國際移轉價格의 課稅當局간 二重課稅에 관한 實證硏究

Abstract

With the rapid globalization and the proliferation of multinational enterprises(MNE), the number of international transactions between related parties(between a parent company and its affiliates or between affiliates of the same MNE) has been increasing dramatically. When goods, intangibles and services are transferred across borders within one MNE, transfer pricing becomes an important issue. Accordingly, transfer pricing has engaged the attention of MNE as well as tax and Customs authorities over recent years. Transfer pricing is the term used to describe how MNE set prices for their intragroup transactions, for example the transfer of goods, services and assets between related companies situated in different jurisdictions. By taking advantage of differences in taxation rates (for example, Customs and corporate income tax), MNE in practice might distribute their taxation liability to reduce their overall tax burden. The long-term effect of this practice could be that it might effectively reduce the tax and customs revenue collected at a national level in some countries. In other words, the MNE will benefit by the transfer price by minimising or maximasing the price of the imported goods in order to take advantage of the most favourable tax or duty rate. From the basis of the Agreement on Implementation of Article Ⅶ of the General Agreement on Tariffs and Trade 1994(WTO Valuation Agreement) and the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations(OECD Guidelines), this can be seen as an over or undervaluation methodology. Customs authorities want to set the arm's length price as high as possible to get higher dutiable value for customs purpose, while the tax authorities prefers lower arm's length price to get higher value for corporate income tax purpose by cutting costs. Both of the two tax authorities impose taxes on transactions between related parties, but there is a tendency to impose taxes in different directions. It is apparent that when dealing with transfer pricing from the perspective of the importer's direct and indirect tax obligations, that the two types pull in opposite directions, that is, the customs duty obligation at the front end of the bus and the corporation tax obligation at the back end of the bus. Under this circumstance, the importer/taxpayer could be squeezed, namely double taxation between corporate tax and Customs, in the middle, if neither Customs nor tax authorities seek the solution for this double taxation. Therefore, this study suggests the solutions for double taxation between corporate tax and Customs in terms of adjustment(for example, making an appropriate adjustment so as to relieve the double taxation) and convergence(for example, bridging the gap between customs valuation and transfer pricing methods) aspects. The following issues are related to the adjustment aspect : Firstly, both tax and Customs authorities should avoid the double taxation by means of corresponding adjustment. This corresponding adjustment is one that the already paid customs duty or corporate tax be refunded based on the adjusted value, in case dutiable value of the imported goods is decided though the Korea Customs Service(KCS)'s post-audit or the adjustment of the Korea National Tax Service(NTS). Secondly, both of the two authorities should make every effort to relieve the double taxation by means of mutual agreement procedure between KCS and NTS. Both Customs and tax authorities shall endeavor, if the objection appears to it th be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with both of the two tax authorities, with a view to the avoidance of taxation which is not in accordance with the WTO Valuation Agreement and the OECD Guidelines. It could be expected that the mutual agreement will be relieved the double taxation between corporate income tax and Customs. Thirdly, the Advance Customs Valuation Arrangement(ACVA) can resolve the double taxation caused to tax payers when dutiable value of the goods imported between related parties is decided through the post audit. The ACVA is an arrangement that determines the customs value of imported goods traded between related parties, that is, a foreign parent company and its domestic subsidiary, in advance, at the request of a tax payer, through the mutual agreement with the tax payer and Customs authorities, and give it exemption or waive of the post audit during the specified period. The KCS's ACVA should be accepted the arm's length price approved by the Advance Pricing Arrangement(APA). Fourthly, the APA can relieve a double taxation caused to tax payers when the arm's length price of the goods imported between related parties is decided through the tax audits. The APA is an arrangement that determinies, in advance of controlled transactions, an appropriate set of criteria (e.g. method, comparables and appropriate adjustments thereto, critical assumptions as to future events) for the determination of the transfer pricing for those transactions over a fixed period of time. The APA is formally initiated by a taxpayer and requires negotiations between the taxpayer and the tax authorities. The NTS's APA should be accepted the arm's length price approved by the ACVA. Lastly, a common APA approved by both tax authorities and Customs will reduce incoherent decisions with the double taxation. In case the Customs authorities participates in the APA at the request of the company and the tax authorities participates in the ACVA at the request of the tax payer, namely joint APA, both of the two authorities can mutually accept the result of the counterpart authorities's APA or ACVA. The following issues are related to the convergence aspect : Firstly, it may be necessary to compare the definition of "related parties" with the definition of "associated enterprises". The use of the term "associated enterprises" in the OECD Guidelines would be equivalent to that of the term "related parties" in the WTO Valuation Agreement. But the scope of "associated enterprises" in the OECD Guidelines and under the Adjustment of International Taxes Act(AITA) wouldn't be equivalent to that of "related parties" in the WTO Valuation Agreement and under the Customs Act. There is a distinct difference between the two. It is necessary to solve the inconsistent results. Secondly, It is under WTO Valuation Agreement Article 1.2⒜, where the OECD Guidelines may be primarily and broadly applied. As we will see, they can provide rules and principles for determining whether the transaction value has been influenced by the relationship and guide the examination of the circumstances surrounding the sale. Thirdly, since Customs valuation on the transaction between unrelated parties cannot be science, it is unreasonable to appraise the imported goods by the pin point Customs valuation, which is aimed at deriving on accurate Customs valuation. It is necessary to consider having flexibility by adopting the concept of the arm's length range in the Customs valuation. Fourthly, In order to obtain a complete understanding of the facts and circumstances surrounding the controlled transaction, it generally might be useful to examine data from both the