Author Archives: Doug Schwerdt

Introducing the Profit Split Method: “To Apply or Not to Apply, this is a BEPS Question”
BEPS / Intangible Property / OECD / Profit Split Method / Publications / Transfer Pricing

Introducing the Profit Split Method: “To Apply or Not to Apply, this is a BEPS Question”

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The Profit Split Method (PSM) is gaining prominence in transfer pricing to ensure fair profit allocation among multinational enterprises. Learn when to apply the PSM based on unique and valuable contributions, highly integrated operations, or shared economically significant risks between controlled parties. Discover how the PSM aligns with the OECD’s BEPS initiative by considering the relative value contributed by each party to the transaction. Explore the origins, strengths, and practical applications of PSM. This article provides insights on using the PSM for arm’s-length pricing, tax planning, and defending against transfer pricing examinations. Continue reading →

SALT Transfer Pricing Quiz
Doug's TP Grab Bag / SALT Transfer Pricing

SALT Transfer Pricing Quiz

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Measure Your SALT & Transfer Pricing Know-How & Win with the 6-Question SALT TP Quiz! Alas, Quiz Prize eligibility closed on April 30, 2022. However, if you haven’t yet read the 2022 Tax Notes State article “SALT Transfer Pricing — What You Need to Know,” there is still time to request a copy of the article from within the Quiz, which we will keep open until 31 May 2022 for this purpose. WTP Advisors is administering the Quiz and all responses (score, name, etc.) will be kept in strict confidence unless, of course, you want us to call and tell your boss how smart you are! Continue reading →

“SALT Transfer Pricing – What You Need to Know: Part 2”
Publications / SALT Transfer Pricing

“SALT Transfer Pricing – What You Need to Know: Part 2”

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This article discusses recent Multistate Tax Commission (MTC) State Intercompany Transactions Advisory Service (SITAS) Committee developments, state application of Tres. Reg. section 482 as evidenced in court cases, state transfer pricing amnesty programs, and measures taxpayers should consider to prepare for state transfer pricing audits. Continue reading →

“SALT Transfer Pricing – What You Need to Know: Part 1”
Publications / SALT Transfer Pricing

“SALT Transfer Pricing – What You Need to Know: Part 1”

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When the subject of transfer pricing arises, most finance and tax professionals think of international transfer pricing. Transfer pricing, however, can play an important role in state and local tax. Part 1 of the article examines: Three major reporting methods available to states under formulary-apportioned corporate tax reporting ◆ The effect of transfer pricing on different reporting methods ◆ The latest Multistate Tax Commission transfer pricing developments. Continue reading →

Six Salaciously SALTy Transfer Pricing Facts You’ll Want to Read More About!
Transfer Pricing

Six Salaciously SALTy Transfer Pricing Facts You’ll Want to Read More About!

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On 24 January 2022, Tax Notes State published SALT Transfer Pricing — What You Need to Know: Part 1. I realize many readers of this blog have an insatiable hunger for all things transfer pricing (with SALT or without). To whet your appetite, here are six salaciously SALTy transfer pricing facts you’ll be longing to read more about in my full coauthored article… Enjoy! Continue reading →

$45.33/hour for Scooping Ice Cream — Sound too Sweet to be True?
Economics

$45.33/hour for Scooping Ice Cream — Sound too Sweet to be True?

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All of the Minimum hourly wages in Gabrielle Olya’s 25 June 2021 article, “Costco, Amazon and 16 Other Companies That Raised Their Minimum Wage to $15 (or More) — Some major companies now offer a minimum wage of $20/hour.”  (https://www.gobankingrates.com/money/jobs/18-companies-raised-minimum-wage-to-15-or-more/) are a lot higher than I would have guessed.   For me, Ben & Jerry’s … Continue reading →

Impactful FYE Transfer Pricing Examination Preparedness Measures
Publications

Impactful FYE Transfer Pricing Examination Preparedness Measures

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U.S.-based MNEs face an inevitable IRS transfer pricing (“TP”) exam sooner rather than later. Fortunately, for U.S. companies in MNE groups, the IRS issued taxpayer guidance on exams in its Transfer Pricing Examination Process, Publication 5300 (TPEP). In this article, we view the TPEP at a high level and provide insights to help tax executives quickly make sense of the IRS’s TP guidance in preparation for 2022 TP documentation and exams in the years ahead. Continue reading →

How WTP Advisors Is Helping Corporate Tax Executives Handle Transfer Pricing Remotely 
Publications

How WTP Advisors Is Helping Corporate Tax Executives Handle Transfer Pricing Remotely 

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I coauthored “How WTP Advisors is Helping Corporate Tax Executives Handle Transfer Pricing Remotely,” which addresses common MNE in-house transfer pricing team pain points and brings a few of my recently developed software solutions to the table (e.g., TP Risk Assessment Model). This article was the concluding article in the September 2020 issue of the bilingual Americas-focused “AMÉRICA, Revista Regional” magazine, which contained articles written by firms in Argentina, Colombia, Costa Rica, Ecuador, and the United States. Continue reading →

Looming Transfer Pricing Exams & IRS Preparedness Measures
Exams / Audits / Transfer Pricing / United States

Looming Transfer Pricing Exams & IRS Preparedness Measures

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(Part 1 of Series) – Originally published in TaxConnections The IRS guidance, Transfer Pricing Examination Process, Publication 5300 (TPEP), released in June 2018, is more relevant now than ever before. There is a broad consensus among transfer pricing and international tax practitioners that tax authorities around the globe will step up transfer pricing audit activity … Continue reading →

“Global Trends in Transfer Pricing”
BEPS / Intangible Property / OECD / Publications / Risk Management (TP) / Technology (TP) / United States

“Global Trends in Transfer Pricing”

