Page 23 - Strategic Tax Planning for Global Commerce & Investment

Strategic Tax Planning for Global Commerce and Investment

property (IP) is owned and developed in the parent company
jurisdiction or other high-tax jurisdiction. IP ownership may be
highly centralized or decentralized, and depending on
acquisition and development patterns may or may not be well
managed. Further, legal ownership may or may not coincide
with beneficial or economic ownership and intercompany
transfer pricing policies may not properly reflect and reward
the true economic or beneficial owner of IP.

In connection with business evolution, profit migration
techniques can be employed to enable the exploitation of IP
from a tax favored location. This can be accomplished through:

 Cost-sharing of IP development costs
 Cost-bearing licensing arrangements

 Revising transaction flows to coincide with
the beneficial ownership of IP.

Given the increasing importance of IP, as a value and tax
driver, and given the potential legal implications of any IP
migration strategy. Special consideration should be given to IP
in the development of a MNEs global tax strategy.

Thus, profit migration applies to various shifting techniques,
whether through the effective use of transfer pricing, utilizing
financial techniques or more substantive approaches that
involve a physical move of people, plant and equipment, or
retooling and shifting of intangible assets and business risk to
benefit from tax-favored locations and structures.

To the extent portable profit do exist, profit migration strategies
and techniques that are supported by arm's length transfer

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