NAM OUTLINES COMMENTS ON TRANSFER-PRICING REGS.
NAM OUTLINES COMMENTS ON TRANSFER-PRICING REGS.
- AuthorsLovell, Monica McGuire
- Institutional AuthorsNational Association of Manufacturers
- Cross-ReferenceIL-372-88
- Code Sections
- Subject Area/Tax Topics
- Index Termsrelated-party allocations
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 92-7842
- Tax Analysts Electronic Citation92 TNT 170-66
=============== SUMMARY ===============
Monica McGuire Lovell of the National Association of Manufacturers (NAM), Washington, has submitted an outline of comments for the public hearing on the proposed section 482 regulations. NAM's comments, which will be presented by John G. Forsythe, will focus on recommendations regarding safe-harbor provisions.
=============== FULL TEXT ===============
August 13, 1992
Internal Revenue Service
P.O. Box 7604
Ben Franklin Station
Room 5228
Washington, DC 20044
Attn: CC:CORP:T:R (INTL 401-88, 372-88)
Dear Sir or Madam:
The National Association of Manufacturers (NAM) requests the opportunity to provide oral testimony at the August 31, 1992, hearing on the proposed section 482 transfer-pricing regulations. The NAM witness will be:
Mr. John G. Forsythe
Vice President -- Tax and Public Affairs
Ecolab Inc.
St. Paul, MN
Ecolab is a medium size company and a member of the NAM.
Enclosed is a outline, as requested by the Internal Revenue Service, of NAM's oral comments on the aforementioned regulations.
Should you have questions or would like to notify me regarding this request to testify, I may be reached at (201) 637-3076.
Thank you for your consideration of this request to testify.
Sincerely,
Monica McGuire Lovell
Director of Taxation
NAM
Washington, DC
cc: John Forsythe
Enclosure: testimony outline
OUTLINE OF NATIONAL ASSOCIATION OF MANUFACTURERS COMMENTS ON THE PROPOSED SECTION 482 REGULATIONS AUGUST 13, 1992
RECOMMENDATIONS WITH REGARD TO SAFE HARBOR PROVISIONS
A. The Proposed Regulations under section 482, relating to transfer pricing, should include safe harbor provisions. We recommend the following as reasonable safe harbors.
1. High-Tax Jurisdictions.
a. Proposed exception would apply when the tax rate in the
foreign jurisdiction exceeds 90% of the maximum U.S.
statutory rate.
2. Back-to-Back Transfers.
a. Transfer of intangibles acquired from unrelated parties to
related parties within a limited amount of time on the same
terms as originally acquired.
3. Transfers to Entities in Which an Unrelated Party Has
Substantial Interest.
a. Transfers to entities in which an unrelated party has a
substantial interest should be considered arm's length.
4. Method Accepted Under Prior Scrutiny by IRS.
a. Methodology accepted by the IRS in one audit cycle
should not be challenged in another, barring substantial
change of fact.
5. Minimum Distributions/Reasonable Profit Split.
a. Minimum amount deemed to be repatriated to U.S. or
specific level of allowable profit split.
6. De Minimis Foreign Activity or Location.
a. Relief for small business and taxpayers with numerous
small foreign related parties.
B. Inclusion of safe harbor provisions in the proposed section 482 regulations would provide a number of advantages.
1. Encourage voluntary compliance by taxpayers by providing an assured outcome of transfer pricing practices.
2. Reduce administrative costs both to IRS and taxpayers.
3. Encourage wider acceptance of proposed regulations by the international community and increase probability of correlative relief, thereby reducing the potential for double taxation.
- AuthorsLovell, Monica McGuire
- Institutional AuthorsNational Association of Manufacturers
- Cross-ReferenceIL-372-88
- Code Sections
- Subject Area/Tax Topics
- Index Termsrelated-party allocations
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 92-7842
- Tax Analysts Electronic Citation92 TNT 170-66