On 14 October 2022 OECD published updated guidance on CbC reporting. The guidance contains definitions of items in the CbC reporting template – revenue, related parties, tax accrued and paid, fair value accounting, positive and negative figures etc. Issued related to particular reporting entities is also addressed (investment funds, major shareholding, deemed listing provisions and permanent establishment information. Guidance is provided on common issues such as currency fluctuations, definition of consolidated revenue, long and short accounting periods, mergers – demergers and acquisitions, and errors made by MNE groups in preparing CbC reports. And finally the updated guidance addresses issues related to the mechanism for sharing CbCR between tax authorities. OECD-guidance-on-the-implementation-of-country-by-country-reporting-beps-action-13 ... Read more

On 28 September 2022 OECD published a new manual for entering bilateral advance pricing arrangement (APA’s) which has been approved by the Inclusive Framework on BEPS, as well as all members of the FTA, on 6 July 2022. The Bilateral Advance Pricing Arrangement Manual (“BAPAM” or “Manual”) is intended as a guide to tax administrations and taxpayers for streamlining the bilateral APA process. In addition to detailing several Best Practices for engaging in bilateral APAs, it also includes practical resources for tax administrations and taxpayers, such as templates and examples. It provides tax administrations and taxpayers with basic information on the operation of bilateral APAs (“BAPAs”) and identifies best practices for BAPAs without imposing a set of binding rules upon jurisdictions. The best practices identified in the Manual aim to streamline the BAPA process through: Mitigating delays created by differences in the BAPA processes in each ... Read more

The input from the BIAC will be discussed at the regular joint meetings between the BIAC and the Working Party ... Read more

The aim of this element in the monitoring process is to keep the member countries informed about developments in each others’ countries. There are usually well established ways at the national level by which the business community can make an input into any developments in the transfer pricing legislation, regulations and administrative practices of a member country. At the level of the OECD, the BIAC will have an opportunity to bring to the attention of the Working Party changes in legislation or practices in both member and non-member countries, which it considered were inconsistent with the Guidelines or which it felt could give rise to practical problems in terms of implementation without, of course, referring to individual cases ... Read more

The difficult case paradigms are intended to illustrate issues and situations where the Guidelines provide no or inadequate guidance. Practical examples when complete will be inserted into the Guidelines to provide illustrations of particular principles. There is a clear role for the business community in assisting in the development of paradigms or examples by contributing the practical experience of their members. The Working Party will ask for comments on both the difficult case paradigms and the practical examples at regular stages in their development. BIAC may also initiate paradigms or examples, provided the caveats in paragraph 17 of this annex are followed so that there can be no question of the process being used to resolve a particular transfer pricing case ... Read more

It is also envisaged that once an issue or a country has been selected by the Working Party for further review, the BIAC will be notified of the decision so that they have the opportunity to comment. If the issue is one originally identified by the BIAC – particularly in the context of issue reviews – they would be kept informed of the Working Party’s discussion on these issues and asked, if necessary, to provide additional clarification. However, a further role for the BIAC in the peer review process beyond that already described is not contemplated at the moment ... Read more

It is felt that one of the strengths of the peer review process is that the review is conducted solely by peers i.e. in this case the other member countries. That way the process is conducted in a positive and constructive manner so that best practice can be passed on and worse practice improved. However, the general guidance to the business community encourages them to identify problematic issues which may be suitable for further analysis and the Working Party will be able to take account of this input when making its final selection of issues for the revised peer review ... Read more

In contributing to the OECD role of monitoring the implementation of the Guidelines, the business community would be encouraged to take particular note of the guidance given at paragraph 17 of this annex. It should therefore focus on issues that give rise to either theoretical or practical difficulties and not on specific and unresolved transfer pricing cases. However, it may be useful to illustrate a particular issue by reference to a hypothetical example. In constructing such an example, which could draw upon features taken from a number of real cases, care should be taken to ensure it remains hypothetical and does not resemble a current case, and that the features described should be restricted to the problematic issues concerned in order to avoid an impression of setting any general precedent for the resolution of an individual case ... Read more

