 4: Australia’s Advance Pricing Arrangement Program
- Chapter 5: China Implements Transfer Pricing Procedures
- Overview
- Regulations
- Chapter 1: General Principles
- Chapter 2: Reporting and Filing of Related Party Transactions
- Chapter 3: Administration of Contemporaneous Documentation
- Chapter 4: Transfer Pricing Methods
- Chapter 5: Transfer Pricing Audits and Adjustments
- Chapter 6: Administrative Guidance Concerning Advance Pricing Arrangements
- Chapter 7: Administrative Guidance Concerning Cost Sharing Agreements
- Chapter 8: Administrative Guidelines Concerning Controlled Foreign Corporations
- Chapter 9: Administrative Guidance Concerning Thin Capitalization
- Chapter 10: Administrative Guidance Concerning General Anti-Avoidance
- Chapter 11: Corresponding Adjustments and International Negotiations
- Chapter 12: Legal Responsibility
- Chapter 13: Supplementary Provisions
- Chapter 6: Reporting Related Party Transactions in China
- Chapter 7: Hong Kong Advance Ruling Cases: Taxability of Profits
- Advance Ruling Process
- Advance Ruling Case No. 4
- Advance Ruling Case No. 8
- Advance Ruling Case No. 9
- Advance Ruling Case No. 10
- Advance Ruling Case No. 11
- Advance Ruling Case No. 12
- Advance Ruling Case No. 13
- Advance Ruling Case No. 16
- Advance Ruling Case No. 19
- Advance Ruling Case No. 21
- Advance Ruling Case No. 23
- Advance Ruling Case No. 26
- Advance Ruling Case No. 30
- Advance Ruling Case No. 34
- Advance Ruling Case No. 35
- Advance Ruling Case No. 36
- Advance Ruling Case No. 37
- Chapter 8: Hong Kong Transfer Pricing Guidelines
- Double Tax Agreements
- Arm’s Length Principle
- Associated Enterprises
- Appropriate Adjustments
- Inland Revenue Ordinance and Case Law
- Permanent Establishment Considerations
- Applying the Arm’s Length Principle
- Four Steps
- Functional Analysis
- Comparability Analysis
- Determining Comparability
- Functions, Assets, and Risks
- Contract Terms
- Economic and Marketing Circumstances
- Business Strategies
- Global Price Lists
- Establishing the Reliability of the Data
- Transfer Pricing Methodologies
- Sources of Profits and Income
- Abusive Tax Schemes
- Transfer Pricing Schemes
- Transfer Pricing Documentation
- Intragroup Services Arrangements
- Deduction of Expenditures Paid for Intragroup Service
- Determining the Amount of Intragroup Charges
- Services Provided by a Permanent Establishment
- Chapter 9: Hong Kong Challenges Abusive Tax Schemes
- Macroeconomic Issues
- Abusive Tax Schemes
- Transfer Pricing Schemes
- Lack of “Economically Significant Functions”
- How the Hong Kong Government Combats Abusive Tax Schemes
- Extreme Forms of Tax Abuse
- Distinguishing Tax Avoidance from Tax Evasion
- How the Reinvoicing Structure Operates
- Shifting Intangible Property: The Tax Perspective
- Chapter 10: Winning Hong Kong’s Landmark Transfer Pricing Case
- Ngai Lik Litigation
- Hong Kong’s Advance Ruling Determinations
- Hong Kong Issues Transfer Pricing Guidelines
- Statutory Provisions
- Determination by the Court of Final Appeal
- The Commissioner’s Determination
- Determination by the Board of Review
- Determination by the Court of First Instance
- Determination by the Court of Appeal
- The Case before the Court of Final Appeal
- Deficiencies in the Scheme as to Additional Annual Bulk Discounts Received by Din Wai Electronics Limited
- Deficiencies in the Scheme as to Manufacturing Profits
- Deficiencies in the Scheme as to the Relevant Years of Assessment
- Are the Scheme and the Tax Benefit Still Viable Bases for Section 61A Assessments?
- Is There a “Tax Benefit” within the Meaning of Section 61A?
