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Asia-Pacific Transfer Pricing Handbook

Asia-Pacific Transfer Pricing Handbook

  • Author:
  • Publisher: John Wiley & Sons
  • ISBN: 9781118359372
  • Published In: October 2012
  • Format: Hardback , 720 pages
  • Jurisdiction: Asia-Pacific, Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Vietnam ? Disclaimer:
    Countri(es) stated herein are used as reference only

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    An overarching look at transfer pricing regimes in Asia-Pacific countries and what they mean for foreign businesses

    A comprehensive guide for companies doing business globally, Asia-Pacific Transfer Pricing Handbook explains the policies and practices that Asia-Pacific countries employ with regards to taxing foreign businesses. The only book that analyzes and guides companies through the often complex transfer pricing rules in place in Asian-Pacific nations, the book explains how authorities in fifteen countries, including ASEAN, India, New Zealand, Japan, and South Korea, tax any company doing business within their borders.

    Helping foreign companies to properly price their goods and services for global markets, providing defenses for transfer pricing audits, explaining standards for creating comparables that multijurisdictional tax administrations will accept, explaining documentation requirements and timing issues, and creating awareness about inadvertently becoming a permanent establishment, Asia-Pacific Transfer Pricing Handbook is an essential resource for doing business abroad.

    • Provides comprehensive, accessible information on transfer pricing in Asia-Pacific countries
    • Covers fifteen Asia-Pacific countries, including all ASEAN countries, giving readers unparalleled exposure to the different transfer pricing arrangements across the region
    • Explains how companies doing business abroad should price their goods and services for global markets to remain in accordance with the law

    A complete and comprehensive guide to transfer pricing and its implications for firms and accountants operating in the Asia-Pacific region, Asia-Pacific Transfer Pricing Handbook explains everything foreign companies need to know about doing business abroad.

  • Preface xxi

    PART ONE: COUNTRY-BY-COUNTRY ANALYSIS 1

    Chapter 1 Introduction 3

    • Part One: Country-by-Country Analysis 3
    • Part Two: Advanced Applications 4

    Chapter 2 Australia’s Risk Assessment Transfer Pricing Approach 7

    • Introductory Issues 8
    • Transfer Pricing Reviews 8
    • Documentation Requirements 10
    • Preparation of the Documentation File 11
    • Applying the Arm’s Length Principle 13
    • Simplified Approach to Doing a Benchmarking Study 13
    • Four Steps for Testing International Transfer Prices 14
    • Decision Tree 16
    • How the ATO Scores Risk 16
    • Scoring the Three Levels 17
    • Score Graph 18
    • Outcome of Transfer Pricing Review or Audit 19
    • Audits Taking Place in Low-Risk Situations 20
    • Transfer Pricing Review Process 20
    • Categorizing the Results of the Transfer Pricing Review 21
    • How the Australian Transfer Pricing Audit Procedure Works 22
    • Australia’s Four-Step Process for Businesses 22

    Chapter 3 Profit Attribution for a Dependent

    • Agent’s Permanent Establishment in Australia 25
    • Permanent Establishment Concepts in Australia 26
    • Profit Attribution Concepts in Australia 26
    • The ATO’s Operational Approach 26
    • Determining Functional Analysis for a Permanent Establishment 27
    • Comparative Analysis for the Permanent Establishment 29
    • Application of the Resale Price Method 31
    • Application of the Cost Plus Method 31
    • Using a Transactional Net Margin Method 32
    • Using a Profit Split Method 32
    • Toll Manufacturers 34
    • Four Examples 35
    • Notes 47

    Chapter 4 Australia’s Advance Pricing Arrangement Program 49

    • Pre-Formal APA Discussions 50
    • APA Processing Times 51
    • Unilateral and Bilateral APAs 52
    • The ATO’s APA Work in Process 52
    • APA Issues and Methods 52

