Transfer pricing and formulary apportionment

Article Abstract:

The formulary apportionment methods proposed as alternatives to the arms' length transaction methods currently approved under transfer pricing regulations would not be any more efficient or effective at curbing abuses. The formulary methods proposed tend to divide an international taxpayer's aggregate income based on a formula. One proposal is to apply the formula used by US states to apportion income. The effects of apportionment on revenues and administrative costs have not been assessed, but it is clear that formulary approaches provide less flexibility than accepted methods.

International aspects, International business enterprises, Multinational corporations, Transfer pricing, Allocation (Taxation), Tax allocation

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Taxing cross-border combinations: nationalistic rules in a global economy

Article Abstract:

Cross-border combinations with legitimate business purposes between US companies and foreign companies have been substantially limited by US and foreign tax policies. US Treasury Dept Notice 94-46 and regulations under IRC section 367(a) virtually force the US holding company form on cross-border combinations in order to receive tax-free treatment. These limitations are mirrored in other countries such as Canada, Germany, France, and the UK. The Treasury Dept should work to eliminate the discriminatory limitations domestically and internationally.

Tax Law, Public Finance Activities, Interpretation and construction, Tax treaties, Tax-free exchanges, International trade regulation

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