- The Narrower Scheme and the Narrower Tax Benefit
- Dominant Purpose of the Narrower Scheme
- Board of Review’s Approach
- Ribeiro’s Dominant Purpose of the Narrower Scheme
- Commissioner’s Assessment Power
- Commissioner’s Exercise of the Section 61A(2) Power
- Board’s Approach to the Exercise of the Section 61A(2) Power
- Disposal of the Appeal
- Chapter 11: Transfer Pricing Litigation in India
- Chapter 12: PE Issues Impact Indian Transfer Pricing
- Background
- Nexus, Effectively Connected Status, and Permanent Establishment
- Four Fact-Based Permanent Establishment Inquiries
- Impact of the Morgan Stanley Case
- Permanent Establishment Transfer Pricing Litigation in India
- Galileo
- Hotel Scopevista
- WorleyParsons
- KnoWerx Education
- ICICI Bank
- Zimmer AG
- Intergrafica
- Ranbaxy Laboratories
- Development Consultants
- Perfitti
- Data Software Research
- SNC Lavalin /Acres Inc.
- Airport Authority of India
- Radha Rani Holdings
- Mashreq Bank PSC
- Mentor Graphics (Noida) Pvt. Ltd.
- Millennium Infocom Technologies Ltd.
- Van Oord ACZ India
- Tokyo Marine & Fire Insurance Co. Ltd.
- Western Union Money Transfer
- Cargo Communities Network
- Hyundai Heavy Industries
- E. Gain Pvt. Ltd.
- Infosys International Activities in New York State
- Chapter 13: Taxation of Travel Services in India
- Chapter 14: Transfer Pricing in Indonesia
- Chapter 15: Japan’s Directive on Transfer Pricing Operations
- Background
- Regulations and the Examples—How They Differ
- Operation of the Japanese Transfer Pricing Administrative Guidelines
- Chapter 1: Definitions and Basic Policies
- Chapter 2: Examination
- Chapter 3: Points to Note in Calculating Arm’s Length Prices
- Chapter 4: Treatment of Foreign Transferred Income
- Chapter 5: Advance Pricing Arrangements
- Chapter 16: Selecting the Arm’s Length Price in Japan
- Background
- Demonstrating the Selection of Arm’s Length Price
- Selection of the Method of Calculation of Arm’s Length Price
- Case 1: Use of the Comparable Uncontrolled Price Method
- Case 2: Use of the Resale Price Method
- Case 3: Use of the Cost Plus Method
- Case 4: Methods Consistent with the Comparable Uncontrolled Price Method
- Case 5: Methods Consistent with the Cost Plus Method
- Case 6: Transactional Net Margin Method
- Case 7: Contribution Profit Split Method
- Case 8: Residual Profit Split Method
- Case 9: Adjustment for Differences
- Chapter 17: Applying Japanese Intangible Transfer Pricing Methods
- Case 10: Intangibles Created by R&D and Marketing Activities
- Case 11: Distribution Channels and Quality Control Know-How
- Case 12: Know-How Accumulation through Human Resource Business Activities
- Case 13: Contributions to Create, Maintain, and Develop Intangible Properties
- Case 14: A Company Bearing only the Cost of Creation of the Intangible Properties
- Case 15: Intangible Properties for Employees on Loan
- Chapter 18: Japanese Profit Split Transfer Pricing Methods
- Case 16: Applying the Profit Split Method to a Series of Foreign-Related Transactions
- Case 17: Excluding Transactions from the Profit Split Method
- Case 18: Calculation of the Profit to Be Split
- Case 19: Differences in Labor Costs Impact the Residual Profit Split Method
- Case 20: Treatment of Market Fluctuations
- Case 21: Calculation of Basic Profit
- Case 22: Factors for Splitting the Residual Profit
- Chapter 19: Japanese Guidelines Address Diverse Transfer Pricing Issues
- Chapter 20: Malaysia Advance Ruling Guidelines
- General Facets of the Advance Ruling Procedure in Malaysia
- Binding Nature of an Advance Ruling
- Scope of the Advance Ruling Request
- Circumstances in Which Malaysia Tax Authorities Will Not Issue an Advance Ruling
- Circumstances in Which the DGIR Can Decline to Issue an Advance Ruling
- Notice Requirements
- Advance Ruling Application Procedure
- Advance Ruling Application Form
- Information Request Requirement
- Issuance of the Advance Ruling
- Advance Ruling Finality and Disclosure
- The DGIR Can Withdraw the Advance Ruling
- Situations in Which the Advance Ruling Ceases to Apply
- Fee Structure
- Internal Procedure
- Chapter 21: Malaysia Transfer Pricing Guidelines
- Introductory Provisions
- Malaysian Transfer Pricing Procedure
- Application of the Arm’s Length Principle
- Malaysia’s Transfer Pricing Regime
- Comparability and Transfer Pricing
- Transfer Pricing Alternatives