    Chapter 5 China Implements Transfer Pricing Procedures 55

    • Overview 55
    • Regulations 56
    • Chapter 1: General Principles 56
    • Chapter 2: Reporting and Filing of Related Party Transactions 59
    • Chapter 3: Administration of Contemporaneous Documentation 62
    • Chapter 4: Transfer Pricing Methods 66
    • Chapter 5: Transfer Pricing Audits and Adjustments 71
    • Chapter 6: Administrative Guidance Concerning Advance Pricing Arrangements 78
    • Chapter 7: Administrative Guidance Concerning Cost Sharing Agreements 87
    • Chapter 8: Administrative Guidelines Concerning Controlled Foreign Corporations 91
    • Chapter 9: Administrative Guidance Concerning Thin Capitalization 93
    • Chapter 10: Administrative Guidance Concerning General Anti-Avoidance 96
    • Chapter 11: Corresponding Adjustments and International Negotiations 98
    • Chapter 12: Legal Responsibility 99
    • Chapter 13: Supplementary Provisions 101
    • Notes 102

    Chapter 6 Reporting Related Party Transactions in China 105

    • Form 1—Related Party Relationships 106
    • Form 2—Summary of Related Party Transactions 109
    • Form 3—Purchases and Sales 111
    • Form 4—Services Form 112
    • Form 5—Intangible Assets 113
    • Form 6—Fixed Assets 113
    • Form 7—Financing 114
    • Form 8—Outbound Investment 115
    • Form 9—Outbound Payments 118
    • Notes 119

    Chapter 7 Hong Kong Advance Ruling Cases: Taxability of Profits 121

    • Advance Ruling Process 121
    • Advance Ruling Case No. 4 122
    • Advance Ruling Case No. 8 123
    • Advance Ruling Case No. 9 125
    • Advance Ruling Case No. 10 126
    • Advance Ruling Case No. 11 127
    • Advance Ruling Case No. 12 128
    • Advance Ruling Case No. 13 130
    • Advance Ruling Case No. 16 132
    • Advance Ruling Case No. 19 133
    • Advance Ruling Case No. 21 134
    • Advance Ruling Case No. 23 135
    • Advance Ruling Case No. 26 136
    • Advance Ruling Case No. 30 137
    • Advance Ruling Case No. 34 138
    • Advance Ruling Case No. 35 139
    • Advance Ruling Case No. 36 140
    • Advance Ruling Case No. 37 141

    Chapter 8 Hong Kong Transfer Pricing Guidelines 143

    • Double Tax Agreements 143
    • Arm’s Length Principle 143
    • Associated Enterprises 145
    • Appropriate Adjustments 146
    • Inland Revenue Ordinance and Case Law 147
    • Permanent Establishment Considerations 150
    • Applying the Arm’s Length Principle 151
    • Four Steps 153
    • Functional Analysis 153
    • Comparability Analysis 154
    • Determining Comparability 155
    • Functions, Assets, and Risks 155
    • Contract Terms 157
    • Economic and Marketing Circumstances 158
    • Business Strategies 158
    • Global Price Lists 159
    • Establishing the Reliability of the Data 160
    • Transfer Pricing Methodologies 160
    • Sources of Profi ts and Income 162
    • Abusive Tax Schemes 163
    • Transfer Pricing Schemes 164
    • Transfer Pricing Documentation 166
    • Intragroup Services Arrangements 169
    • Deduction of Expenditures Paid for Intragroup Service 170
    • Determining the Amount of Intragroup Charges 171
    • Services Provided by a Permanent Establishment 173
    • Notes 174

    Chapter 9 Hong Kong Challenges Abusive Tax Schemes 175

    • Macroeconomic Issues 176
    • Abusive Tax Schemes 177
    • Transfer Pricing Schemes 178
    • Lack of “Economically Significant Functions” 179
    • How the Hong Kong Government Combats Abusive Tax Schemes 179
    • Extreme Forms of Tax Abuse 180
    • Distinguishing Tax Avoidance from Tax Evasion 180
    • How the Reinvoicing Structure Operates 181
    • Shifting Intangible Property: The Tax Perspective 182
    • Notes 184

