Arbeitspapier
The Impact of ICT on Profit Allocation within Multinational Groups: Arm's Length Pricing or Formula Apportionment?
The use of information and communication technologies (ICT) within multinational groups leads to a rising number of intragroup cross-border transactions. At the same time, transactions and the organisational structures of affiliated groups become more and more specific and, thus, less comparable. The importance of human capital and of mobile factors of production, such as intangible assets, increases. The objective of this paper is to give an insight into the principal issues of profit allocation within multinational groups resulting from these economic changes. It is examined whether the traditional transaction methods based on the arm?s length principle can be upheld and to what extent the alternative method of formula apportionment is more suitable. The tax principles of inter-nation equity and feasibility are used to evaluate the different methods of profit allocation. We conclude that, in the light of the two demanded principles, formula apportionment is more appropriate than the arm?s length principle as regards the changed economic structures by use of ICT. As formula apportionment constitutes a suitable alternative especially in the European Union, the proposals made by the European Commission are considered to be a good starting point.
- Language
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Englisch
- Bibliographic citation
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Series: ZEW Discussion Papers ; No. 03-53
- Classification
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Wirtschaft
Taxation and Subsidies: Efficiency; Optimal Taxation
Business Taxes and Subsidies including sales and value-added (VAT)
- Subject
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International Company Taxation
Profit Allocation
Transfer Pricing
Arm?s Length Principle
Formula Apportionment
Inter-Nation Equity
Multinationales Unternehmen
Gewinnverlagerung
Transferpreis
Internet
E-Business
Unternehmensbesteuerung
Doppelbesteuerung
Welt
- Event
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Geistige Schöpfung
- (who)
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Spengel, Christoph
Schäfer, Anne
- Event
-
Veröffentlichung
- (who)
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Zentrum für Europäische Wirtschaftsforschung (ZEW)
- (where)
-
Mannheim
- (when)
-
2003
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Spengel, Christoph
- Schäfer, Anne
- Zentrum für Europäische Wirtschaftsforschung (ZEW)
Time of origin
- 2003
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Kollektivversagen: Cum/Cum, Cum/Ex und Hopp!
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Steuerbetrug: Task Force: irreführender Begriff
Inwieweit eignen sich die International Accounting Standards für die steuerliche Gewinnermittlung?
Effektive Steuerbelastung der grenzüberschreitenden Geschäftstätigkeit nach den Vorschlägen zur Reform der Unternehmensbesteuerung
The common consolidated corporate tax base
Multinational firms in tax havens: Corporate motives, regulatory countermeasures, and recent statistics
Is mandatory country-by-country reporting effective? Early evidence on the economic responses by multinational firms
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The effective tax burden of companies in the member states of the EU : the perspective of a multinational investor
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Kollektivversagen: Cum/Cum, Cum/Ex und Hopp!
Effective marginal tax rates for US investors in Germany and Europe : an analysis of recent tax reforms in Germany
Steuerbetrug: Task Force: irreführender Begriff
Inwieweit eignen sich die International Accounting Standards für die steuerliche Gewinnermittlung?
Effektive Steuerbelastung der grenzüberschreitenden Geschäftstätigkeit nach den Vorschlägen zur Reform der Unternehmensbesteuerung
The common consolidated corporate tax base
Multinational firms in tax havens: Corporate motives, regulatory countermeasures, and recent statistics