Location-Specific Advantages : : Modified Application of the Arm's Length Principle in a Knowledge-Based Economy.

• Superior document: WU Series ; v.22
• Author: Peng, Claire (Xue).
• Place / Publishing House: Amsterdam : : IBFD Publications USA, Incorporated,, 2021.; Ã2021.
• Year of Publication: 2021
• Edition: 1st ed.
• Language: English
• Series: WU Series
• Physical Description: 1 online resource (293 pages)

This book discusses location-specific advantages, a novel concept originating from the transfer pricing practice in China and India.

Table of Contents

Cover -- Title -- Copyright -- Table of Contents -- Preface -- Acknowledgements -- Abbreviations -- Chapter 1: Introduction -- 1.1. Background -- 1.1.1. From where it started: A query of emerging countries -- 1.1.2. Developing countries are a rising force in the global economy and in the international tax community -- 1.1.3. Global businesses embrace a knowledge-based economy -- 1.1.4. Modern business models erode physical presence in host countries -- 1.1.5. Arm's length principle falls short and requires further modification post-BEPS -- 1.2. Research questions -- 1.3. Novelty of the research -- 1.4. Scope and assumptions -- 1.5. Methodologies -- 1.6. Structure -- Chapter 2: Conceptual Debate of Location-Specific Advantages -- 2.1. Introduction to LSAs -- 2.2. LSAs as an economic concept -- 2.3. LSAs as a tax law and transfer pricing concept -- 2.3.1. LSAs justify the taxing right of host countries in international taxation -- 2.3.2. LSAs present a pricing problem in transfer pricing -- 2.3.3. LSAs present insufficiently identifiable value under the current guidance and practice of transfer pricing -- 2.3.4. LSAs present as an inherent deficiency in allocating global taxing rights -- 2.4. Concluding remarks -- Chapter 3: Transfer Pricing Debate in International and National Domains -- 3.1. Insights from the international organizations -- 3.1.1. The OECD TP Guidelines -- 3.1.2. The UN TP Manual -- 3.2. Insights from selected countries -- 3.2.1. US tax law -- 3.2.2. German tax law -- 3.2.3. Chinese tax law -- 3.2.3.1. "China Country Practice" in the 2017 UN TP Manual -- 3.2.3.2. Domestic transfer pricing rules in China -- 3.2.4. Indian tax law -- 3.2.4.1. Location savings and other LSAs -- 3.2.4.2. Marketing intangibles -- 3.3. Concluding remarks -- Chapter 4: Economic Views of Multinational Enterprises -- 4.1. MNEs and the global economy.

4.2. Economic theories of firms and MNEs -- 4.2.1. Overview of the theories -- 4.2.2. An integration of firm theories -- 4.2.2.1. Ownership advantages and KBC -- 4.2.2.2. Locational advantages -- 4.2.2.3. Internalization advantages -- 4.2.3. Interactions of OLI advantages with contemporary considerations -- 4.3. Concluding remarks -- Chapter 5: Theories of Taxing MNEs -- 5.1. Separate entity theory -- 5.1.1. What it is -- 5.1.2. Merits and demerits -- 5.1.3. Appraisals -- 5.2. Unitary entity theory -- 5.2.1. What it is -- 5.2.1.1. Tax unit: The unitary business -- 5.2.1.2. Tax base: Consolidated income of the unitary business -- 5.2.1.3. Formulary apportionment: Factors and weights -- 5.2.2. Merits and demerits -- 5.2.3. Appraisals -- 5.3. Concluding remarks -- Chapter 6: The Arm's Length Principle -- 6.1. Pre-BEPS developments since the 1930s -- 6.1.1. 1930s-1960s: The emergence of the arm's length principle -- 6.1.2. 1960s-1995: International acceptance of the arm's length principle -- 6.1.3. 1995-2015: Diverging national practice in respect of the arm's length principle -- 6.2. The BEPS Project as an overhaul of the arm's length principle -- 6.2.1. The BEPS initiatives and outcomes -- 6.2.2. The post-BEPS arm's length principle -- 6.2.2.1. Value creation is the new requirement -- 6.2.2.2. Addressing the separation of risks from functions -- 6.2.2.3. Addressing the separation of intangible-related income from functions -- 6.2.2.4. Revised guidance on the transactional profit split method -- 6.2.2.5. Simplified approach to low value-adding services -- 6.2.3. Interpretative value of the post-BEPS arm's length principle in tax treaties -- 6.3. The post-BEPS arm's length principle requires further modification -- 6.3.1. The arm's length principle per se is not a principle.

6.3.2. Global formulary apportionment is not ready to replace the arm's length standard as the international solution -- 6.3.3. The arm's length principle presents fundamental limits in guidance and practice -- 6.3.3.1. Transactional significance -- 6.3.3.2. Functional analysis at entity level -- 6.3.3.3. The post-BEPS arm's length principle still excessively underlines functional significance -- 6.4. Concluding remarks -- Chapter 7: A New Framework for the Guidance and Practice of the Arm's Length Principle -- 7.1. Background -- 7.1.1. The profit allocation problem caused by insufficient inclusion of LSAs -- 7.1.2. Alternative international proposals -- 7.2. The proposal -- 7.2.1. Overview -- 7.2.2. The revised transfer pricing analysis -- 7.2.3. The revised transfer pricing methods -- 7.2.3.1. The one-sided methods with adjustment applicable in Scenario 1 -- 7.2.3.2. The revised residual profit split method applicable in Scenario 2 -- 7.3. Appraisal -- Chapter 8: Conclusions -- 8.1. What are LSAs? -- 8.2. What is the transfer pricing problem caused by LSAs? -- 8.3. What is the rationale for resolving the problem identified? -- 8.4. What is the proposal? -- Bibliography -- Other Titles in the WU Institute for Austrian and International Tax Law - Tax Law and Policy Series.