<abstract xmlns="http://www.w3.org/1999/xhtml"><p> Modern manufacturing entities often operate in capital groups, and their role is sometimes limited to the function of cost centers. From the legal point of view, however, they are separate entities obliged to apply transfer pricing regulations. Meeting the requirements of the arm's length principle can be very difficult at this time, given the relationships and conflicts of interest in the capital group. Complexity increases in capital groups operating in different countries, due to differences in tax regulations. The main purpose of the paper is to demonstrate that the need to valuate the sale of finished goods to a manufacturing entity, which is a subject to a different tax jurisdiction, may lead to a problem of compliance with the arm's length principle. In addition, the paper proposes a methodology for comparability analysis that may be used by manufacturing entities to defend conditions of setting transfer pricing. The paper presents the different functional profiles of manufacturing entities and points out the difficulties that they may encounter when preparing the comparability analysis. It has also been noted that there are differences in transfer pricing regulations in different countries, for example by analyzing Polish and Czech regulations. The lack of uniform benchmarking legislation can cause inconsistencies in the selection of comparable data, resulting in differences in transfer pricing. The paper uses the method of legal regulation review and analysis of results of published studies concerning the scope of transfer pricing and comparability analysis. The paper also adopts a case study analysis.</p></abstract>

Modern manufacturing entities often operate in capital groups, and their role is sometimes limited to the function of cost centers. From the legal point of view, however, they are separate entities obliged to apply transfer pricing regulations. Meeting the requirements of the arm's length principle can be very difficult at this time, given the relationships and conflicts of interest in the capital group. Complexity increases in capital groups operating in different countries, due to differences in tax regulations. The main purpose of the paper is to demonstrate that the need to valuate the sale of finished goods to a manufacturing entity, which is a subject to a different tax jurisdiction, may lead to a problem of compliance with the arm's length principle. In addition, the paper proposes a methodology for comparability analysis that may be used by manufacturing entities to defend conditions of setting transfer pricing. The paper presents the different functional profiles of manufacturing entities and points out the difficulties that they may encounter when preparing the comparability analysis. It has also been noted that there are differences in transfer pricing regulations in different countries, for example by analyzing Polish and Czech regulations. The lack of uniform benchmarking legislation can cause inconsistencies in the selection of comparable data, resulting in differences in transfer pricing. The paper uses the method of legal regulation review and analysis of results of published studies concerning the scope of transfer pricing and comparability analysis. The paper also adopts a case study analysis.

Dilemmas of Transfer Pricing Comparability Analysis in Manufacturing Entities. Polish-Czech Case Study

Management Systems in Production Engineering

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Modern manufacturing entities often operate in capital groups, and their role is sometimes limited to the function of cost centers. From the legal point of...

Dilemmas of Transfer Pricing Comparability Analysis in Manufacturing Entities. Polish-Czech Case Study

Publié en ligne: 22 mai 2018

Pages: 76 - 82

Reçu: 01 mai 2017

Accepté: 01 sept. 2017

DOI: https://doi.org/10.2478/mspe-2018-0012

Mots clés
transfer pricing, comparability analysis, cost center, benchmarking, contract manufacturer

© 2018 Aleksandra Sulik-Górecka, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Dilemmas of Transfer Pricing Comparability Analysis in Manufacturing Entities. Polish-Czech Case Study

Publié en ligne: 22 mai 2018

Pages: 76 - 82

Reçu: 01 mai 2017

Accepté: 01 sept. 2017

DOI: https://doi.org/10.2478/mspe-2018-0012

Mots cléstransfer pricing, comparability analysis, cost center, benchmarking, contract manufacturer

© 2018 Aleksandra Sulik-Górecka, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Mots clés
transfer pricing, comparability analysis, cost center, benchmarking, contract manufacturer