Background The Appellant is a registered taxpayer whose principal business is grading and packaging of flowers for export. It is located in Naivasha Kenya. The Respondent is a principal officer of Kenya Revenue Authority, Kenya Revenue Authority is an agency established under the Kenya Revenue Authority Act for the collection of Government revenue and related...
The Profit Split Method: it logically follows that the residual profits will be allocated to those entities contributing the unique and valuable intangibles and making the crucial strategic decision (entrepreneurs), while entities performing supporting functions will be allocated a small and stable (routine) remuneration. The aim is aligning profits with value contribution. It is useful...
Transactional Profit Methods The Transactional Net Margin Method (TNMM): Net Margin data derived from uncontrolled transactions. TNMM examines the net profit relative to an appropriate base like costs (Net Profit return to Costs), sales (Net Profit return to Sales), or assets (Net Profit Return to Assets). It operates like a cost plus or resale minus,...
The Cost-Plus Method (CPM): Gross profit margin data expressed as a mark-up of production costs incurred in uncontrolled transactions. OECD GL paragraph 2.45 states that cost plus method begins with the costs incurred by the supplier of property (or services) in a controlled transaction for property transferred or services provided to an associated purchaser. An...
Most countries, the OECD and the United Nations transfer pricing guidelines have all built in a degree of flexibility into their approaches, allowing other methods to be used in specific cases, provided that they approximate an arm’s length result and are acceptable to all the parties involved – that is acceptable to the tax administration,...
Income tax treaties begin with the recitation that they are entered into between countries for the purposes of avoiding double taxation of international income flows, and the prevention of fiscal evasion with respect to taxes on income and capital gains. Permanent Establishment (PE) is a key concept in international corporate tax planning, used by tax...
The Organization for Corporation and Economic Development (OECD) published a consultation document on Pillar One Amount B on 8th December 2022 with a deadline on 25th January 2023. The Amount B is intended to standardize the remuneration of distributors (Subsidiary or permanent establishment) that buy products from related party for resale by using the separate...
Key issues and concerns remained at the end of the previous trade negotiation round. Developing countries felt that more needed to be done to strengthen the multilateral trading system. The prevailing system then for example, permitted developed countries to impose temporary trade restrictions to protect local industries and hence negotiations on safeguards were to continue....
Carbon pricing should be a key component of any climate mitigation strategy designed to assist countries in reaching net zero emissions by 2050. Humans depend majorly on fossil fuels to drive their economies and that’s why we need an immediate way to encourage the shift to clean energy by imposing tangible economic pressure. Policymakers considering...
The global economy is growing rapidly coupled with integration of national economies and markets. This growth has created an opportunity for profit shifting by Multinationals from high-tax jurisdictions to low-tax jurisdictions through treaty shopping; which has been cited by OECD Inclusive framework as one of the major sources of BEPS concerns. Against that background, OECD...