    Chapter 10 Winning Hong Kong’s Landmark Transfer Pricing Case 185

    • Ngai Lik Litigation 185
    • Hong Kong’s Advance Ruling Determinations 186
    • Hong Kong Issues Transfer Pricing Guidelines 186
    • Statutory Provisions 187
    • Determination by the Court of Final Appeal 188
    • The Commissioner’s Determination 188
    • Determination by the Board of Review 189
    • Determination by the Court of First Instance 189
    • Determination by the Court of Appeal 190
    • The Case before the Court of Final Appeal 191
    • Deficiencies in the Scheme as to Additional Annual Bulk Discounts Received by Din Wai Electronics Limited 192
    • Deficiencies in the Scheme as to Manufacturing Profits 193
    • Deficiencies in the Scheme as to the Relevant Years of Assessment 196
    • Are the Scheme and the Tax Benefit Still Viable Bases for Section 61A Assessments? 196
    • Is There a “Tax Benefi t” within the Meaning of Section 61A? 197
    • The Narrower Scheme and the Narrower Tax Benefit 197
    • Dominant Purpose of the Narrower Scheme 198
    • Board of Review’s Approach 199
    • Ribeiro’s Dominant Purpose of the Narrower Scheme 200
    • Commissioner’s Assessment Power 202
    • Commissioner’s Exercise of the Section 61A(2) Power 202
    • Board’s Approach to the Exercise of the Section 61A(2) Power 203
    • Disposal of the Appeal 203
    • Notes 204

    Chapter 11 Transfer Pricing Litigation in India 205

    • Background 205
    • Transfer Pricing Chronology and Administration 206
    • Related Parties 207
    • Transfer Pricing Method Selection in India 208
    • Contemporaneous Documentation in India 209
    • Audit Procedures 210
    • Penalties 211
    • Appellate Procedures 212
    • Transfer Pricing Litigation 213
    • Vodafone: Hutchison Essar Acquisition 215
    • Notes 215

    Chapter 12 PE Issues Impact Indian Transfer Pricing 217

    • Background 218
    • Nexus, Effectively Connected Status, and Permanent Establishment 218
    • Four Fact-Based Permanent Establishment Inquiries 219
    • Impact of the Morgan Stanley Case 220
    • Permanent Establishment Transfer Pricing Litigation in India 220
    • Galileo 221
    • Hotel Scopevista 222
    • WorleyParsons 223
    • KnoWerx Education 223
    • ICICI Bank 224
    • Zimmer AG 225
    • Intergrafica 226
    • Ranbaxy Laboratories 226
    • Development Consultants 227
    • Perfitti 228
    • Data Software Research 229
    • SNC Lavalin /Acres Inc. 229
    • Airport Authority of India 230
    • Radha Rani Holdings 231
    • Mashreq Bank PSC 232
    • Mentor Graphics (Noida) Pvt. Ltd. 232
    • Millennium Infocom Technologies Ltd. 233
    • Van Oord ACZ India 233
    • Tokyo Marine & Fire Insurance Co. Ltd. 234
    • Western Union Money Transfer 235
    • Cargo Communities Network 235
    • Hyundai Heavy Industries 235
    • E. Gain Pvt. Ltd. 236
    • Infosys International Activities in New York State 236

    Chapter 13 Taxation of Travel Services in India 239

    • Sabre 240
    • Galileo 243
    • Installed Hardwire 245
    • Notes 245

    Chapter 14 Transfer Pricing in Indonesia 247

    • Historical Background 247
    • Transfer Pricing Considerations 248
    • Special Attachment 249

    Chapter 15 Japan’s Directive on Transfer Pricing Operations 251

    • Background 251
    • Regulations and the Examples—How They Differ 252
    • Operation of the Japanese Transfer Pricing Administrative Guidelines 253
    • Chapter 1: Defi nitions and Basic Policies 253
    • Chapter 2: Examination 254
    • Chapter 3: Points to Note in Calculating Arm’s Length Prices 269
    • Chapter 4: Treatment of Foreign Transferred Income 272
    • Chapter 5: Advance Pricing Arrangements 274
    • Notes 288

    Chapter 16 Selecting the Arm’s Length Price in Japan 289

    • Background 290
    • Demonstrating the Selection of Arm’s Length Price 290
    • Selection of the Method of Calculation of Arm’s Length Price 290
    • Case 1: Use of the Comparable Uncontrolled Price Method 291
    • Case 2: Use of the Resale Price Method 299
    • Case 3: Use of the Cost Plus Method 301
    • Case 4: Methods Consistent with the Comparable Uncontrolled Price Method 303
    • Case 5: Methods Consistent with the Cost Plus Method 307
    • Case 6: Transactional Net Margin Method 311
    • Case 7: Contribution Profi t Split Method 316
    • Case 8: Residual Profi t Split Method 320
    • Case 9: Adjustment for Differences 323
    • Notes 325

