Friday, June 3, 2011

Transfer Pricing in the Mainstream Media

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As editor of BNA's Transfer Pricing Report, I have mixed feelings whenever transfer pricing news makes it into more mainstream media outlets, as has been happening more and more lately. (For recent examples, see a succint and fairly accurate summary of the Veritas Software case byTaxProf Blog http://taxprof.typepad.com/taxprof_blog/2010/11/irs-throws.html and Bloomberg's coverage of Google's 2.4 percent effective tax rate http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html. One small nit with the TaxProf account is that he does not mention that the IRS substantially lowered its position on the $2.5 billion buy-in payment at trial.) On the one hand, since BNA is a market leader on coverage of this issue, it's nice to have the publicity, but on the other hand, some of the statements I've read make me feel a little maligned on behalf of our readers and our sources.

An article in today's Transfer Pricing Report  articulates this point well. In "Misrepresentation of Transfer Pricing in the Mainstream Media," Daniel Falk of True Partners Consulting LLC states, "The most troubling aspect of the articles is what the stories do not say, rather than what they do say. Transfer pricing is depicted in a manner that makes it seem as if multinational corporations have a choice of whether to engage or not engage in transfer pricing. What is not mentioned is the fact that companies with overseas operations are required to engage in transfer pricing based on accounting principles, such as those adapted under U.S. generally accepted accounting principles, and tax rules and regulations, including the guidelines issued by the Organization for Economic Cooperation and Development, to which most countries subscribe. Transfer pricing is a fact of life for multinational corporations with multiple legal entities around the world."

Molly Moses

Editor, Transfer Pricing Report

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