The Business Industry Advisory Committee (“BIAC”) will be invited to present practical difficulties in monitoring the application of the Guidelines to the Working Party for its consideration of the adequacy of the guidance provided in the Guidelines in relation to such areas, respecting confidentiality of the information ... Read more

It is not intended that the OECD should intervene in the resolution of transfer pricing disputes between a taxpayer and a tax administration. The monitoring process is not intended to be a form of arbitration and so taxpayers will not be able to present individual cases for resolution by the Working Party. Nevertheless, as foreseen in the Guidelines and the Council Recommendation, the business community will be encouraged to identify problematic issues (preferably illustrated with practical but hypothetical examples) which raise questions about the internationally consistent application of the Guidelines ... Read more

The foregoing monitoring procedures will parallel the development of additional hypothetical examples to be added to the Guidelines. The examples are not intended to develop new principles or to cover new issues but rather to assist in interpreting principles and in addressing difficult issues already discussed in the Guidelines. To ensure that they are of practical value and avoid being overly prescriptive the examples will be short, based on stated facts and relatively straightforward so that their scope is not so confined that the guidance they provide is of narrow and limited application. The examples will fall into two broad categories. The first will consist of illustrations of the application of the methods and approaches described in the Guidelines. The second set of examples will be designed to aid in the selection of a suitable transfer pricing method or methods. Although hypothetical, the examples will ... Read more

The Secretariat will solicit from member countries reports on developments in their domestic transfer pricing legislation, regulations, and administrative practices, consistent with the invitation of the Council ... Read more

The outcomes envisaged by the Working Party from the identification and analysis of difficult case paradigms could include the development of examples illustrating the application of the Guidelines in cases (identified for discussion) where the principles already contained within the Guidelines can be applied. It could also include identification of areas where the Guidelines could be amended to provide clearer guidance or where new material could be inserted into the Guidelines ... Read more

Individual countries would take responsibility at meetings of Working Party No. 6 for leading discussions of the difficult case paradigms and of problematic areas that can be illustrated with practical examples ... Read more

In the context of the regular meetings of tax inspectors organised by the Committee on Fiscal Affairs, the Working Party will arrange biennial meetings of tax examiners to discuss difficult case paradigms and to provide an input to any appropriate updates to the Guidelines. OECD will consider the difficult case paradigms only from the perspective of monitoring the application of the Guidelines ... Read more

The first issue is the procedure to be used and the responsibility assigned for identifying the difficult case paradigms, focusing on issues and situations where the Guidelines may provide no or inadequate guidance or where member countries might be interpreting the Guidelines differently and therefore presenting obstacles to an internationally consistent application of the Guidelines. Member countries can identify areas where, in their view, the Guidelines might not address or adequately address a particular issue ... Read more

A key aspect of monitoring will be to identify and then to analyse difficult fact patterns and problem areas which may be illustrated by practical examples and which present obstacles to an internationally consistent application of the transfer pricing methods set out in the Guidelines. Monitoring will also include areas where the Guidelines appear to offer no or inadequate guidance to tax authorities or taxpayers. All member countries will be actively involved in this process and recognise that resources will be required to ensure its success. The business community will also be involved in the monitoring (see Section C of this annex) ... Read more

To improve the effectiveness of the peer review process it is essential that the reviews are undertaken selectively and concentrate on the areas of greatest difficulty in applying the Guidelines. The final decision to undertake any of the three types of review will be made by the full Working Party having regard both to the overall usefulness of any review to the work of the Working Party in monitoring the application of the Guidelines and to whether there are sufficient resources available to undertake the proposed review. It is important that any review, once undertaken, is completed to a high standard so that worthwhile conclusions can be drawn from it ... Read more

