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Proposal_of_a_new_approach_for_the_profit_split_method_and Costs_sharing_between_associated_enterprises_in_the_automotive_industry

Author

Listed:
  • 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)

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.

Suggested Citation

  • Oliver Diez & Thomas Prosch & Emilio Larrode & Victoria Muerza & Luis Navarro-Elolala, "undated". "Proposal_of_a_new_approach_for_the_profit_split_method_and Costs_sharing_between_associated_enterprises_in_the_automotive_industry," Review of Socio - Economic Perspectives 201611, Reviewsep.
    • Handle: RePEc:aly:journl:201611
    DOI: https://dx.medra.org/10.19275/RSEP006
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    References listed on IDEAS

    as
    1. Lakhal, Salem Y., 2006. "An operational profit sharing and transfer pricing model for network-manufacturing companies," European Journal of Operational Research, Elsevier, vol. 175(1), pages 543-565, November.
    2. Timothy J. Sturgeon & Olga Memedovic & Johannes Van Biesebroeck & Gary Gereffi, 2009. "Globalisation of the automotive industry: main features and trends," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 2(1/2), pages 7-24.
    3. Woonghee Tim Huh & Kun Soo Park, 2013. "Impact of transfer pricing methods for tax purposes on supply chain performance under demand uncertainty," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(4), pages 269-293, June.
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    More about this item

    Keywords

    Transfer pricing; arms length principle; comparable uncontrolled price method; cost-/ profit-splitting; automotive industry;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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