year under examination and prior years. Multiple year data will also be useful in providing information about the relevant business and product life cycles of the comparables. It is necessary to accept the concept of the use of multiple year data under the OECD Guidelines in Customs valuation. Fifthly, there are similarities in the Comparable Uncontrolled Price method(CUP method) used by corporate income tax to determine transfer prices and transaction value of identical or similar goods method(the 2nd/3rd method) used by Customs authorities to determine the value for duty. The starting points are more alike in this situation, that is, looking at the comparable price versus the transaction value of identical or similar goods. As well, the adjustments being made to the transaction value of the identical or similar goods are more alike to the adjustments that tend to be made to the comparable price. Therefore, it is necessary to recognize the necessity of the integration of the both CUP method and the 2nd/3rd method. Sixthly, it may be necessary to compare the deductive value method(the 4th method) with the Resale Price method(RP method). There are several similarities between these methods. The first is that the starting point for each calculation is the resale price to an unrelated party. As well, an amount meant to cover profit and operating cost is deducted from the resale price. Therefore, we should recognize the fact that the RP method can do harmonize with the 4th method. Seventhly, there are similarities in the Cost Plus method(CP method) used by NTS to determine transfer prices and the computed value method(the 5th method) used by KCS to determine the value for duty. First, the starting point for both calculations is the cost of production. As well, an amount for profit is added to that cost of production. Therefore, it is necessary to recognize the necessity of the integration of the both CP method and the 5th method. Eighthly, it is under WTO Valuation Agreement Article 1.2⒜ and its Note, where the Transaction Net Margin method(TNM method) in the OECD Guidelines may be primarily and broadly applied. The TNM method examines the net profit margin relative to appropriate base (e.g. costs, sales, assets) that a taxpayer realizes from a controlled transaction. It may be necessary to compare "representative of the firm's overall profit" under WTO Valuation Agreement Article 1.2⒜ and its Note with "net margin" under the TNM method. The TNM method appears to be consistent with the second example provided by the Note to WTO Valuation Agreement Article 1.2. Ninthly, the Berry Ratio is the ratio of a company's gross profits to operating expenses. This ratio is used as a kind of net margin under the TNM method. Therefore, the Berry Ratio appears to be consitent with the second example provided by the Note to WTO Valuation Agreement Article 1.2. Tenthly, it may be necessary to compare "the fall-back method"(the 6th method) with "other methods deemed rational in view of the substance and practice of trades"(Unspecified method). If the customs value of the imported goods cannot be determined under the 1st through 5th, the customs value shall be determined using reasonable means consistent with the principles and general provisions of WTO Valuation Agreement. Namely, this method is the 6th method. On the other hand, In cases where the method of computing arm's length price is applied in accordance with the OECD Guidelines, the Unspecified method shall be applied only when the methods under the CUP method, RP method, CP method, Profit Split method and TNM method are not applicable. There are several similarities between the 6th method and Unspecified method. Although each method has different rules on reasonable means, all two methods require that two tax authorities must use the 6th method and Unspecified method as a counsel of despair, for example. Both of the two methods should mutually accept the result of the result of the counterpart method. Eleventhly, transfer pricing agreements should be accepted by the customs authorities as a kind of price review clauses. What must be remembered by Customs administrations is that when dealing with transfer priced importations, ultimately there is likely to be a global adjustment made to that price by the parent company. This may occur quarterly, bi-annually or annually. The adjustments may result in an increase or decrease in the price originally declared to Customs depending on the global position of the importing company in the worldwide trade of that MNE. So, in effect, Customs administrations should have a procedure in place to deal with such post importation adjustments. Twelfthly, two tax authorities should introduce Section 1059A of the Internal Revenue Code of the United States in Korea. Section 1059A prevents the use of higher values for tax than for customs declaration purposes. This could be viewed as an effort to harmonize corporate income tax and customs transfer pricing regimes. Thirteenthly, tax and Customs administrations need to audit together MNE's transfer pricing. The party (NTS or KCS) should notify immediately the other of the request of the joint income tax and customs audits. Transfer pricing audits by NTS can arguably result in double taxation with respect to customs duty. Transfer pricing audits by KCS can arguably result in double taxation with respect to corporate income tax, too. Therefore, two tax authorities need to work together. Fourteenthly, it is necessary to consider greater cooperation in the area of exchange of information between KCS and NTS. The KCS signed a Memorandum of Understanding with the NTS in January 2009 for mutual cooperation and consultation. Accordingly, two tax agencies need to arrange the time and subjects of post audit on transactions between related parties and settle conflicts on tax issues. Lastly, two tax authorities need to make an active response to the discussion between the WCO and the OECD on the integration of customs valuation and transfer price adjustment methods. Customs and tax administrations through the WCO and the OECD should create an appropriate joint forum for dialogue, study and possible liaison, with invitations being extended to the WTO, business and academics. Taken together, tax authorities use the arm's length principle under the OECD Guidelines and the Customs addresses transfer pricing through the provision of related party transactions under the WTO Valuation Agreement. Different rules of both agencies and absence of coordinated efforts could also to double taxation, which might create barriers to trade and investment against the objectives of international organizations and national governments concerned. The Customs community has recognized that transfer pricing is an increasingly important issue in the field of customs valuation. Even though there are some key differences between the two systems, there are also some similarities between customs valuation and transfer pricing methodologies. Consequently, these similarities would lead to the discussion on exploring the possible adjustment or convergence between the customs valuation and transfer pricing in order to prevent double taxation.