- Comparable Uncontrolled Price Transfer Pricing Method
- Resale Price Transfer Pricing Method
- Cost Plus Transfer Pricing Method
- Additional Transfer Pricing Methods
- Profit Split Transfer Pricing Method
- Residual Analysis Example
- Transactional Net Margin Method
- Intangible Property
- Transfer Pricing Services Regulations
- Documentation
- Malaysia Issues Advance Rulings Guidelines
- General Facts about of the Advance Ruling Procedure in Malaysia
- Binding Nature of an Advance Ruling
- Scope of the Advance Ruling Request
- Advance Ruling Application Procedure
- Advance Ruling Application Form
- Information Request Requirement
- Issuance of the Advance Ruling
- Advance Ruling Finality and Disclosure
- The DGIR Can Withdraw the Advance Ruling
- Situations in Which the Advance Ruling Ceases to Apply
- Fee Structure
- Internal Procedure
- Chapter 22: New Zealand Transfer Pricing Developments
- New Zealand Transfer Pricing Guidelines
- Initial Developments
- Arm’s Length Principle and the Pricing Methods
- Basics of the Transfer of Intangible Property
- Profit Split Method and the Joint Ownership of Intangible Property
- Profit Split Method
- Residual Profit Split Analysis
- Transactional Net Margin Method
- Market Penetration Techniques
- Australia’s Four-Step Process to Ascertain the Arm’s Length Approach
- Documentation
- Documentation and the Burden of Proof Rule
- Inland Revenue Seeks to Ascertain the Risks to the Revenue
- Retention of Records
- Transfer Pricing in Countries without a Double Tax Agreement
- Intangible Property Audits
- Trade Intangibles and Marketing Intangibles
- Ascertaining the Arm’s Length Amount for Intangible Property
- Ascertaining the Ownership of Intangible Property
- Factors in Ascertaining the Nature of Intangible Property
- Terms and Conditions of the Intangible Property Transfer
- Valuing Intangible Property
- Non-Owner’s Marketing Activities
- Applying the Profit Split Method to Intangible Property
- Intangible Property Planning
- Chapter 23: Philippine Transfer Pricing Regulations
- Chapter 24: Singapore Implements Advance Pricing Arrangement Procedure
- Objectives of the Supplementary Circular
- What the Supplementary Circular Provides
- Minimum Information Requirements
- Considerations for Accepting the APA
- Pre-Filing APA Process
- Formal APA Submission Procedures
- APA Review and Negotiations: Considerations and Requirements
- APA Roll-Back
- Discontinuation of the APA Process
- Nonsubmission of the APA Application
- Insufficient Level of Support during the APA Process
- Absence of Communication
- Effective Date
- Chapter 25: Singapore Transfer Pricing Consultation Process
- Chapter 26: Singapore Transfer Pricing Guidelines
- Chapter 27: Singapore Transfer Pricing Guidelines for Related Party Loans and Services
- Transfer Pricing Guidelines for Related Party Loans
- Two Loan Categories
- Facts and Circumstances to Determine Comparability Analysis
- Transfer Pricing Guidelines for Related Party Services
- Direct Charging versus Indirect Charging of Services
- Ascertaining the Arm’s Length Fee
- Routine Services and the 5% Markup
- Cost Pooling Contracts
- Strict Cost Pass-through
- Documentation
- Chapter 28: South Korea Transfer Pricing
- Background
- Related Party Transfer Pricing Relationships in Korea
- Computation of Indirect Ownership
- Economic Interest and Control
- Transfer Pricing Method Alternatives
- Information Requests and Documents
- Transfer Pricing Audits
- Permanent Establishment, Competent Authority, and Advance Pricing Agreements
- Thin Capitalization and Tax Havens
- Applying the “Most Reasonable Method” Standard to Determine Arm’s Length Price
- Underpayments and Overpayments
- Selecting Transfer Pricing Methods
- Reporting Methods for Determining Arm’s Length Price
- Advance Pricing Arrangements
- Sanctions Imposed on Failure to Comply with the Data Request
- Penalties
- Thin Capitalization Rules
- Debt under an Arm’s Length Situation
- Anti–Tax Haven Rules
- Scope of the “Tax Haven” Jurisdiction
- Computation of the Reserved Income Distributed Amount
- Gift Tax on Property Located Outside Korea
- Mutual Agreement Procedure
- International Tax Cooperation
- Chapter 29: Sri Lanka Transfer Pricing
- Associated Undertakings
- Arm’s Length Price
- Documentation
- Threshold for Applying Sri Lanka Transfer Pricing