Peer reviews will continue to be carried out but at three different levels: The first level would be an “issue review ”, which would look at the approach taken by all member countries to a particular issue of widespread significance. Ideally, the review should link up with other aspects of the monitoring process. For example, the best way to solve any problems emerging from such a review may be to analyse the issue in more detail by developing difficult case paradigms (see Section B.2 of this annex) or to develop practical examples for insertion in the Guidelines (see Section B.4 of this annex). The second level would be a “limited review” in that it would only look at the approach of a particular country or countries in relation to a specific and relatively narrow issue. The review would be carried out by two reviewers for ... Read more

The peer review guidelines call for a report to be submitted to the Working Party for each reviewed country. The report covers the legal basis for dealing with transfer pricing issues, any country guidelines to direct enforcement practices, approaches commonly used to address a complex transfer pricing problem, administrative arrangements for handling transfer pricing cases, case law principles, and experience with data gathering and taxpayer documentation. The report also is to describe experiences with administrative approaches to avoiding and resolving transfer pricing disputes (e.g. mutual agreement procedure, advance pricing arrangements and safe harbours) ... Read more

The Working Party No. 6 on Taxation of Multinational Enterprises (“the Working Party”) has been undertaking peer reviews of the transfer pricing practices of member countries over the course of the last few years. The peer reviews aim to gain detailed information on legislation, practices and experiences of transfer pricing in member countries. The Delegates of the Working Party jointly decide which country should be reviewed and which countries would conduct the review. The reviews follow guidelines approved by the Committee ... Read more

The monitoring process will be carried out through four related projects: 1. peer reviews of member country practices; 2. identification and analysis of difficult case paradigms; 3. review of changes in legislation, regulations, and administrative practices; and 4. development of examples. Each of these is discussed below ... Read more

In line with the Council’s Recommendation, there will be a role for the business community in the monitoring and this role is set out in Section C ... Read more

The monitoring is expected to be an on-going process and to cover all aspects of the Guidelines but with particular emphasis on the use of transactional profit methods. The purpose of this note is to set forth some procedures for carrying out the monitoring, thereby implementing the instruction of the OECD Council. These procedures will be implemented gradually. Further revisions may be necessary once the procedures have been put into practice ... Read more

To summarise, the main purpose of the monitoring is to examine how far member countries’ legislation, regulations and administrative practices are consistent with the Guidelines and to identify areas where the Guidelines may require amendments or additions. The monitoring should not only lead to identification of problematic issues, but also to the identification of practices followed by one or more member countries in applying the Guidelines which could be usefully extended to other countries. The monitoring is not intended to arbitrate on particular cases ... Read more

In July 1995, the OECD Council approved for publication the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“the Guidelines”), submitted by the Committee on Fiscal Affairs (“the Committee”). At the same time, the OECD Council endorsed the Committee’s recommendation that the Guidelines be reviewed and up-dated periodically as appropriate based upon the experience of member countries and the business community with the application of the principles and methods set forth in the Guidelines. For this purpose, and to facilitate on-going clarifications and improvements, the OECD Council instructed the Committee to undertake a period of monitoring international transfer pricing experience. The monitoring role is seen as an integrated part of the agreement reached in July 1995 and its successful implementation is a key feature to getting a consistent application of the Guidelines. The Council Recommendation “instructs the Committee on Fiscal Affairs to monitor the ... Read more

21. The facts are the same as in Example 4 except that the functional analysis indicates Company A has no capacity to make decisions to take on or decline the risk-bearing opportunity represented by its participation in the CCA, or to make decisions on whether and how to respond to the risks associated with the opportunity. It also has no capability to mitigate the risks or to assess and make decisions relating to the risk mitigation activities of another party conducted on its behalf. 22. In accurately delineating the transactions associated with the CCA, the functional analysis therefore indicates that Company A does not control its specific risks under the CCA in accordance with the guidance in paragraph 8.15 and consequently is not entitled to a share in the output that is the objective of the CCA ... Read more

