Transfer Pricing: Prisfastsættelse i højt integrerede værdikæder, der bygger på en digitaliseret forretningsmodel

Nabil Guimar & Nabila Ahdidouch

Student thesis: Diploma thesis

Abstract

Digitalization has made technology cheaper, more powerful and globally standardized, which has giv-en MNEs the opportunity of creating a significant value in a jurisdiction without having any physical presence. This makes governments around the globe question whether these MNEs should have a nexus in economies, where entities with a highly digitalized value chain have created a significant val-ue in the minds of jurisdiction’s users. If OECD does not agree on a unified solution, countries will act in desperation, an example is France, who has launched a digital tax called GAFA, taxing 3% of the revenue generated in France.

This thesis seeks to understand whether today's international taxing rules and transfer pricing guide-lines are capable of allocating income to jurisdictions, where an enterprise is understood to create value without having any physical presence.

To further understand the value creation process, this thesis will look at the main characteristics of a digitalized business that is said to be of significant value in a highly integrated value chain. This thesis centers on an analysis of different processes of value creation across 3 different digitalized business models, with the aim of a better understanding on how to effectively allocate profit. Intangible assets play a huge role regarding the value creation in a highly digitalized business model, and as a result of their nature of being easy to relocate from one business to another and being used across jurisdic-tions, it creates an issue in whom the profit should be allocated to.

The conclusion of this thesis is that the arm’s length principle, international taxing rules and OECD Transfer Pricing Guidelines as we know them today, fails to appropriately allocate income to the juris-diction in which an entity is understood to create value. All the proposals set out by OECD would real-locate profits in favor of the user or market jurisdictions. This creates a new nexus rule, which ignores the physical presence of an entity. Not only this, they all go behind the arm’s length principle and ig-nore the separate entity approach.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
LanguageDanish
Publication date2020
Number of pages78