This document provides a review of the Argentine tax authority’s structure for dealing with transfer pricing in Argentina a chronological review of the legislative transfer pricing framework and a very extensive listing of the transfer pricing cases that have reached different court levels. However, due to vested interests in the current system and the reinforced capacity of the OECD to intervene in public discourses, we expect this transformation to be procedural and marked by conflicts over the meaning of the current guidelines, notably with regards to the arm's length principle and the measurement of value creation. Identifying a diminishing capacity of expert networks to achieve consensus on matters with strong distributional consequences, we argue that the incoherence of the system contains the seeds of its own transformation. However, given the imperfect reconciliation – or even incompatibility – with persisting principles of international tax law, the incremental changes add to the complexity and incoherence of the guidelines on transfer pricing, leading us to expect an increase in conflicting assessments and uncertainty in the near future. We interpret this strategy of the OECD as an attempt to prevent a loss of authority without a politically risky complete overhaul. However, this may be a response to economic power and influence of non-member countries, and not solely a response to demands for more transparency and participation of a wide-range of stakeholders.Īs a response to widely reported corporate tax avoidance, the OECD/G20 Base Erosion and Profit Shifting process has relied on modifying the Transfer Pricing Guidelines in order to align taxation with economic substance, a form of incremental rather than radical change. Under the Base Erosion and Profit Shifting Action Plan, the OECD is calling for participation of more external actors, including developing countries. Conversely, there is some positive evolution of Global Administrative Law (GAL) principles’ use: in the last years, OECD has shown openness to non-members countries’ participation as “observers”, which may be a sign of an eventual desire of public-like legitimacy. This is even more relevant if we bear in mind the scarce participation by external actors (namely developing countries) in the Guidelines drafting process. Since the Guidelines are uncertain regarding its actual application and it also targets non-members, one should ask why should the OECD be the rule maker, imposing an international standard. The Brazil’s Practice is even more interesting, since this country adopted pre-fixed profit margins instead of using the arm’s length standard, due to a higher level of certainty and predictability. Namely, it tries to understand why did China made pragmatic adaptations and adjustments in the arm’s length standard implementation, especially in relation with Located Savings Advantages. This paper studies the China and Brazil’s Country Practices. The Manual also covers some countries practices. The main concerns are the lack of comparables and the need of establishing Transfer Pricing capability in developing countries. On the other hand, the United Nations Practical Manual on Transfer Pricing for Developing Countries (Manual), also addressing the arm’s length principle, was created to give practical guidance to developing countries, finding their difficulties and possible solutions. Therefore, these standards give guidance on performing a comparability analysis and in the methods’ application. However, a certain degree of sophistication is required for the arm’s length application. OECD sustains that a common understanding among the business community and tax administrations in the arm’s length principle application exists. The two traditional solutions to transfer pricing are the arm’s length principle (adopted by the Guidelines) and a unitary taxation or formulary apportionment (rejected by the same Guidelines). The Transfer Pricing problem demands for guidance due to globalization and increase of international transactions, in order to avoid profit shifting and double taxation. However, since these units are not independent, the correct pricing of their transactions for taxation purposes is problematic. Transfer Pricing is the price of goods and services exchanged by units of the same Multinational Enterprise (MNE). An example of that is the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (Guidelines). The OECD is a political actor, establishing international orientations or standards aimed to influenced national agencies actions.
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