17. Company A and Company B are members of an MNE group and decide to undertake the development of an intangible through a CCA. The intangible is anticipated to be highly profitable based on Company B’s existing intangibles, its track record and its experienced research and development staff. Company A performs, through its own personnel, all the functions expected of a participant in a development CCA obtaining an independent right to exploit the resulting intangible, including functions required to exercise control over the risks it contractually assumes in accordance with the principles outlined in paragraphs 8.14 to 8.18. The particular intangible in this example is expected to take five years to develop before possible commercial exploitation and if successful, is anticipated to have value for ten years after initial Exploitation. 18. Under the CCA, Company A will contribute to funding associated with the development of ... Read more

15. The facts are the same as Example 1, except that the per-unit value of Service 2 is 120 (that is, both Service 1 and Service 2 are equally valuable, and neither are low-value services). 16. Under the CCA, the value of Company A and Company B’s contributions should each correspond to their respective proportionate shares of expected benefits i.e. 50%. Since the total value of contributions under the CCA is 6 000, this means each party must contribute 3 000. The value of Company A’s in-kind contribution is 3 600. The value of Company B’s in- kind contribution is 2 400. Accordingly, Company B should make a balancing payment to Company A of 600. This has the effect of “topping up” Company B’s contribution to 3 000; and offsets Company A’s contribution to the same amount. Example 3 illustrates that, in general, assessing contributions ... Read more

Example 2 12. The facts are the same as Example 1, except that the per-unit value of Service 1 is 103 (that is, both Service 1 and Service 2 are low-value services). Assume, therefore, that the calculation of the costs and value of the services is as follows: Cost to Company A of providing services (30 units * 100 per unit) 3 000 (60% of total costs) Cost to Company B of providing services (20 units * 100 per unit) 2 000 (40% of total costs Total cost to group 5 000 Value of contribution made by Company A (30 units * 103 per unit) 3 090 (59.5% of     total contributions) Value of contribution made by Company B (20 units * 105 per unit) 2 100 (40.5% of     total contributions) Total value of contributions made under the CCA 5 190 Company A and Company B each ... Read more

8. The facts are the same as Example 1. In accordance with the guidance in paragraph 8.27, an alternative way to achieve the identical result under Example 1 is through the use of a two-step process as set out below 9. Step 1 (contributions measured at cost): Company A should bear 50% of the total cost of 5 000, or 2 500. The cost of Company A’s in-kind contribution is 3 000. Company B should bear 50% of the total cost, or 2 500. The cost of Company B’s in-kind contribution is 2 000. Company B should thus make an additional payment to Company A of 500. This reflects a balancing payment associated with current contributions. 10. Step 2 (accounting for additional contributions of value to the CCA): Company A produces 20 of value above costs per unit. Company B produces 5 of value above ... Read more

1. Example 1 illustrates the general principle that contributions should be assessed at value (i.e. based on arm’s length prices) in order to produce results that are consistent with the arm’s length 2. Company A and Company B are members of an MNE group and decide to enter into a CCA. Company A performs Service 1 and Company B performs Service 2. Company A and Company B each “consume” both services (that is, Company A receives a benefit from Service 2 performed by Company B, and Company B receives a benefit from Service 1 performed by Company A). 3. Assume that the costs and value of the services are as follows: Costs of providing Service 1 (cost incurred by Company A) 100 per unit. Value of Service 1 (i.e. the arm’s length price that Company A would charge Company B for the provision of Service ... Read more

2. Examples (1) 18. The following examples are aimed at illustrating the practical application of a transfer pricing adjustment arising from the application of the HTVI guidance. The assumptions made about arm’s length arrangements and transfer pricing adjustments determined in the examples are intended for illustrative purposes only and should not be taken as prescribing adjustments and arm’s length arrangements in actual cases or particular industries. The HTVI guidance must be applied in each case according to the specific facts and circumstances of the case. 19. These examples make the following assumptions: The transaction involves the transfer of an intangible (or rights therein) meeting the criteria for HTVI in paragraph 6.189, that is (i) no reliable comparables exist; and (ii) at the time the transaction was entered into, the projections of future cash flows or income expected to be derived from the transferred intangible, or ... Read more

