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This will interest every multinational company that own, license or use intangibles! |
| OECD Update on Intangibles |
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29 March 2011 - The OECD met with the business community on the valuation of intangibles for transfer pricing purposes to learn about:
- Valuation definitions and principles, price vs. value, hindsight, valuation process, general valuation approaches (i.e., income, market and cost), and underlying assumptions.
- Practical example for valuing intangibles.
- Valuation in a highly uncertain environment and hindsight.
- Other key aspects for valuing intangibles.
More details are provided on the OECD website. Click here.
This is the fourth Transfer Pricing Alert on this topic. More will follow. Learn more by reading past issues. Click here. |
| IRS Update on Intangibles |
18 March 2011 - the IRS issued a Chief Counsel Advisory (CCA) to an IRS auditor about an unknown taxpayer, citing certain facts and circumstances, regarding the development and use of intangibles.
The CCA starts with an example where one party gives a related party something valuable, which the related party must further develop at its own expense before full exploitation is possible. The CCA then refers to the unknown taxpayer where the parent company provided services (with embedded intangibles) that lead to the related party - after further development - owning rights to certain intangibles.
In this case, the CCA concluded that none of the traditional specified methods work (transfer pricing), and goes on to introduce new approaches to valuing intangibles (valuation methods).
In one example the CCA refers to the pharmaceutical industry.
Learn more by reading the CCA. Click here. |
| New OECD Project on Transfer Pricing |
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9 March 2011 - The OECD launched a new project on the administration of transfer pricing. The OECD will focus on striking a balance between the development of sophisticated guidance for complex transactions and the cost-effective use of taxpayers' and tax administrations' resources for improved compliance and enforcement.
The OECD is seeking comments to be submitted before 30 June 2011.
More details are provided on the OECD website. Click here. |
| Concern for all Companies |
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It is reasonable to expect the Canada Revenue Agency, the Internal Revenue Service and all other tax authorities will consider how these changes might impact their transfer pricing rules and administrative guidance. However, it is not yet known how long it might take for these changes to be introduced, what the impact will be, the first year of implementation, transitional provisions, etc.
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| Transfer Pricing Services |
Please conta ct MDW Consulting Inc. if you have questions about this or other transfer pricing issues that concern you. |
