handbook-tb

Adolfo Martín Jimenézto deal with transfer pricing issues, suffice it to say that some examplesare mentioned in the United Nations Practical Manual on TransferPricing for Developing Countries (United Nations Transfer PricingManual). 128 For instance, fixed profit margins are used in Brazil fordistribution of products. 129 China adopts an approach aimed at correctingwhat is seen as overvaluation of purchases by local subsidiariesand undervaluation of functions — sales, marketing and distribution— and considering value location savings and other specific advantagesand, in general, the contribution of local subsidiaries to globalsupply chains. 130 A similar approach is adopted by India to correct theprofits of local subsidiaries by adequately valuing marketing intangiblesor the contribution of local subsidiaries to the group’s profits. 131In the case of both China and India, cost-plus is deemed not to give acorrect outcome in terms of valuation. Other examples are related tofixed margins for some sectors (for example, hotels and resorts). This isthe case in the Dominican Republic 132 where fixed margins are applicableuntil enough experience and information on the relevant sectorsis obtained. Other proposals from different perspectives to make more128United Nations, Department of Economic and Social Affairs, UnitedNations Practical Manual on Transfer Pricing for Developing Countries (NewYork: United Nations, 2013), available at http://www.un.org/esa/ffd/wp-content/uploads/2014/08/UN_Manual_TransferPricing.pdf.129Ibid., 358-374.130Ibid., 374-388. See also R. Ainsworth and A. Shact, “UN TransferPricing Guidelines: China’s Contribution to Chapter 10,” (2014) Vol. 74, No.12 Tax Notes International, 1147 ff. It seems that developed countries are alsousing similar approaches: see, for instance, P. Desai and S. Goradia, “CrossBorder Outsourcing: Issues, Strategies and Solutions,” supra note 19, whereit is reported that the Canadian authorities are also using an aggressiveapproach to define “location savings” and attribute higher margins to localsubsidiaries.131United Nations, Department of Economic and Social Affairs, UnitedNations Practical Manual on Transfer Pricing for Developing Countries, supranote 128, 388-409.132See F. Velayos and A. Barreix, “Towards a New Form of InternationalTaxation: the View from Latin America and the Caribbean,” (2013) Vol. 41,No. 3 Intertax, 128 ff.402