1. Introduction 1. Action 8 of the BEPS Action Plan mandated the development of transfer pricing rules or special measures for transfers of hard-to-value intangibles aimed at preventing base erosion and profit shifting by moving intangibles among group members. 2. The outcome of this work is found in Section D.4 of the Revised Chapter VI of the Transfer Pricing Guidelines, contained in the 2015 Final Report for Actions 8-10, “Aligning Transfer Pricing Outcomes with Value Creation” (BEPS TP Report) and now formally adopted as part of the Guidelines. Section D.4 addresses the treatment of hard- to-value intangibles (HTVI) for transfer pricing purposes. That Section contains an “approach consistent with the arm’s length principle that tax administrations can adopt to ensure that tax administrations can determine in which situations the pricing arrangements as set by the taxpayers are at arm’s length and are based on an ... Read more

3. Dispute prevention and resolution in relation to the HTVI approach 34. The purpose of this guidance is to improve consistency in the application of the HTVI approach by jurisdictions, thus reducing the risk of economic double taxation. In addition to this guidance, there may be other tools at the disposal of taxpayers to avoid instances of double taxation and enhance tax certainty in HTVI transactions. 35. In particular, Chapter IV of these Guidelines discusses in detail advance pricing arrangements (APAs), which if concluded bilaterally or multilaterally between treaty partner competent authorities provide an increased level of certainty in the jurisdictions involved, lessen the likelihood of double taxation, and may proactively prevent transfer pricing disputes. Recognising the role of APAs in preventing double taxation and providing certainty to taxpayers, paragraph 6.193 of these Guidelines prevents the application of the HTVI approach when the transfer of ... Read more

104. Pervichnyi is the parent of an MNE group organised and doing business in country X. Prior to Year 1, Pervichnyi developed patents and trademarks related to Product F. It manufactured Product F in country X and supplied the product to distribution affiliates throughout the world. For purposes of this example assume the prices charged to distribution affiliates were consistently arm’s length. 105. At the beginning of Year 1, Pervichnyi organises a wholly owned subsidiary, Company S, in country Y. In order to save costs, Pervichnyi transfers all of its production of Product F to Company S. At the time of the organisation of Company S, Pervichnyi sells the patents and trademarks related to Product F to Company S for a lump sum. Under these circumstances, Pervichnyi and Company S seek to identify an arm’s length price for the transferred intangibles by utilising a discounted ... Read more

101. Company A is the Parent company of an MNE group with operations in country S. Company B is a member of the MNE group with operations in country T, and Company C is also a member of the MNE group with operations in country U. For valid business reasons the MNE group decides to centralise all of its intangibles related to business conducted outside of country S in a single location. Accordingly, intangibles owned by Company B are sold to Company C for a lump sum, including patents, trademarks, know-how, and customer relationships. At the same time, Company C retains Company B to act as a contract manufacturer of products previously produced and sold by Company B on a full-risk basis. Company C has the personnel and resources required to manage the acquired lines of business, including the further development of intangibles necessary to ... Read more

97. Company A is the Parent of an MNE group with operations in country X. Company A owns patents, trademarks and know-how with regard to several products produced and sold by the MNE group. Company B is a wholly owned subsidiary of Company A. All of Company B’s operations are conducted in country Y. Company B also owns patents, trademarks and know-how related to Product M. 98. For sound business reasons related to the coordination of the group’s patent protection and anti-counterfeiting activities, the MNE group decides to centralise ownership of its patents in Company A. Accordingly, Company B sells the Product M patents to Company A for a lump-sum price. Company A assumes responsibility to perform all ongoing functions and it assumes all risks related to the Product M patents following the sale. Based on a detailed comparability and functional analysis, the MNE group ... Read more

92. Osnovni is the parent company of an MNE Group engaged in the development and sale of software products. Osnovni acquires 100% of the equity interests in Company S, a publicly traded company organised in the same country as Osnovni, for a price equal to 160. At the time of the acquisition, Company S shares had an aggregate trading value of 100. Competitive bidders for the Company S business offered amounts ranging from 120 to 130 for Company S. 93. Company S had only a nominal amount of fixed assets at the time of the acquisition. Its value consisted primarily of rights in developed and partially developed intangibles related to software products and its skilled workforce. The purchase price allocation performed for accounting purposes by Osnovni allocated 10 to tangible assets, 60 to intangibles, and 90 to goodwill. Osnovni justified the 160 purchase price in ... Read more

