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.