In today’s economy in which multinational enterprises (MNEs) play an increasingly prominent role, transfer pricing continues to be high on the agendas of tax administrations and taxpayers alike.
Within the practice of transfer pricing, intercompany loans are among the most tricky and vital for multinationals. They are used to centralize their treasury and long-term financial needs to ensure cost-efficiency when borrowing on the market.
Transfer pricing is the result of the globalisation of our economies. On the one hand, big groups and banks are targeting all kinds of markets and countries; on the other, countries are competing to attract business with advantageous tax systems.
Transfer pricing represents a tax risk that is not totally under the control of banks, but can they really manage this risk? It has now been around five years since international transfer-pricing rules were set by the OECD (Organisation for Economic Co-operation and Development)
Cupertino-headquartered Apple Inc. has accumulated cash reserves in excess of $200 billion, but most of this money is stashed outside the US, safe from the country’s tax authorities.