| Budget Amount *help |
¥1,700,000 (Direct Cost: ¥1,700,000)
Fiscal Year 1997: ¥400,000 (Direct Cost: ¥400,000)
Fiscal Year 1996: ¥500,000 (Direct Cost: ¥500,000)
Fiscal Year 1995: ¥800,000 (Direct Cost: ¥800,000)
|
|---|
| Research Abstract |
Under the arm's length standard, it is almost impossible or unrealistic to evaluate the transfer prices of intangibles, such as intellectual properties, and to determine their locations or owners, and sources of their income. This is because income from intangibles includes the super-profits through corporate integration, which does not fit the traditional arm's length concept. On the other hand, under the formulary apportionment in unitary taxation, it is necessary to evaluate and locate intangibles in the asset factor, and to separate their income and determine the source in the sale factor. These are also very difficult, as under the arm's length principle. Thus, beyond the dispute between the arm's length principle and unitary taxation, the new framework of international taxation should be established, which can avoid these difficulties. Each component of the existent international tax system should be reexamined from the view point of how much it needs or can avoid evaluation and location of intangibles.
One example of this avoidance of evaluation can be seen in the application of section 482 of the internal revenue code to non-recognition transactions in corporate organization and reoganization in order to prevent the abuse of deferral. Section 482 does not evaluate assets transferred or exchanged, but reallocate the income or losses out of third party transactions after the intra-group transfer.
The concern over evaluation and location of intangibles is also reflected in the superloyalty rule introduced in the Tax Reform Act of 1986, the Internal Revenue Regulation of the cost sharing arrangement, and the contract manufacturer theory.
|
