Transfer pricing taxation rules place a huge burden on multinational taxpayers. The way intellectual property is created, used and shared drives the way profits are recognised for tax purposes. This is an increasingly significant focus for tax authorities, which perceive substantial profits made at a (consolidated) group level are not necessarily replicated at a local level.
This paper addresses the transfer pricing principles in the context of an automotive group, as some characteristics of the auto industry can make the analysis different to other sectors and, consequently, may create more conflicts between taxpayers and their revenue authorities.
A second paper, scheduled to be released later in the year, will consider where value exists in an organisation and will reflect on some of the business and transfer pricing models used in the automotive industry.
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