    Chapter 17 Applying Japanese Intangible Transfer Pricing Methods 327

    • Case 10: Intangibles Created by R&D and Marketing Activities 328
    • Case 11: Distribution Channels and Quality Control Know-How 333
    • Case 12: Know-How Accumulation through Human Resource Business Activities 335
    • Case 13: Contributions to Create, Maintain, and Develop Intangible Properties 339
    • Case 14: A Company Bearing only the Cost of Creation of the Intangible Properties 341
    • Case 15: Intangible Properties for Employees on Loan 343

    Chapter 18 Japanese Profi t Split Transfer Pricing Methods 345

    • Case 16: Applying the Profi t Split Method to a Series of Foreign-Related Transactions 346
    • Case 17: Excluding Transactions from the Profit Split Method 349Contents  xiii
    • Case 18: Calculation of the Profi t to Be Split 352
    • Case 19: Differences in Labor Costs Impact the Residual Profit Split Method 358
    • Case 20: Treatment of Market Fluctuations 361
    • Case 21: Calculation of Basic Profi t 364
    • Case 22: Factors for Splitting the Residual Profit 367

    Chapter 19 Japanese Guidelines Address Diverse Transfer Pricing Issues 373

    • Case 23: Determining Whether Services Provide Commercial Value 373
    • Case 24: Multiple-Year Considerations 377
    • Case 25: Establishing the Target Profit Margin 380
    • Case 26: Critical Assumptions 384

    Chapter 20 Malaysia Advance Ruling Guidelines 387

    • General Facets of the Advance Ruling Procedure in Malaysia 388
    • Binding Nature of an Advance Ruling 388
    • Scope of the Advance Ruling Request 389
    • Circumstances in Which Malaysia Tax Authorities Will Not Issue an Advance Ruling 390
    • Circumstances in Which the DGIR Can Decline to Issue an Advance Ruling 391
    • Notice Requirements 392
    • Advance Ruling Application Procedure 392
    • Advance Ruling Application Form 393
    • Information Request Requirement 394
    • Issuance of the Advance Ruling 394
    • Advance Ruling Finality and Disclosure 395
    • The DGIR Can Withdraw the Advance Ruling 396
    • Situations in Which the Advance Ruling Ceases to Apply 396
    • Fee Structure 397
    • Internal Procedure 397
    • Notes 397

    Chapter 21 Malaysia Transfer Pricing Guidelines 401

    • Introductory Provisions 401
    • Malaysian Transfer Pricing Procedure 402
    • Application of the Arm’s Length Principle 403
    • Malaysia’s Transfer Pricing Regime 403
    • Comparability and Transfer Pricing 404
    • Transfer Pricing Alternatives 407
    • Comparable Uncontrolled Price Transfer Pricing Method 407
    • Resale Price Transfer Pricing Method 409
    • Cost Plus Transfer Pricing Method 411
    • Additional Transfer Pricing Methods 413
    • Profit Split Transfer Pricing Method 414
    • Residual Analysis Example 415
    • Transactional Net Margin Method 418
    • Intangible Property 419
    • Transfer Pricing Services Regulations 420
    • Documentation 421
    • Malaysia Issues Advance Rulings Guidelines 423
    • General Facts about of the Advance Ruling Procedure in Malaysia 423
    • Binding Nature of an Advance Ruling 424
    • Scope of the Advance Ruling Request 425
    • Advance Ruling Application Procedure 427
    • Advance Ruling Application Form 428
    • Information Request Requirement 429
    • Issuance of the Advance Ruling 429
    • Advance Ruling Finality and Disclosure 431
    • The DGIR Can Withdraw the Advance Ruling 431
    • Situations in Which the Advance Ruling Ceases to Apply 432
    • Fee Structure 432
    • Internal Procedure 433
    • Notes 433

    Chapter 22 New Zealand Transfer Pricing Developments 439

    • New Zealand Transfer Pricing Guidelines 440
    • Initial Developments 440
    • Arm’s Length Principle and the Pricing Methods 441
    • Basics of the Transfer of Intangible Property 442
    • Profit Split Method and the Joint Ownership of Intangible Property 443
    • Profit Split Method 444
    • Residual Profit Split Analysis 444
    • Transactional Net Margin Method 445
    • Market Penetration Techniques 445
    • Australia’s Four-Step Process to Ascertain the Arm’s Length Approach 446
    • Documentation 446
    • Documentation and the Burden of Proof Rule 447
    • Inland Revenue Seeks to Ascertain the Risks to the Revenue 447
    • Retention of Records 448
    • Transfer Pricing in Countries without a Double Tax Agreement 449
    • Intangible Property Audits 450
    • Trade Intangibles and Marketing Intangibles 450
    • Ascertaining the Arm’s Length Amount for Intangible Property 451
    • Ascertaining the Ownership of Intangible Property 451
    • Factors in Ascertaining the Nature of Intangible Property 452
    • Terms and Conditions of the Intangible Property Transfer 453
    • Valuing Intangible Property 454
    • Non-Owner’s Marketing Activities 454
    • Applying the Profi t Split Method to Intangible Property 455
    • Intangible Property Planning 456

