Transfer pricing – the principle of formulary apportionment and small and medium-sized enterprises (SMEs)
DOI:
https://doi.org/10.12775/SIT.2023.008Keywords
transfer pricing, arm’s length principle, SME, global tax orderAbstract
This article discusses the possibility of using the formula apportionment mechanism as a tool to replace the current international tax order based on the separate entity approach and the arm’s length principle, and in particular the importance of such changes for SMEs. The current system is far from perfect and owing to the ongoing changes in the ways of doing business and the technologies available, its weaknesses are deepening.
As a result of the existence of petrified and costly solutions, SME entities lose their competitiveness. It seems however possible to replace such solutions with formulary apportionment mechanisms, which would be simpler, cheaper, and fairer. The change might have a positive impact on the entire system and, in particular, on smaller taxpayers.
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