2000 Fiscal Year Final Research Report Summary
Cost Sharing Agreement and International Taxation
| Project/Area Number |
10620020
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Public law
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| Research Institution | KYOTO UNIVERSITY |
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Principal Investigator |
OKAMURA Tadao Kyoto University, graduate school of Law, Professor, 法学研究科, 教授 (30183768)
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| Project Period (FY) |
1998 – 2000
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| Keywords | cost sharing / intangibles / intellectual property / international taxation / tax shelter / reorganization / liguidation / acquisition |
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| Research Abstract |
This study addressed international tax issues on the development of intangibles, such as intellectual properties. Specifically, it focused on the cost sharing agreements and how it relates to the basic framework of international taxation. Because it is almost impossible or unrealistic to evaluate the transfer prices of intangibles and to determine their locations or owners, and sources of their income, this study discussed whether it is possible to avoid these difficulties.
This study encountered two problems in its course.
First, tax laws of most countries provide incentives to the developments of intellectual properties, and these tax preferences are traded and transferred to third parties in the tax shelter schemes, which should be controlled. On the other hand, tax law should not deter international participation in the developments of intangibles. This study accumulated American cases and rulings on this area, and examined principles such as "substance over form", business purpose test, and sham transactions.
Second, transfer of intangibles is often arranged as a corporate reorganization. Target intangibles are kept in the corporate shell, and the rules of corporate reorganization defer the recognition of gain or loss related to the intangibles transferred. This deferral might abusively magnify the effects of tax preferences provided to developments of intangibles. This study examined ground rules relating to corporate liquidation and acquisition, and showed that the policy concerning to the abusive use of reorganization should be based on the shareholder level, although its numerical analysis has yet to be concluded.
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