Friday, February 28, 2014
Diane M. Ring (Boston College), Book Review, 73 Tax Notes Int'l 713 (Feb. 17, 2014) (reviewing Resolving Transfer Pricing Disputes: A Global Analysis (Eduardo Baistrocchi & Ian Roxan eds., Cambridge University Press 2013)):
Eduardo Baistrocchi and Ian Roxan have brought a new contribution, Resolving Transfer Pricing Disputes, to the global literature on transfer pricing. The basic structure is straightforward: The introduction provides an overview of the book's mission, coverage, and design process. Chapter 2 outlines the transfer pricing problem, its history, and the evolving international response. The following 18 chapters highlight countries around the globe, both those with a long history of transfer pricing regulation and countries just beginning to develop and implement a national response. The concluding chapters return to themes identified at the outset regarding the evolution of the transfer pricing regime -- the claim that the international tax system has been moving from a rules-based response to a more standards-based approach to the problem of artificial income shifting.
Resolving Transfer Pricing Disputes has a distinct perspective beyond its articulation of a historical trend from a rules-based to a standards-based approach to transfer pricing. The conclusion (in Chapter 21) develops an overarching framework in the form of six stages of development in managing (or not needing to manage) transfer pricing. The chapter maps transfer pricing regimes across the globe and through time on the dimensions of these six stages. Asserting the view that the taxation of transfer pricing has proceeded through discernible stages and that these stages are universal and can be found in all countries can be risky, but here the argument and the reasoning resonate with the international tax reader's experience and is well documented and grounded historically. Moreover, the presentation of the stages is nuanced and understood to be nonlinear. For example, movement from stage 6 to stage 5 is imagined if circumstances in the jurisdiction change. In the future, it would be interesting to examine what the concept of the stages suggests about the likelihood of increased agreement among jurisdictions on transfer pricing (for example, as reflected in the projects of the OECD). Furthermore, the transfer pricing analysis could be expanded to consider how the stages of transfer pricing might relate to other emerging practices in international tax.
Regardless of whether a reader is ultimately persuaded by the historical vision presented by Resolving Transfer Pricing Disputes, the work's contribution to the international tax literature is ensured.