Discussion:Balancing of commercial and tax pricing in international corporation

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Discussion Forum Index --> Tax Tips --> Balancing of commercial and tax pricing in international corporation

Discussion Forum Index --> Tax Questions --> Balancing of commercial and tax pricing in international corporation


Nika (talk|edits) said:

9 June 2006
Hi people,

I need your help and advice of experts, please!

I am 21-year old student and I am writing 30-40 pages paperwork with theme "Balancing of commercial and tax pricing in international corporation". This Theme was assigned to me - after several hours in internet I have not even found a single tip! What is meant actually under "Balancing of commercial and tax pricing in internatioanal corporation"? Could you please help me and give a piece of advice and send any relevant information about this topic?

In fact, I need index - the main skeleton for future "flesh". Please, help!!!!!!!! Every advice, link or may be even index - the main skeleton - will be great of help for me!!!

Thanks in advance!!!

Dennis (talk|edits) said:

9 June 2006
Transfer Pricing

Sandysea (talk|edits) said:

9 June 2006
Hi Nika;

I am actively involved with a multinational corporation and I believe that the title is referring to balancing prices for an entity and the subsequent tax treatment of those prices. Dennis is on the right track with the transfer pricing as it is inherently important for a multinational corp.

Look at also some sites having to do with Customs, US/Foreign treaties, Arms length policies. IRS has also some links to Advance Pricing agreements.

You can certainly come up with hundreds of pages as you only need 30 to 40, you should find enough in transfer pricing alone!!

JR1 (talk|edits) said:

9 June 2006
I think, hoping I'm not stoned for this...that it has to do with properly assessing profits in various tax districts. Let's make it simple and keep it domestic. Suppose you have a company doing business in two states, one with a 6% tax rate on corp. profits there, and another with 1.5%. A saavy business will try to run as much business as it can thru the 1.5% state since the taxes are a bunch less. Happens with sales taxes, too. On the international front, it's more complicated, but the same idea. A company wants to keep its tax cost to a minimum, naturally, while the governments want to collect what they feel is rightfully theirs. So finding the RIGHT numbers is difficult.

Sandysea (talk|edits) said:

9 June 2006
Touche! JR. That is why all the hoopla over this transfer pricing. So many tax haven countries and then take into account exchange rates and a foreigner can "launder" the money to the tax haven country. I agree, same with states. This is why these things are complicated and very difficult to explain to the multinational.....Ok I am venting again, but you have the nail on the head so will you talk to my client and write the paper for Nika too? hehe

JR1 (talk|edits) said:

9 June 2006
Well...until Riley posts and I'm all wrong again...

Riley2 (talk|edits) said:

11 June 2006
Nika, your school probably has the BNA foreign portfolio series which has close to 2,000 pages contained in 11 portfolio’s on international transfer pricing issues. See BNA Foreign Portfolio’s 886 through 898.

Nika (talk|edits) said:

12 June 2006
Guys, thank you very-very-very much for help!!! Sincerely, I really LIKE proposition of Sandysea "so will you talk to my client and write the paper for Nika too"?))) OK, OK, I do not want to be so impudent, but I really like it))

Seriously, I need skeleton. Index. What should I right my work about? Just "common" questions? What kind of staff Transfer Pricing is, which kind of methods, agreements, authorities, bodies, billing processes, transfer pricing roadmaps/matrix, allocation of costs categories and all similar heresy is used in corporations? It looks like at the end I have to have some kind of common overview of WHAT ACTUALLY TRANSFERPICING IS, right?

Sincerely, I am confused with that "balancing of commercial and tax pricing". What is COMMERCIAL pricing at all? Is it "real" revenue of company? And what is "tax pricing" then? That is amount of revenue that local unit's manager is going to show local tax authorities like profit that should be taxed? Man, I am totally confused......and, in the end, if there is no difference between "Balancing of commercial and tax pricing in international corporation" and simple "Transfer Pricing in international corporation", why the name of that bloody paper is not just "Transfer Pricing" but all that BALANCING topic? May be I should specify something??

JR1 (talk|edits) said:

12 June 2006
Sandy's the only one who's going to actually write the paper for you...but the issue is exactly as you've surmised. What is the actual profit for a product/location/division, etc? That's what the gov't entities want to know. Transfer pricing also has to do with costs within a corporation as well. Take GM, for example. In Canada, eh, they manufacture a vehicle part, a door panel, let's say, which then gets shipped to another plant for assembly. GM will want to track profitibility by division/location so that they know who to blame when losses increase. So, how much do we allow the door panel mfg plant to 'sell' the panet for to the assembly plant? And what should the assembly plant pay for it? What's good for one isn't good for the other. The buyer of panels may say, hey, I can get these panels built in China for 1/2 what you're charging me. And then there's the whole issue of overhead/indirect costs. What's included and what isn't. Hopefully we've give you some meat to work with. Now, start building your skeleton.

Sandysea (talk|edits) said:

12 June 2006
OHHH NOOOO; Sandy is NOT writing a paper...hehehehehe

It is incredibly interesting Nika and it is also incredibly time consuming, but it is logical and that is where I would start if I were writing a paper on it. Who knows? Your paper may be included in googles transfer pricing lookup if you do it really well...GOOD LUCK TO YOU!! :)

Nika (talk|edits) said:

13 June 2006
ahem..................thanks, folks.........................:)

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