89. Prathamika is the parent company of an MNE group. Prathamika has been engaged in several large litigation matters and its internal legal department has become adept at managing large scale litigation on behalf of Prathamika. In the course of working on such litigation, Prathamika has developed proprietary document management software tools unique to its industry. 90. Company S is an associated enterprise of Prathamika. Company S becomes involved in a complex litigation similar to those with which the legal department of Prathamika has experience. Prathamika agrees to make two individuals from its legal team available to Company S to work on the Company S litigation. The individuals from Prathamika assume responsibility for managing documents related to the litigation. In undertaking this responsibility they make use of the document management software of Prathamika. They do not, however, provide Company S the right to use the ... Read more

86. Zhu is a company engaged in software development consulting. In the past Zhu has developed software supporting ATM transactions for client Bank A. In the process of doing so, Zhu created and retained an interest in proprietary copyrighted software code that is potentially suitable for use by other similarly situated banking clients, albeit with some revision and customisation. 87. Assume that Company S, an associated enterprise of Zhu, enters into a separate agreement to develop software supporting ATM operations for another bank, Bank B. Zhu agrees to support its associated enterprise by providing employees who worked on the Bank A engagement to work on Company S’s Bank B engagement. Those employees have access to software designs and know-how developed in the Bank A engagement, including proprietary software code. That code and the services of the Zhu employees are utilised by Company S in executing ... Read more

83. Birincil acquires 100% of the equity interests in an independent enterprise, Company T for 100. Company T is a company that engages in research and development and has partially developed several promising technologies but has only minimal sales. The purchase price is justified primarily by the value of the promising, but only partly developed, technologies and by the potential of Company T personnel to develop further new technologies in the future. Birincil’s purchase price allocation performed for accounting purposes with respect to the acquisition attributes 20 of the purchase price to tangible property and identified intangibles, including patents, and 80 to goodwill. 84. Immediately following the acquisition, Birincil causes Company T to transfer all of its rights in developed and partially developed technologies, including patents, trade secrets and technical know-how to Company S, a subsidiary of Birincil. Company S simultaneously enters into a contract ... Read more

78. Company A owns a government licence for a mining activity and a government licence for the exploitation of a railway. The mining licence has a standalone market value of 20. The railway licence has a standalone market value of 10. Company A has no other net assets. 79. Birincil, an entity which is independent of Company A, acquires 100% of the equity interests in Company A for 100. Birincil’s purchase price allocation performed for accounting purposes with respect to the acquisition attributes 20 of the purchase price to the mining licence; 10 to the railway licence; and 70 to goodwill based on the synergies created between the mining and railway licences. 80. Immediately following the acquisition, Birincil causes Company A to transfer its mining and railway licences to Company S, a subsidiary of Birincil. 81. In conducting a transfer pricing analysis of the arm’s ... Read more

73. Första is a consumer goods company organised and operating in country A. Prior to Year 1, Första produces Product Y in country A and sells it through affiliated distribution companies in many countries around the world. Product Y is well recognised and attracts a premium compared to its competitors, to which Första is entitled as the legal owner and developer of the trademark and related goodwill giving rise to that premium. 74. In Year 2, Första organises Company S, a wholly owned subsidiary, in country B. Company S acts as a super distributor and invoicing centre. Första continues to ship Product Y directly to its distribution affiliates, but title to the products passes to Company S, which reinvoices the distribution affiliates for the products. 75. Beginning in Year 2, Company S undertakes to reimburse the distribution affiliates for a portion of their advertising costs ... Read more

