BUDGETARY AND TAX POLICY REGULATING TRANSFER PRICING IN COUNTRIES OF THE WORLD
Abstract
The article is devoted to clarifying the development trends of the budget and tax policy of regulation of transfer pricing in foreign countries. The experience of the USA and other countries in the regulation of transfer pricing in the process of carrying out tax reforms and the significant growth of the power of transnational corporations and at the same time the losses of state budgets due to the transnationalization of capital, the development of world trade and financial speculation are highlighted. It was found that the foreign experience of formation and implementation of the budget and tax policy of regulation of transfer pricing is reflected in various approaches and practices that are used by countries of the world and require coordination at the international level. It is shown that significant efforts of international organizations are directed to the establishment of uniform approaches to the coordination and unification of transfer pricing rules in order to counteract the process of erosion of the tax base and tax evasion. The transfer pricing regulation policy at the interstate level is implemented in the process of cooperation between countries, establishment of international standards, methods, rules, elimination of inconsistencies and unification of approaches to unambiguous interpretation of key concepts, definitions, unhindered and prompt exchange of information with the aim of ensuring fair taxation and strengthening the budget and tax control to minimize tax evasion. At the current stage, the budget and tax policy of regulating the activities of transnational companies continues to be improved by harmonizing budget and tax policies in the field of transfer pricing in the global and regional (national) dimensions, which is necessary both for the development of the economies of the countries of the world and for ensuring the effectiveness of the activities of sub- objects of international business. The article outlines a number of currently unsolved problematic issues in the field of transfer pricing, which require the activation of budgetary and tax policy measures at the national and international levels. It is emphasized that the rules of transfer pricing in Ukraine are developed in accordance with the rules operating in international practice, at the same time, some of them do not correspond to the established institutional environment of the country due to the influence of negative factors in the extremely difficult conditions of the war and the significant need for investment resources of a current and strategic nature. Given the domestic institutional environment and the need to implement the recommendations of the Organization for Economic Cooperation and Development (OECD), it is necessary to further improve the transfer pricing regulation mechanism in Ukraine, which will characterize the increase in the effectiveness and efficiency of the budget and tax policy in this area.
References
Кругляк В., Курілов Є. Шлях до європейських правил податкового контролю за трансфертним ціноутворенням. 2023. URL: https://pravo.ua/shliakh do ievropeiskykh pravyl podatkovoho kontroliu za transfertnym tsinoutvorenniam
Податковий кодекс України: Закон України від 02.12.2010 р. № 2755-VI. URL: https://zakon.rada.-gov.ua/laws/show/2755-17#Text (дата звернення: 18.06.2024).
Результати роботи ДПС щодо податкового контролю за трансфертним ціноутворенням. Державна податкова служба України 2024 липень. URL: https://tax.gov.ua/diyalnist-/transfertne-tsinoutvorennya-ta-mijnarodne-opodatkuvannya/transfertne-tsinoutvorennya/prezentatsiyni-materiali/806985.html (дата звернення: 01.08.2024)
Фролова Н.Б. Окремі аспекти оподаткування прибутку підприємств в рамках проекту BEPS. Фінансові інструменти сталого розвитку держави в умовах системної економічної трансформації : матеріали ІІ Міжнар. наук.-практ. конф. (14 червня 2023 р., м. Хмельницький – м. Херсон). Херсон : ФОП Лукашевич О.М., 2023. С. 87-90.
Álvarez-Martínez M., Barrios S., D’Andria D., Gesualdo M., Nicodème G., Pycroft J. How Large is the Corporate Tax Base Erosion and Profit Shifting? A General Equilibrium Approach. Economic systems research. 2022. № 34 (2). Рp. 167-198. DOI 10.1080/09535314.2020.1865882
Auerbach, A. J. (2018). Measuring the effects of corporate tax cuts. Journal of Economic Perspectives/ 2018. № 32(4). С. 97-120.
Base erosion and profit shifting (BEPS). OESD. 2024. URL: https://www.oecd.org/en/topics/policy-issues/base-erosion-and-profit-shifting-beps.html (дата звернення: 26.07.2024).
Business Taxation for the 21st Century: Communication from the Commission to the European Parliament and the Council Empty. May 18th, 2021. URL: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52021DC0251&from=EN (дата звернення: 01.08.2024)
Cockroft J., Arnison R. Implementing the OECD’s two-pillar solution for international taxation. URL: https://www.bristows.com/viewpoint/articles/implementing-theoecds-two-pillar-solution-for-international-taxation/ (дата звернення: 26.07.2024).
The Budget and Economic Outlook: 2018 to 2028. Congressional Budget Office. 2018. URL: https://www.cbo.gov/publication/53651 (дата звернення: 26.07.2024).
Dover R., Ferrett B., Gravino D., Jones E., Merler S. Bringing transparency, coordination and convergence to corporate tax policies in the European Union, European Parliamentary Research Service, PE 558,773. 2015. 63 p. URL: https://www.europarl.europa.eu/RegData/etudes/STUD/2015/558773/EPRS_STU%282015%29558773_EN.pdf.
