Abstract
Throughout this book, the tax authorities might at times have been characterized as a sort of “opponent” of taxpayers. To be sure, there is a competitive element involved in almost every tax audit, i.e. when stepping on to the bazaar, everyone is trying to secure a favorable bargain. It should be clear, however, that all respective comments were intended to be understood in the spirit of good sportsmanship.
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Notes
- 1.
Note: Some of the worse effects are related to excessive regulation regarding formalistic requirements, i.e., an ever-increasing scope of required documentations (including detailed data on ex ante financial data such as forecasts and budgets).
- 2.
In Germany, for example, this threshold is stipulated at 600,000 € (cumulative volume) for service transactions and 6,000,000 € for all other transactions. Even start-up companies quickly exceed these thresholds and frequently have to cope with suffocating audit procedures—a more lenient regulation would greatly help these smaller companies to get off the ground without any material danger of trigger tax gap effects. Naturally, this would apply not only to transfer pricing but in tax in more general.
- 3.
For detailed comments, see Treidler (2019).
- 4.
Whereas the OECD previously compiled all public responses in one or two PDFs, it actually had to set up a “drop box” to publish all the comments received regarding the digital taxation. For all practitioners and students interested in international regulation of taxation, these responses are a treasure trove of information. I also contributed my two cents, specifically emphasizing that the proposals of the OECD (i.e., by adopting a default position of allocating (allegedly high-value) market intangibles to local sales entities) erode the established consensus that a low-risk distributor is conceptually not entitled to a share in the residual profit. While some of the more intricate points of the public discussion are beyond the scope of issues discussed in this book, you will find that the current discussions actually touch heavily upon the basic arm’s length principles we discussed in this book.
Bibliography
Treidler, O. (2019). The rotten smell of the European tax agenda in 2019. Cayman Financial Review, 1st Quarter, (54).
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Treidler, O. (2020). Closing Remarks: A Kind Word to Tax Auditors and Policymakers. In: Transfer Pricing in One Lesson. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-030-25085-0_6
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