PROPOSAL_OF_A_NEW_APPROACH_FOR_THE_PROFIT_SPLIT_METHOD_AND COSTS_SHARING_BETWEEN_ASSOCIATED_ENTERPRISES_IN_THE_AUTOMOTIVE_INDUSTRY

Oliver Diez, Thomas Prosch, Emilio Larrode, Victoria Muerza and Luis Navarro-Elolala
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Oliver Diez: Polígono Industrial Can Illa, Av. Millenari de Catalunya, Spain
Thomas Prosch: Polígono Industrial Can Illa, Av. Millenari de Catalunya, Spain
Emilio Larrode: University of Zaragoza, Spain
Victoria Muerza: Instituto de Investigación en Ingeniería de Aragón, Spain
Luis Navarro-Elolala: University of Zaragoza, Spain

Review of Socio - Economic Perspectives, 2016, vol. 1, issue 2, 101-116

Abstract: Multinational enterprises set the transfer prices for the different transactions. These must be governed by the arms length principle on the basis of the international laws and regulations of the Organization of Economic Co-operation and Development (OECD), and in the example of this paper as well as the corresponding European regulations agreed by European Union (EU) member states. Besides, each EU member state has its own legislative and regulatory framework, which it must observe. This paper presents a procedure to apply the arms length principle on the basis of the comparable uncontrolled price method (CUP) in companies of the automotive auxiliary industry. Transfer prices so calculated are used to identify the production processes that need improvement to increase competitiveness. The model of methodology presented in this work is completely new and can be seen in one of the sections of this paper.

Keywords: Transfer pricing; arms length principle; comparable uncontrolled price method; cost-/ profit-splitting; automotive industry (search for similar items in EconPapers)
JEL-codes: D23 F23 H25 (search for similar items in EconPapers)
Date: 2016
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