Transfer Pricing and Value Creation

1. S. 256Introduction

With consumption constantly increasing, supply chains have become more customer centric. The distribution that has taken place within these chains is the last stage in the supply chain and has the closest ties and communication with customers. The globalization process, the need to secure the presence on economically significant markets, digitalization, the constantly increasing role of the Internet, the cooperation of States in the elaboration of the common standards at the international level, especially in the tax sphere, and many other factors urge multinational enterprises (MNEs) to seek for optimized distribution structures.

The distribution function has been strongly affected as a result of implementation of the BEPS actions whereby the main changing factors have been and still remain:

• Target of aligning transfer pricing outcomes with the value creation set forth in the final report on BEPS Actions 8–10 which has caused the revision of the OECD Transfer Pricing guidelines including the revision of the arm’s length principle and the review of the transactional profit split method;

• New versions/ amendments/commentaries to Articles 5 and 7 of the OECD Model Conventi...