- Advance Pricing Agreements
- Burden of Proof
- Implementation
- Annex 1: Test of Control—Associated Undertaking
- Annex 2: Arm’s Length Pricing Methodologies
- Annex 3: Appropriate Pricing Methodology—Factors to Consider
- Annex 4: Comparability of an Uncontrolled Transaction—Factors to Consider
- Annex 5: Prescribed Documentation
- Suggested Supporting Documents
- Chapter 30: Taiwan Transfer Pricing
- Chapter 31: Thailand Transfer Pricing
- Transfer Pricing Booklet
- Part 1: Tax Legislation Impacting Transfer Pricing
- Revenue Department of Thailand Departmental Instruction Paw 113/2545
- Part 2: Methodologies in Calculating Market Price
- Part 3: Process in Establishing the Market Price
- Process of Establishing the Market Price
- Guidelines on the Determination of Market Price
- Chapter 32: Vietnam Transfer Pricing
- Part Two: Advanced Applications
- Chapter 33: Services Transfer Pricing in Hong Kong and in Singapore
- Services Transfer Pricing in Hong Kong and in Singapore: Basic Comparison
- Hong Kong Services Transfer Pricing Methods
- Shareholder Activity and Stewardship Functions
- Financial Services Audit Example
- Deduction of Expenditures Paid for Intragroup Services
- “Objective Commercial Explanation” Standard
- Determining the Amount of Intragroup Charges
- Services Provided by a Permanent Establishment
- Scope of Activities for Related Party Services in Singapore
- Singapore Transfer Pricing Services Guidelines
- Direct Charging versus Indirect Charging of Services
- Ascertaining the Arm’s Length Fee
- Routine Services and the 5% Markup in Singapore
- Cost Pooling Contracts
- Cost Pooling versus Pass-Through Allocation Alternatives
- Documentation
- Chapter 34: Permanent Establishment Parameters: Hong Kong versus India
- Chapter 35: Pacific Tax Administrators Coordinate Transfer Pricing Documentation
- Chapter 36: Shared Services and Cost Pooling Arrangements in the United States and Singapore
- Chapter 37: South Korea–Japan Bilateral Investment Treaty
- Chapter 38: China–Taiwan Trade
- Taiwan and China: A History Lesson
- Economic Considerations
- One-China Policy
- Economic Cooperation Framework Agreement
- Tax Considerations
- Choice of Transfer Pricing Method
- Functional Analysis
- Analysis of the Production Activities
- Fact Pattern
- Accounting and Tax Operations
- Permanent Establishment
- Taiwanese–Chinese Electronics Company
- Transactional Profit Split Method Criteria
- Most Appropriate Transfer Pricing Method
- Allocation Key System
- Strong Correlation Standard
- Selecting among Allocation Keys
- APA Process
- Chapter 39: Malaysia–Singapore Allocation Keys
- Importance of Allocation Keys
- Selection of the Real Estate Leasing Example
- When the Transactional Profit Split Method Is the “Most Applicable” Transfer Pricing Method
- Specialized Services
- Applying the Transactional Profit Split Method
- Four Allocation Keys Categories
- Key Functions
- Selecting Potential Allocation Keys
- Residential Condominium Leasing Example
- Residential Condominium Database
- Selecting among Allocation Keys
- “Strong Correlation” Standard
- Allocation Keys
- Transfer Pricing Strategies
- Corporate Tax Strategy
- Malaysia’s Tax Strategy
- Chapter 40: Permanent Establishment Parameters
- OECD’s Permanent Establishment Provisions
- Consequences of Permanent Establishment Status
- Consequences of a Permanent Establishment to Business
- Transfer Pricing and Permanent Establishment
- Overall Tax Considerations
- Potential for the Imposition of Two Levels of Taxation
- OECD Approach to Determine Permanent Establishment
- Hong Kong Applies the OECD Permanent Establishment Provisions
- How Hong Kong Applies the Permanent Establishment Provisions
- Common Law Permanent Establishment Criteria
- Direct Activities
- Agency Relationships
- Shareholder Activities in Subsidiaries’ Locations
- Presence of Personnel Shifts among Entities
- Entirety of the Operations
- Declining Businesses
- “Preparatory to” and “Auxiliary from” Exemptions
- Time Spent
- Will the OECD Approach Prevail?
- Chapter 33: Services Transfer Pricing in Hong Kong and in Singapore
- About the Authors
- Index
To Steven Feinschreiber and Kathryn Feinschreiber Hagedorn, and to our grandchildren, Alexander, Elizabeth, and Henry, in the hope that they will follow our footsteps.
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