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Transfer Pricing as Economic Mechanism of a TNC

Transfer Pricing as Economic Mechanism of a TNC. Prepared by Anna Ielisieieva, 4 th year student, International Economics, KROK University for Economics and Law. CONTENTS. Economic Essence of Transfer Pricing Transfer Pricing Regulation in Developed Countries

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Transfer Pricing as Economic Mechanism of a TNC

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  1. Transfer Pricing as Economic Mechanismof a TNC Prepared by Anna Ielisieieva, 4th year student, International Economics, KROK University for Economics and Law

  2. CONTENTS • Economic Essence of Transfer Pricing • Transfer Pricing Regulation in Developed Countries • Transfer Pricing Regulation in Ukraine • Current Challenges • Recommendations

  3. Economic Essence of Transfer Pricing (1) Transfer Pricing • various transactions • subdivisions • different countries • transnational corporation (TNC)

  4. Economic Essence of Transfer Pricing (2) Basic Characteristics • Regulation inside a company. • Meeting particular needs. • Generation of the inner profit rate. • Influence on macroeconomic indicators. • Manipulation by a TNC.

  5. Economic Essence of Transfer Pricing (3) TNC’s Motives • transfer of money; • decrease of tax duties; • impact on customs tariffs; • different risks; • other.

  6. Transfer Pricing Regulation in Developed Countries (1) Organization for Economic Cooperation and Development Transfer Pricing International Taxation • 30 members

  7. Transfer Pricing Regulation in Developed Countries (2) OECD Main Document “Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations”, 1995 • The Arm’s Length Principle; • Transfer Pricing Methods; • Administrative Procedures; • Instructions for Tax Authorities; • Advance Pricing Arrangements; • Transfer Pricing of Non-Material Assets & Services.

  8. Transfer Pricing Regulation in Ukraine Current Challenges No Regulation System Some Legislative Provision: • the Law of Ukraine "On Corporate Income Tax" • the Law of Ukraine "On the Value Added Tax” • Resolution of the National Bank of Ukraine №597 "On transfer of funds in national and foreign currency to non-residents for Certain Transactions”

  9. Transfer Pricing Regulation in Ukraine Recommandations I Stage: • Publishing Special Legal Document • Holding Trainings for Controllers • Restructuring Tax Administration II Stage: • Implementing Transfer Pricing Methods • Applying Sanctions for Abuse of Transfer Pricing III Stage: • Regulating Transfer Pricing for Non-Material Assets

  10. Thank you!!! All your questions are welcomed…

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