Write a paper in the area of Transfer Pricing in The Arm’s Length Standard and BEPS 2.0 – where does the Arm’s Length Standard go from here.
The constraints of the paper are as follows:
1. It must relate to Transfer Pricing
2. You provide an Hypothesis statement on what you will prove (I recommend discussing the Hypothesis statement with me.)
3. Describe the transaction being analyzed/discuss or how the hypothesis relates to transfer pricing. That is, what transfer pricing issue are you researching and how it relates to the class.
4. Your paper should include tax/transfer pricing references and tax nomenclature.
Sample solution
Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell.
In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.
God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.
Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.
To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.
References
Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.
Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.
Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.
Sample Answer
Sample Answer
Transfer Pricing in the Arm’s Length Standard and BEPS 2.0: The Evolution and Future Direction
Introduction
The arm’s length principle has long been the cornerstone of transfer pricing regulations, aiming to ensure that transactions between related entities are conducted on a fair and equitable basis. However, with the emergence of the Base Erosion and Profit Shifting (BEPS) project and the ongoing discussions around BEPS 2.0, the future of the arm’s length standard is being questioned. In this paper, we will explore the evolution of the arm’s length standard, its challenges in the context of BEPS, and discuss the potential directions it may take to adapt to the changing international tax landscape.
Hypothesis Statement
The hypothesis of this paper is that the arm’s length standard will continue to play a central role in transfer pricing regulations, but it will need to evolve to address the challenges posed by the digital economy and the BEPS project. This evolution will likely involve a combination of reforms to the current framework and the introduction of new approaches to ensure a fair allocation of profits in an increasingly global and digitalized business environment.
The Arm’s Length Standard and BEPS
The transaction being analyzed in this paper revolves around the transfer of goods, services, or intellectual property between related entities within a multinational corporation. The arm’s length standard requires that such transactions be priced as if they were between unrelated entities, ensuring that profits are allocated appropriately among jurisdictions. However, the rapid development of the digital economy and the increasing complexity of multinational business models have challenged the effectiveness and relevance of the traditional arm’s length standard.
Challenges to the Arm’s Length Standard
Digital Economy: The rise of digital business models has created unique transfer pricing challenges. The arm’s length standard relies heavily on the comparability of transactions between unrelated entities, but digital companies often operate in a borderless manner, making it difficult to find comparable transactions. Additionally, the value creation in the digital economy is often driven by intangible assets, which are challenging to price accurately under the arm’s length principle.
BEPS Project: The BEPS project, initiated by the Organization for Economic Cooperation and Development (OECD), aims to combat tax avoidance by multinational corporations. It has highlighted the shortcomings of the arm’s length standard in addressing the challenges posed by profit shifting and the erosion of tax bases. The BEPS project has called for a reevaluation of transfer pricing rules and the development of new approaches to ensure a fair and consistent allocation of profits.
Potential Directions for the Arm’s Length Standard
Reforms to the Current Framework: The arm’s length standard could be strengthened through reforms to address the challenges posed by the digital economy and BEPS. This could involve enhancing the guidance on the pricing of intangible assets, revisiting the definition of comparability, and providing clearer rules for determining economic substance and value creation.
Introduction of New Approaches: In addition to reforms, the arm’s length standard may need to be complemented with new approaches. One potential approach is the introduction of formulary apportionment, which allocates profits based on a formula that considers factors such as sales, employees, and assets in each jurisdiction. This approach aims to eliminate the need for extensive comparability analysis and provide a more equitable allocation of profits in the digital economy.
Enhanced Collaboration and Data Sharing: To effectively address the challenges of the digital economy and BEPS, increased collaboration and data sharing among tax authorities and multinational corporations are essential. This would enable a better understanding of the value creation process, facilitate the development of appropriate transfer pricing methodologies, and ensure consistent enforcement across jurisdictions.
Conclusion
The arm’s length standard has been a fundamental principle in transfer pricing regulations for decades. However, the evolving global business landscape, driven by the digital economy and the BEPS project, has exposed its limitations. While the arm’s length standard will likely continue to play a central role in transfer pricing, it needs to adapt and evolve to address the challenges posed by the changing international tax environment. Reforms to the current framework and the introduction of new approaches, along with enhanced collaboration and data sharing, will be key to ensuring a fair and consistent allocation of profits in the digital age.