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I examine the intricate and evolving transfer pricing landscape in this insightful article. From the globally converging corporate income tax rates aimed at diminishing tax base erosion to the intense focus on intangibles in related legislation, the article provides a comprehensive overview of the key 2019 transfer pricing trends. The article also highlights the rising compliance and risk management burdens for multinational enterprises (MNEs) and the innovative use of technology to improve global transfer pricing processes. Finally, focusing on the U.S. Tax Cuts and Jobs Act (TCJA) of 2017 and its implications, the piece offers a detailed look at the changing dynamics of global tax competition. Learn more about how these shifts impact MNEs and their approach to managing transfer pricing risks. Continue reading →

Review of and Insights on the IRS Transfer Pricing Examination Process
Exams / Audits / Publications / Transfer Pricing / United States

Review of and Insights on the IRS Transfer Pricing Examination Process

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Attention, international tax managers and transfer pricing professionals: The IRS’s Transfer Pricing Examination Process (TPEP) is your insider’s guide to the IRS’s transfer pricing exams. This comprehensive guide, designed for IRS examiners, openly details the inner workings of their process. Learn how to proactively use this knowledge to strengthen your transfer pricing documentation, anticipate IRS inquiries, and avoid costly adjustments. Don’t be caught unprepared. This in-depth analysis of the TPEP will give you a significant advantage in ensuring your company’s transfer pricing practices meet IRS scrutiny. Discover the key takeaways, practical tips, and strategic insights that can make all the difference in the outcome of your next exam. Continue reading →

IRS Transfer Pricing Audit Roadmap
Exams / Audits / Risk Management (TP) / Transfer Pricing / United States

IRS Transfer Pricing Audit Roadmap

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Transfer Pricing NEWS The Transfer Pricing Operations (TPO) of the Large Business and International (LB&I) division of IRS released the 26-page Transfer Pricing Audit Roadmap to the public on February 14, 2014. The Transfer Pricing Audit Roadmap (“Roadmap”) provides audit procedures around an approximate 24-month audit timeline. The stated goals of the roadmap are to assist both … Continue reading →

New Ukraine Transfer Pricing Rules
Transfer Pricing / Ukraine

New Ukraine Transfer Pricing Rules

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Prior to 2012, Ukraine had not been overly concerned about transfer pricing issues. But recently, in the era of fiscal deficits, the Ukrainian government has been more focused on implementing transfer pricing compliance practices in accordance with OECD member countries.  Transfer Pricing NEWS On December 4, 2012 the Parliament of Ukraine registered the draft bill … Continue reading →

Featured Article – Changes to Australia’s Transfer Pricing Rules
Transfer Pricing

Featured Article – Changes to Australia’s Transfer Pricing Rules

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Transfer Pricing NEWS: An exposure draft of legislation was released on November 22, 2012, “Tax Laws Amendment (Cross-Border Transfer Pricing) Bill 2013: Modernisation of transfer pricing rules—proposing changes to Australia’s domestic transfer pricing rules,” to introduce new Australian transfer pricing rules with significant self assessment and documentation requirements. The start date for these new rules … Continue reading →

The Queen v. GlaxoSmithKline Inc. – After two decades, still no resolution in Canada
Canada / Tax Court Cases / Transfer Pricing

The Queen v. GlaxoSmithKline Inc. – After two decades, still no resolution in Canada

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The Queen v. GlaxoSmithKline Inc. – After two decades, still no resolution in Canada Please click on the link for the News on the case, and read below for the Insights. CRA and the OECD The Supreme Court of Canada (SCC) rejected the CRA’s narrow “transaction-by-transaction” approach. What was the CRA thinking? Clearly, the Organisation for … Continue reading →

Pros and Cons of Safe Harbors, and Advice to Tax Authorities
OECD / Transfer Pricing

Pros and Cons of Safe Harbors, and Advice to Tax Authorities

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Why is it worth weighing pros and cons of safe harbors*? Because the OECD’s June 6, 2012 draft endorses safe harbors and presents three sample memoranda that countries may use to negotiate bilateral safe harbors. Also, most would say that the IRS has been successful with instituting safe harbors on interest rates for intercompany loans, and … Continue reading →

Vietnam’s Ho Chi Minh City tax officials targeting enterprises which reported losses interminably while still expanding business operations
Exams / Audits / Transfer Pricing

Vietnam’s Ho Chi Minh City tax officials targeting enterprises which reported losses interminably while still expanding business operations

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Vietnam’s Ho Chi Minh City tax officials targeting enterprises which reported losses interminably while still expanding business operations December 14, 2012, on the heels of HMRC’s recent interest in Starbucks, Amazon, and Google, Vietnam tax authorities follow suit, investigating Coca-Cola, Adidas, and Metro Cash & Carry for potential causal linkages between transfer pricing and losses in … Continue reading →

Irish Revenue announces transfer pricing compliance review (TPCR) guidance
Exams / Audits / Ireland / Transfer Pricing

Irish Revenue announces transfer pricing compliance review (TPCR) guidance

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Irish Revenue announces transfer pricing compliance review (TPCR) guidance On November 26, 2012, the Irish Revenue issued guidance on how they are proposing to monitor transfer pricing compliance in accordance with Part 35A of the Taxes Consolidation Act 1997. A TPCR is a self-review performed by a company of its compliance with Irish transfer pricing legislation. It appears … Continue reading →

Markups on covered services and IRS scrutiny
Transfer Pricing / United States

Markups on covered services and IRS scrutiny

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Markups on covered services and IRS scrutiny I am interested to know if anyone has experienced IRS scrutiny of services markups in instances where the services are “covered services” under Rev. Proc. 2007-13, but the taxpayer chooses to markup the services using a method (e.g., the cost of services plus method, or the CPM) that … Continue reading →