International Transfer Pricing Case Study

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perspective, although regulatory authorities often frown upon the use of transfer pricing to avoid taxes.

Transfer pricing takes advantage of different tax regimes in different countries by booking more profits for goods and services produced in countries or economies with lower tax rates.

It is administered by the World Customs Organization (WCO), an intergovernmental organization of 180 customs authorities.

While its guidance is not binding on any jurisdiction, its pronouncements are regularly cited by customs authorities worldwide.

EBITDA focuses on the operating decisions of a business because it looks at the business’ profitability from core operations before the impact of capital structure.

Formula, examples Income taxes and its accounting is a key area of corporate finance.In FY 2012-13, Google Australia earned around million as profit on revenues of 8 million.The corporate tax payment was estimated at AU.1 million, after claiming a tax credit of .5 million.Article 9 of the OECD Model Tax Convention describes the rules for Arm’s Length Principle.It states that transfer prices between two commonly controlled entities must be treated in such a way as if they are two independent entities.Google reported total tax payments of US .3 billion against revenues of billion.The effective tax rates come to 19%, which is less than the statutory corporate tax rate of 35% in the US.Following approval by the World Customs Organization Council, it is expected to be released as TCCV Case Study 14.2.The TCCV is a committee of customs authorities created by the World Trade Organization (WTO) Valuation Agreement and tasked with providing interpretation and guidance on the Valuation Agreement.Having a conceptual understanding of accounting for income taxes will allow a company to to maintain financial flexibility.Tax is an intricate field to navigate and often confuses even the most skilled analysts.


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