– DAGTVA truth table –
DAGTVA® – Distribution of MNE profits
|No.||Problems exposed, requests, constraints and subjects||Origin||Pg||Li||Doc|
|30||Possible provisions – Determination of transfer prices.||Pillar 1||5||43||RBDpx|
Quote : At the same time, the approach largely retains the current transfer pricing rules based on the arm’s length principle (RBDpx – RBNac – RBRpc) but complements them with formula based solutions in areas where tensions in the current system are the highest.
As it is specified in the preceding pages RBRpc and RLNac, OECD in its document speak about, I quote the title of the paragraph: « New Profit Allocation Rule going beyond the Arm’s Length Principle« , the sens of this sentence is ambigue the Arm’s Length Principle may be respected or not, but it is impossible to have a third position over this principle, we are in or out the respect of this principle.
It seems impossible, in a framwork of a World Single Taxation to be outside this Arm’s Length Principle, otherwhise it is the open gate to the tax anarchie by the impossibility to achieve a common tax system, by making believe that the principle is respected when it is not in an uncertain tax position.
You will see in the study of this proposal for a global taxation system with the application of the DAGTVA calculation of transfer prices, the DAGTVA system never deviates from compliance of the arm’s length principle. It even goes further by automatically calculating a theoretical transfer price serving as a working basis, both by the tax authorities but also for the MNE so that it can present an acceptable commercial action. The aim is to avoid any fiscal manipulation aimed at derogating from this principle of healthy competition but above all by providing a framework for the MNE in its production policy by developing international trade.
You will see in the study, these rules are supplemented, not by formulas applicable to solutions that may be controversial, but by a simple process that works in all possible cases, supplemented by a new system of allocation of international aid.
The DAGTVA system also participates through its structure and its functioning in the distribution of profits within MNEs as is explained in the different situations of the DAGTVA calculation of transfer prices.