Durst M. The Historical Evolution of Base Erosion and Profit Shifting. Tax Notes International, 2018. №90 (4). P. 449-467. URL: https://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/13843
Eden L. The Arm’s-Length Standard in North America. Tax Notes International. 2000. 7 February. Рp. 673-681 URL: http://www.voxprof.com/eden/Publications/thearmslenghtstandardinnorthamerica.pdf
Exchange of information on request Schedule of Round 2 peer reviews, 2016-2027 (last update: 8 April 2024). URL: https://web-archive.oecd.org/tax/transparency/documents/schedule-of-reviews.pdf
Finance Act 1915. No 2. CHAPTER 89. URL: https://www.legislation.gov.uk/ukpga/Geo5/5-6/89/enacted (дата звернення: 26.07.2024).
Global Anti-Base Erosion (GloBE) rules, OECD. URL: https://www.oecd.org/tax/beps/pillar-two-model-GloBE-rules-faqs.pdf (дата звернення: 15.07.2024).
International community strikes a ground-breaking tax deal for the digital age. 2021, 8 October. OECD. URL: https://www.oecd.org/tax/international-community-strikes-a-ground-breaking-tax-deal-for-the-digital-age.htm (дата звернення: 15.07.2024).
Inclusive Framework on BEPS. The Organisation for Economic Cooperation and Development. URL : https://www.oecd.org/tax/beps/about (дата звернення: 15.07.2024).
Joint Committee on Taxation. “Macroeconomic Analysis of the Conference Agreement for H.R. 1, the ‘Tax Cuts and Jobs Act.” JCX-69-17. 2017,December 22. URL : https://www.jct.gov/publications/2017/jcx-67-17 (дата звернення 25.07.2026)
Base Erosion and Profit Shifting Project. Addressing the tax challenges arising from the digitalization of the economy. 2021, July. OECD/G20. URL: https://www.oecd.org/tax/beps/brochure-addressing-the-tax-challenges-arising-from-thedigitalisation-of-the-economy-july-2021.pdf (дата звернення 12.07. 2024).
PWS, Worldwide Tax Summaries. 2024. URL: https://taxsummaries.pwc.com (дата звернення 02.06. 2024)
Rixen T. From Double Tax Avoidance to Tax Competition: Explaining the Institutional Trajectory of International Tax Governance. Review of International Political Economy. 2010. April 13. DOI: http://dx.doi.org/10.2139/ssrn.1589132
Sikka P., Wilmott H. The dark side of transfer pricing: its role in tax avoidance and wealth retentiveness. Critical Perspectives on Accounting. 2010. №21(4). Рр. 342- 356. URL: www.journal.elsever.com (accessed 18.06.2024)
Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. 2021, July. OECD/G20 Inclusive Framework on BEPS, OECD. Paris. URL: https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-toaddress-thetax-challenges-arising-from-the-digitalisation-of-theeconomy-july-2021.htm (дата звернення 02.08. 2024)
Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017. OECD iLibrary. 10.07.2017. URL: https://www.oecd-ilibrary.org/taxation/oecd-transfer-pricing-guidelines-for-multinational-enterprises-and-tax-administrations-2017_tpg-2017-en (дата звернення: 06.08.2024)
REFERENCES
Kruhliak V., Kurilov Ye. (2023) Shliakh do yevropeiskykh pravyl podatkovoho kontroliu za transfertnym tsinoutvorenniam [The path to European transfer pricing tax control rules]. Available at: https://pravo.ua/shliakh do ievropeiskykh pravyl podatkovoho kontroliu za transfertnym tsinoutvorenniam
The Verkhovna Rada of Ukraine (2010), “Tax Code of Ukraine”. Аvailable at: https://zakon.rada.gov.ua/laws/show/2755-17#Text (accessed June 06, 2024).
State Tax Service of Ukraine (2024). Rezultaty roboty DPS shchodo podatkovoho kontroliu za transfertnym tsinoutvorenniam. [The results of the work of the DPS regarding tax control of the transfer innovation.]. Available at: https://tax.gov.ua/diyalnist-/transfertne-tsinoutvorennya-ta-mijnarodne-opodatkuvannya/transfertne-tsinoutvorennya/prezentatsiyni-materiali/806985.html (accessed August 01, 2024)
Frolova N.B. Okremi aspekty opodatkuvannia prybutku pidpryiemstv v ramkakh proektu BEPS [Certain aspects of corporate income taxation within the framework of the BEPS project]. Finansovi instrumenty staloho rozvytku derzhavy v umovakh systemnoi ekonomichnoi transformatsii : II Mizhnarodna naukovo-praktichna konferenciya (Khmelnytskyi – Kherson, 14 June, 2023). Kherson, рр. 87-90. (in Ukrainian)
Álvarez-Martínez M., Barrios S., D’Andria D., Gesualdo M., Nicodème G., Pycroft J. (2022) How Large is the Corporate Tax Base Erosion and Profit Shifting? A General Equilibrium Approach. Economic systems research, no 34 (2), pp. 167-198. DOI : https://doi.org/10.1080/09535314.2020.1865882
Auerbach, A. J. (2018). Measuring the effects of corporate tax cuts. Journal of Economic Perspectives, no 32(4), pp. 97-120.