    Chapter 23 Philippine Transfer Pricing Regulations 457

    • Scope of the Philippine Provisions 458
    • Philippine-Specific Provisions 458

    Chapter 24 Singapore Implements Advance

    • Pricing Arrangement Procedure 461
    • Objectives of the Supplementary Circular 462
    • What the Supplementary Circular Provides 462
    • Minimum Information Requirements 462
    • Considerations for Accepting the APA 463
    • Pre-Filing APA Process 464
    • Formal APA Submission Procedures 466
    • APA Review and Negotiations: Considerations and Requirements 467
    • APA Roll-Back 468
    • Discontinuation of the APA Process 469
    • Nonsubmission of the APA Application 469
    • Insuffi cient Level of Support during the APA Process 470
    • Absence of Communication 470
    • Effective Date 471
    • Notes 471

    Chapter 25 Singapore Transfer Pricing Consultation Process 475

    • Background 475
    • Objectives of the Transfer Pricing Consultation 476
    • Issuance of the Transfer Pricing Questionnaire 476
    • Transfer Pricing Consultation 477
    • Transfer Pricing Questionnaire 478
    • Notes 480

    Chapter 26 Singapore Transfer Pricing Guidelines 481

    • Key Concepts and Arm’s Length Principles 482
    • Three-Step Approach 483
    • Comparison of Economically Signifi cant Functions 483
    • Comparable Uncontrolled Price Method 484
    • Transfer Pricing Method Selection 484
    • Transfer Pricing Documentation 488
    • Mutual Agreement Procedures 490
    • Advance Pricing Agreements 491
    • Comments 491
    • Notes 491

    Chapter 27 Singapore Transfer Pricing Guidelines for Related Party Loans and Services 493

    • Transfer Pricing Guidelines for Related Party Loans 494
    • Two Loan Categories 494
    • Facts and Circumstances to Determine Comparability Analysis 496
    • Transfer Pricing Guidelines for Related Party Services 497
    • Direct Charging versus Indirect Charging of Services 499
    • Ascertaining the Arm’s Length Fee 500
    • Routine Services and the 5% Markup 500
    • Cost Pooling Contracts 503
    • Strict Cost Pass-through 504
    • Documentation 505
    • Notes 506

    Chapter 28 South Korea Transfer Pricing 507

    • Background 507
    • Related Party Transfer Pricing Relationships in Korea 508
    • Computation of Indirect Ownership 509
    • Economic Interest and Control 509
    • Transfer Pricing Method Alternatives 510
    • Information Requests and Documents 512
    • Transfer Pricing Audits 514
    • Permanent Establishment, Competent Authority, and Advance Pricing Agreements 515
    • Thin Capitalization and Tax Havens 515
    • Applying the “Most Reasonable Method” Standard to Determine Arm’s Length Price 516
    • Underpayments and Overpayments 517
    • Selecting Transfer Pricing Methods 517
    • Reporting Methods for Determining Arm’s Length Price 518
    • Advance Pricing Arrangements 518
    • Sanctions Imposed on Failure to Comply with the Data Request 520
    • Penalties 520
    • Thin Capitalization Rules 521
    • Debt under an Arm’s Length Situation 522
    • Anti–Tax Haven Rules 522
    • Scope of the “Tax Haven” Jurisdiction 523
    • Computation of the Reserved Income Distributed Amount 524
    • Gift Tax on Property Located Outside Korea 524
    • Mutual Agreement Procedure 525
    • International Tax Cooperation 525
    • Note 526

