Archive for the ‘Transfer Pricing’ category

By Appeasing the United Kingdom, Starbucks May Have Relocated Its Tax Problems Into The United States

December 12, 2012

By:  Dustin Covello

As one of many U.S. multinationals that reportedly implemented the Double Irish international tax structure, Starbucks has reportedly paid a U.K. tax rate of 2.8 percent over the last decade.  Not satisfied with this levy, last month the British Parliament called Starbucks and other U.S. multinationals before the body to discuss the structure.  Last week, in response to Parliament’s pressure, Starbucks announced that it would voluntarily forgo U.K. deductions to ensure it pays £10 million ($16 million) in tax during 2013 and 2014.  It remains to be seen whether Starbucks’ announcement will placate Parliament.  By making this gesture, however, has Starbucks caused a U.S. tax problem?  (more…)

The Benefits Of Seeking Competent Authority Relief For Proposed Transfer Pricing Adjustments

June 20, 2011

By David L. Bernard

TaxBlawg’s Guest Commentator, David L. Bernard, is the former Vice President of Taxes for Kimberly-Clark Corporation, a past president of the Tax Executives Institute, and a periodic contributor to TaxBlawg.

My last blog post suggested that the best defense against transfer pricing assessments is the adoption of a globally consistent transfer pricing policy supported by appropriate documentation. Near the conclusion of that post, I noted that the Competent Authority (CA) process and Advance Pricing Agreements (“APAs”) were tools that could be employed if your company faced transfer pricing adjustments.

Although the goal of your transfer pricing policy and related documentation is to manage risk and avoid tax assessments, the nature of the beast is such that there is no precise price one can pinpoint in transfer pricing matters that can completely eliminate the risk of a tax authority’s challenge. Rather, there is usually a range of potential prices that may be appropriate. A tax authority may be inclined to pick a price at the end of the range most favorable to its country from a revenue perspective, leaving the Chief Tax Officer (CTO) to consider a menu of potential remedies, including administrative appeals, litigation, APAs, or perhaps a request for CA assistance.

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Transfer Pricing and How to Handle the “Double-Edged Sword”

February 28, 2011

By David L. Bernard

TaxBlawg’s Guest Commentator, David L. Bernard, is the former Vice President of Taxes for Kimberly-Clark Corporation, a past president of the Tax Executives Institute, and a periodic contributor to TaxBlawg.

Transfer pricing among affiliated companies is the classic “double-edged sword”. When carefully designed, transfer pricing practices can cut a company’s effective tax rate (“ETR”) with little risk of interference from tax authorities. When done poorly, transfer pricing can devolve into a mess of  ETR-killing practices.  As quickly as one edge can save a company money, the other edge can cut short a tax professional’s career.

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