OESD. Base erosion and profit shifting (BEPS). Available at: https://www.oecd.org/en/topics/policy-issues/base-erosion-and-profit-shifting-beps.html (accessed July 26, 2024)
Business Taxation for the 21st Century: Communication from the Commission to the European Parliament and the Council Empty (2021), May 18th. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52021DC0251&from=EN. (accessed August 01, 2024)
Cockroft J., Arnison R. Implementing the OECD’s two-pillar solution for international taxation. Available at: https://www.bristows.com/viewpoint/articles/implementing-theoecds-two-pillar-solution-for-international-taxation (accessed July 26, 2024)
Congressional Budget Office (2018). The Budget and Economic Outlook: 2018 to 2028. Available at: https://www.cbo.gov/publication/53651 (accessed July 26, 2024)
Dover R., Ferrett B., Gravino D., Jones E., Merler S. (2015) Bringing transparency, coordination and convergence to corporate tax policies in the European Union, European Parliamentary Research Service, PE 558,773 Available at: https://www.europarl.europa.eu/RegData/etudes/STUD/2015/558773/EPRS_STU%282015%29558773_EN.pdf.
Durst M. (2018) Historical Evolution of Base Erosion and Profit Shifting. Tax Notes International, no 90 (4), pp. 449-467. Available at: https:// opendocs.ids.ac.uk/opendocs/handle/20.500.12413/13843
Eden L. (2000) The Arm’s-Length Standard in North America. Tax Notes International. 7 February, pp. 673-681 Available at: http://www.voxprof.com/eden/Publications/thearmslenghtstandardinnorthamerica.pdf
Exchange of information on request Schedule of Round 2 peer reviews, 2016-2027 (last update: 8 April 2024). Available at: https://web-archive.oecd.org/tax/transparency/documents/schedule-of-reviews.pdf
Finance (No 2) Act (1915). CHAPTER 89. Available at: https://www.legislation.gov.uk/ukpga/Geo5/5-6/89/enacted (accessed July 26, 2024)
Global Anti-Base Erosion (GloBE) rules, OECD. Available at: https://www.oecd.org/tax/ beps/pillar-two-model-GloBE-rules-faqs.pdf (accessed July 15, 2024)
OECD (2021) International community strikes a ground-breaking tax deal for the digital age. Available at: https://www.oecd.org/tax/international-community-strikes-a-ground-breaking-tax-deal-for-the-digital-age.htm (accessed July 15, 2024).
Inclusive Framework on BEPS. The Organisation for Economic Cooperation and Development. Available at: https://www.oecd.org/tax/beps/about (accessed July 15, 2024)
Joint Committee on Taxation (2017) “Macroeconomic Analysis of the Conference Agreement for H.R. 1, the ‘Tax Cuts and Jobs Act.” JCX-69-17, December 22. Available at: https://www.jct.gov/publications/2017/jcx-67-17 (accessed July 25, 2024)
OECD/G20 (2021) Base Erosion and Profit Shifting Project. Addressing the tax challenges arising from the digitalization of the economy, July. OECD. Available at: https://www.oecd.org/tax/beps/brochure-addressing-the-tax-challenges-arising-from-thedigitalisation-of-the-economy-july-2021.pdf (Accessed 12 June, 2024).
PWS, Worldwide Tax Summaries. 2024. Available at: https://taxsummaries.pwc.com (Accessed 02 June, 2024)
Rixen T. (2010) From Double Tax Avoidance to Tax Competition: Explaining the Institutional Trajectory of International Tax Governance. Review of International Political Economy, April 13. DOI: http://dx.doi.org/10.2139/ssrn.1589132
Sikka P., Wilmott H. (2010). The dark side of transfer pricing: its role in tax avoidance and wealth retentiveness. Critical Perspectives on Accounting, no 21(4), pp. 342- 356. Available at: www.journal.elsever.com (accessed 18.06.2024)
OECD (2021). Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy, July. Inclusive Framework on BEPS. Paris. Available at: https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-toaddress-thetax-challenges-arising-from-the-digitalisation-of-theeconomy-july-2021.htm (accessed 02 August, 2024)
Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017. OECD iLibrary : сайт. 10.07.2017. Available at: https://www.oecd-ilibrary.org/taxation/oecd-transfer-pricing-guidelines-for-multinational-enterprises-and-tax-administrations-2017_tpg-2017-en (accessed August 08, 2024)
This work is licensed under a Creative Commons Attribution 4.0 International License.