    Chapter 29 Sri Lanka Transfer Pricing 527

    • Associated Undertakings 528
    • Arm’s Length Price 528
    • Documentation 529
    • Threshold for Applying Sri Lanka Transfer Pricing 529
    • Advance Pricing Agreements 530
    • Burden of Proof 530
    • Implementation 530
    • Annex 1: Test of Control—Associated Undertaking 530
    • Annex 2: Arm’s Length Pricing Methodologies 531
    • Annex 3: Appropriate Pricing Methodology—Factors to Consider 536
    • Annex 4: Comparability of an Uncontrolled Transaction—Factors to Consider 536
    • Annex 5: Prescribed Documentation 537
    • Suggested Supporting Documents 538

    Chapter 30 Taiwan Transfer Pricing 539

    • Enactment of the Transfer Pricing Statute 539
    • Transfer Pricing Regulations 540

    Chapter 31 Thailand Transfer Pricing 547

    • Transfer Pricing Booklet 548
    • Part 1: Tax Legislation Impacting Transfer Pricing 548
      • Revenue Department of Thailand Departmental Instruction Paw 113/2545 549
    • Part 2: Methodologies in Calculating Market Price 554
    • Part 3: Process in Establishing the Market Price 554
      • Process of Establishing the Market Price 556
      • Guidelines on the Determination of Market Price 557

    Chapter 32 Vietnam Transfer Pricing 559

    • Expansive View of Related Party Ownership 560
    • Transfer Pricing Methods 560
    • Documentation Requirements 561
    • Compliance Considerations 561

    PART TWO: ADVANCED APPLICATIONS 565

    Chapter 33 Services Transfer Pricing in Hong Kong and in Singapore 567

    • Services Transfer Pricing in Hong Kong and in Singapore: Basic Comparison 567
    • Hong Kong Services Transfer Pricing Methods 568
    • Shareholder Activity and Stewardship Functions 569
    • Financial Services Audit Example 570
    • Deduction of Expenditures Paid for Intragroup Services 570
    • “Objective Commercial Explanation” Standard 571
    • Determining the Amount of Intragroup Charges 572
    • Services Provided by a Permanent Establishment 573
    • Scope of Activities for Related Party Services in Singapore 574
    • Singapore Transfer Pricing Services Guidelines 575
    • Direct Charging versus Indirect Charging of Services 576
    • Ascertaining the Arm’s Length Fee 577
    • Routine Services and the 5% Markup in Singapore 577
    • Cost Pooling Contracts 580
    • Cost Pooling versus Pass-Through Allocation Alternatives 582
    • Documentation 583
    • Notes 583

    Chapter 34 Permanent Establishment Parameters: Hong Kong versus India 585

    • General Permanent Establishment Considerations 586
    • Permanent Establishment Considerations in India 586
    • Permanent Establishment Considerations in Hong Kong 588

    Chapter 35 Pacific Tax Administrators Coordinate Transfer Pricing Documentation 591

    • Background 591
    • PATA Provisions 593
    • Three Operative Principles 594
    • Specifi c Mandatory Documentation 596
    • Notes 603

    Chapter 36 Shared Services and Cost Pooling Arrangements in the United States and Singapore 605

    • Historical Background 606
    • Explanation of the Shared Services Arrangement Provisions 606
    • Shared Services Arrangements 608
    • Services Cost Method Examples 611
    • Singapore Shared Services Arrangements 620
    • Notes 622

    Chapter 37 South Korea–Japan Bilateral Investment Treaty 623

    • Background 623
    • U.S. Involvement in BITS 624
    • Arbitration 624
    • ICSID Arbitration 624
    • Treaty Shopping within the Bilateral Investment Treaty Context 625
    • Tax Provisions within the Korea–Japan Bilateral Investment Treaty 626

    Chapter 38 China–Taiwan Trade 629

    • Taiwan and China: A History Lesson 629
    • Economic Considerations 630
    • One-China Policy 630
    • Economic Cooperation Framework Agreement 631
    • Tax Considerations 632
    • Choice of Transfer Pricing Method 633
    • Functional Analysis 634
    • Analysis of the Production Activities 634
    • Fact Pattern 635
    • Accounting and Tax Operations 635
    • Permanent Establishment 636
    • Taiwanese–Chinese Electronics Company 636
    • Transactional Profi t Split Method Criteria 637
    • Most Appropriate Transfer Pricing Method 637
    • Allocation Key System 637
    • Strong Correlation Standard 638
    • Selecting among Allocation Keys 638
    • APA Process 640
    • Notes 640

