Transfer Pricing Highlights – July 2014

Thomson Reuters Tax & Accounting Newsletters, ONESOURCE July 3, 2014

Welcome to the July edition of the ONESOURCE Transfer Pricing Newsletter, your monthly source for the latest transfer pricing news. Each edition will feature articles and insight to keep you apprised on current events in the transfer pricing industry, as well as exciting things we are working on at Thomson Reuters ONESOURCE.

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What’s New

Obama to Call for End to Tax Inversions

The recent merger between AbbVie and Shire as well proposed mergers of Medtronic and Covidien as well as Walgreen and AB Boots has attracted substantial controversy with part of this discussion focusing on whether the benefits of an inversion are simply escaping the repatriation tax on foreign sourced profits versus allowing a more aggressive shifting of profits away from the U.S. affiliate to tax haven affiliates.

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Arm’s-Length Panel Mulls Next Steps For State-Level Transfer Pricing Service

The Multistate Tax Commission is developing a transfer pricing program for the state tax authorities. They have also been consulting with various transfer pricing consulting firms.

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Pricing Incomplete Risk Contracts Presents Significant Challenge, IRS Economist Says

The chief economist for the IRS discusses the issue of which related party affiliate truly born the risk of ongoing intangible development costs and which affiliate deserves the benefits of any future success from such intangible development activity. This discussion highlights the need for clear intercompany contracts.

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Shiseido charged tax penalties in Japan for allegedly keeping profits in U.S.

Shiseido’s manufacturing facility in New Jersey sells products to its Japanese parent. This intercompany pricing has been challenged by the Tokyo Regional Taxation Bureau on the grounds that the New Jersey affiliate allegedly has more income than its competitors.

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Ask a Transfer Pricing Expert

Question: The Kenya Revenue Agency (KRA) and the South African Revenue Service (SARS) are insisting on country risk adjustments for our TNMM analyzes. What is this issue about and how might we implement these adjustments?

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