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OTC Conseil Americas
Newsletter #4 - July 2009

Editorial

Summer has just arrived, along with our July newsletter.

For the next two months, we will focus on one topic per newsletter. Here, we discuss a topic that is both strategic and fiscal: transfer pricing, i.e., the way multinational groups value and shift internal costs and profits between their subsidiaries, particularly when these subsidiaries are subject to different local laws and tax authorities.

This subject is of real concern to all multinational companies, from industrial corporations to the banking industry.

Principles of transfer pricing may seem quite basic on the face of it, but the reality is that their application is complex and strongly regulated.

Special attention has recently been given to the topic: on an international level, the OECD has recently released significant guidelines. In the US, the Obama administration has devised a program seeking to control corporations’ revenues.

Next month, we will look at another strategic subject which concerns all kind of financial institutions: portfolio project management.

Also, visit our website for more information, including longer articles and details of our upcoming and past events.

Last June, for example, OTC Conseil Americas organized a conference on the theme of Carbon Finance for New York-based alumni of the Ecole Centrale.
This seminar, which put regulated markets (the Kyoto Protocol and its application in Europe) and voluntary markets (local initiatives, notably in the U.S.) in to perspective, emphasized the objectives of market convergence and the high stakes of Carbon Finance. Our presentations are available on our website to registered users.

Check it out!

Until then, have a good read!


Fayna LIONET
Chief Operating Officer

Transfer Pricing: Policies to revisit


Transfer prices are the prices of goods, services, or intangible goods exchanged by the different national entities of the same corporation.

Since an intercompany transaction takes place between businesses that are affiliated within a group, the market mechanisms that are generally used to set prices between third parties may not apply. As the transfer pricing process determines the amount of income that each entity of the group earns from intercompany transactions, it is under the close scrutiny of governments and tax authorities alike. The latter carefully monitor the allocation of profits and losses to their jurisdiction.