    Chapter 39 Malaysia–Singapore Allocation Keys 643

    • Importance of Allocation Keys 643
    • Selection of the Real Estate Leasing Example 644
    • When the Transactional Profit Split Method Is the “Most Applicable” Transfer Pricing Method 644
    • Specialized Services 645
    • Applying the Transactional Profit Split Method 646
    • Four Allocation Keys Categories 647
    • Key Functions 647
    • Selecting Potential Allocation Keys 648
    • Residential Condominium Leasing Example 648
    • Residential Condominium Database 650
    • Selecting among Allocation Keys 650
    • “Strong Correlation” Standard 651
    • Allocation Keys 652
    • Transfer Pricing Strategies 656
    • Corporate Tax Strategy 657
    • Malaysia’s Tax Strategy 657
    • Notes 658

    Chapter 40 Permanent Establishment Parameters 659

    • OECD’s Permanent Establishment Provisions 660
    • Consequences of Permanent Establishment Status 660
    • Consequences of a Permanent Establishment to Business 661
    • Transfer Pricing and Permanent Establishment 661
    • Overall Tax Considerations 662
    • Potential for the Imposition of Two Levels of Taxation 662
    • OECD Approach to Determine Permanent Establishment 663
    • Hong Kong Applies the OECD Permanent Establishment Provisions 663
    • How Hong Kong Applies the Permanent Establishment Provisions 664
    • Common Law Permanent Establishment Criteria 665
    • Direct Activities 665
    • Agency Relationships 666
    • Shareholder Activities in Subsidiaries’ Locations 667
    • Presence of Personnel Shifts among Entities 668
    • Entirety of the Operations 668
    • Declining Businesses 668
    • “Preparatory to” and “Auxiliary from” Exemptions 669
    • Time Spent 669
    • Will the OECD Approach Prevail? 669
    • Notes 670

    About the Authors 671

    Index 673

  • Robert Feinschreiber is an experienced tax practitioner, an attorney, and a counselor based in Miami, Florida. Together with Margaret Kent, he focuses on resolving transfer pricing disputes and on developing comprehensive worldwide transfer pricing strategies for large and mid-sized businesses through TransferPricingConsortium.com. He has been quoted as an authority by the U.S. Tax Court, Businessweek, and Forbes.

    Mr. Feinschreiber has been a consultant to several foreign governments in transfer pricing issues, but his primary activity is to defend international businesses. He focuses on OECD transfer pricing, transfer pricing in the United States, and transfer pricing in Asia.


    Margaret Kent is an experienced tax practitioner, an attorney, and a counselor based in Miami, Florida. Together with Robert Feinschreiber, she focuses on resolving transfer pricing disputes and on developing comprehensive worldwide transfer pricing strategies for large and mid-sized businesses through TransferPricingConsortium.com.

    Ms. Kent has been a consultant to several foreign governments in transfer pricing issues, but her primary activity is to defend international businesses. He focuses on OECD transfer pricing, transfer pricing in the United States, transfer pricing in Asia, and transfer pricing in South America.

  • "Robert Feinschreiber and Margaret Kent continue to provide comprehensive and up-to-date guidance in the complex and dynamic transfer pricing field. In this book, they focus in a very concrete and useful way on what is certainly the most economically explosive region of the world --- Asia.”

    Michael Kliegman
    PricewaterhouseCoopers, LLP

     

    “This book provides practical solutions and guidance to assist multinational corporations (MNC) to effectively mitigate transfer pricing tax exposure. It provides practical solutions with examples that demonstrate the use of “allocation keys” under the Transactional Profit Split method that can provide equitable and consistent results in connection with allocating MNC global profits to affiliates in different tax jurisdictions. I believe the information provided by Feinschreiber and Kent’s book will be valuable to business executives, tax professionals, and tax administrative officers.”

    Alexander Pan, PhD, MBA, MBT, CPA
    Partner (retired),
    PricewaterhouseCoopers, LLP;
    University of California, Irvine

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Concise Guide: Compliance and Company Secretarial Practice of Hong Kong Private Companies
Concise Guide: Compliance and Company Secretarial Practice of Hong Kong Private Companies

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Hong Kong Company Law, 14th Edition
Hong Kong Company Law, 14th Edition

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Individual Income Tax Planning for Expatriates in China, 6th Edition
Individual Income Tax Planning for Expatriates in China, 6th Edition

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