In the TPWeek readers’ poll, the tax campaigners, who are appealing for a unitary taxation system to combat transfer mispricing, received 32% of the vote, while the OECD, which was nominated for its work on Base Erosion and Profit Shifting (BEPS), received 28%.
Other nominations included the Big 4, who received 11% of the vote.
This year, voters had the option to select “other” as a leading force in global transfer pricing and suggestions included: China's aggressive views of transfer pricing; Pramod Kumar (of the Indian ITAT); the ATO, “for being several years ahead of other tax authorities”; the EU Joint Transfer Pricing Forum; and the G20.
The Tax Justice Network’s entry in this year’s poll acknowledged that not everyone agrees with the concept of unitary taxation, but the campaign is strong all the same.
“While we agree that some tax practitioners don't support unitary taxation - one might well note they have a vested interest in the status quo - others do.”
The group then referenced the Financial Times editorialon April 29, which said:
"Thus far, the problem [of tax avoidance] has been delegated to the OECD, which is seeking to tighten rules on transfer pricing... But it is questionable whether a few tweaks will be enough to stop multinationals from making corporation tax liabilities evaporate, and countries from competing to offer tax loopholes to footloose multinationals... The most ambitious solution would be to agree a common consolidated corporate tax base. This would have states tax a mutually agreed share of a multinational's profits, not just the share the group decides to account for in each jurisdiction."
The OECD has been tasked, by the G20, with examining the use of transfer pricing and the way it can be manipulated by multinational companies to minimise profits in higher taxed jurisdictions.
The impact the BEPS project will have on transfer pricing is uncertain, though it is bound to be significant. BEPS is questioning the bedrock of transfer pricing: the arm's-length principle. The OECD admits that international tax regulations have not kept pace with theevolution of business.
