Method Transfer Of Pricing
Before specified [by] method transfer of pricing which will be used, need to be determined is situation that faced to fulfill two covenants as arranged in Section 9 OECD MODEL, which its(the formula is as follows:
" Article 9 - Associated Enterprises
1. Where
a) An enterprise of a Contracting State participates directly or indirectly indium the management, control or capital of an enterprise of the other Contracting State, or
b) The same persons participate directly or indirectly indium the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
And indium either case conditions acre made or imposed between two enterprises indium their commercial or financial relations which differ from those which would is made between independent enterprises, then any profits which would, but for those conditions, has accrued to one of the enterprises, but, by reason of those conditions, has is note so accrued, may is included indium the profits of the enterprise and taxed accordingly."
The rule is upper to contains two covenants to apply method transfer of pricing for the agenda of specifying transaction which arm's length, that is relationship there must be be commercial financial or ( commercial or financial relations), and certain conditions created in financial or commercial relationship.
If rule is upper attributed to case presented hence financial and commercial relationship between PARENTCo with SUBSIDICO-1 and SUBSIDICO-2 there is because the parent corporation performs [a] SOP with certain conditions of which is mandatory fulfilled by the staff, and agreed by SUBSIDICO-1 and SUBSIDICO-2 to participate in it. In case to PARENTCo will not vouchsafe fee to employee is working for other company except having the advantage of the transaction. Therefore, in the case of PARENTCo vouchsafes option freehold asset to employee working in SUBSIDICO-2 without fee ( or even so there is smaller than number of which arm's length) hence second covenant from Section 9 is upper also is fulfilled.
Before specified [by] method transfer of pricing which will be used, need to be determined is situation that faced to fulfill two covenants as arranged in Section 9 OECD MODEL, which its(the formula is as follows:
" Article 9 - Associated Enterprises
1. Where
a) An enterprise of a Contracting State participates directly or indirectly indium the management, control or capital of an enterprise of the other Contracting State, or
b) The same persons participate directly or indirectly indium the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
And indium either case conditions acre made or imposed between two enterprises indium their commercial or financial relations which differ from those which would is made between independent enterprises, then any profits which would, but for those conditions, has accrued to one of the enterprises, but, by reason of those conditions, has is note so accrued, may is included indium the profits of the enterprise and taxed accordingly."
The rule is upper to contains two covenants to apply method transfer of pricing for the agenda of specifying transaction which arm's length, that is relationship there must be be commercial financial or ( commercial or financial relations), and certain conditions created in financial or commercial relationship.
If rule is upper attributed to case presented hence financial and commercial relationship between PARENTCo with SUBSIDICO-1 and SUBSIDICO-2 there is because the parent corporation performs [a] SOP with certain conditions of which is mandatory fulfilled by the staff, and agreed by SUBSIDICO-1 and SUBSIDICO-2 to participate in it. In case to PARENTCo will not vouchsafe fee to employee is working for other company except having the advantage of the transaction. Therefore, in the case of PARENTCo vouchsafes option freehold asset to employee working in SUBSIDICO-2 without fee ( or even so there is smaller than number of which arm's length) hence second covenant from Section 9 is upper also is fulfilled.
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