69. Ilcha is organised in country A. The Ilcha group of companies has for many years manufactured and sold Product Q in countries B and C through a wholly owned subsidiary, Company S1, which is organised in country B. Ilcha owns patents related to the design of Product Q and has developed a unique trademark and other marketing intangibles. The patents and trademarks are registered by Ilcha in countries B and C. 70. For sound business reasons, Ilcha determines that the group’s business in countries B and C would be enhanced if those businesses were operated through separate subsidiaries in each country. Ilcha therefore organises in country C a wholly owned subsidiary, Company S2. With regard to the business in country C: Company S1 transfers to Company S2 the tangible manufacturing and marketing assets previously used by Company S1 in country C. Ilcha and Company ... Read more

67. Company P, a resident of country A conducts a retailing business, operating several department stores in country A. Over the years, Company P has developed special know-how and a unique marketing concept for the operation of its department stores. It is assumed that the know-how and unique marketing concept constitute intangibles within the meaning of Section A of Chapter VI. After years of successfully conducting business in country A, Company P establishes a new subsidiary, Company S, in country B. Company S opens and operates new department stores in country B, obtaining profit margins substantially higher than those of otherwise comparable retailers in country B. 68. A detailed functional analysis reveals that Company S uses in its operations in country B, the same know-how and unique marketing concept as the ones used by Company P in its operations in country A. Under these circumstances, ... Read more

64. Primarni is organised in and conducts business in country A. Company S is an associated enterprise of Primarni. Company S is organised in and does business in country B. Primarni develops a patented invention and manufacturing know-how related to Product X. It obtains valid patents in all countries relevant to this example. Primarni and Company S enter into a written licence agreement pursuant to which Primarni grants Company S the right to use the Product X patents and know-how to manufacture and sell Product X in country B, while Primarni retains the patent and know-how rights to Product X throughout Asia, Africa, and in country A. 65. Assume Company S uses the patents and know-how to manufacture Product X in country B. It sells Product X to both independent and associated customers in country B. Additionally, it sells Product X to associated distribution entities ... Read more

59. Company A is a fully integrated pharmaceutical company engaged in the discovery, development, production and sale of pharmaceutical preparations. Company A conducts its operations in country X. In conducting its research activities, Company A regularly retains independent Contract Research Organisations (CROs) to perform various R&D activities, including designing and conducting clinical trials with regard to products under development by Company A. However, such CROs do not engage in the blue sky research required to identify new pharmaceutical compounds. Where Company A does retain a CRO to engage in clinical research activities, research personnel at Company A actively participate in designing the CRO’s research studies, provide to the CRO results and information derived from earlier research, establish budgets and timelines for CRO projects, and conduct ongoing quality control with respect to the CRO’s activities. In such arrangements, CROs are paid a negotiated fee for services ... Read more

54. Shuyona is the parent company of an MNE group. Shuyona is organised in and operates exclusively in Country X. The Shuyona group is involved in the production and sale of consumer goods. In order to maintain and, if possible, improve its market position, ongoing research is carried out by the Shuyona group to improve existing products and develop new products. The Shuyona group maintains two R&D centres, one operated by Shuyona in country X, and the other operated by Company S, a subsidiary of Shuyona, operating in country Y. The relationships between the Shuyona R&D centre and the Company S R&D centre are as described in Example 14. 55. In Year 1, Shuyona sells all rights to patents and other technology related intangibles, including rights to use those intangibles in ongoing research, to a new subsidiary, Company T, organised in country Z. Company T ... Read more

49. Shuyona is the parent company of an MNE group. Shuyona is organised in and operates exclusively in country X. The Shuyona group is involved in the production and sale of consumer goods. In order to maintain and, if possible, improve its market position, ongoing research is carried out by the Shuyona group to improve existing products and develop new products. The Shuyona group maintains two R&D centres, one operated by Shuyona in country X, and the other operated by Company S, a subsidiary of Shuyona, operating in country Y. 50. The Shuyona group sells two lines of products. All R&D with respect to product line A is conducted by Shuyona. All R&D with respect to product line B is conducted by the R&D centre operated by Company S. Company S also functions as the regional headquarters of the Shuyona group in North America and ... Read more