The EdgarStat Blog explores issues in transfer pricing and application of the transactional net margin method (TNMM or CPM in the US) and other enterprise profit-based methods.
Licensees bear significant commercial risk when they use valuable intangible assets owned by another entity. As such, any method that affords them with an expected return to its tangible assets that is only as high as the overall enterprise’s cost of capital is inconsistent with sound economics.
Topics: US Transfer Pricing Royalty Rates Intangibles Medtronic Section 482 TNMM/CPM Tax ControversyRead more
This discussion presents a simplified illustration of the issues with respect to the unspecified method applied in Medtronic III in contrast to the IRS' extreme CPM approach and a traditional RPSM approach based on sound financial economics.
Topics: US Transfer Pricing Residual Profit Split Method Unspecified Method US Internal Revenue Service Intangibles Tax Policy Medtronic Section 482 TNMM/CPM Tax ControversyRead more