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Why is transfer pricing & double taxation a potential concern for CbC reporting?

Two expected results of the CbC reporting template are increased transfer pricing-related disputes with taxing authorities and the incidence of double taxation especially if the OECD's other transfer pricing BEPs action plan changes are adopted in final form. Many believe these changes will cause an erosion of the longstanding arm's-length transfer pricing principles by some of the more aggressive tax authorities. The focus of transfer pricing audits would therefore shift to an MNE providing information on its global value chain and its allocation of income, economic activity, and taxes paid among countries that may be unrelated to the specific transfer pricing arrangement. Ultimately, this could lead to more cross-border disputes and without adequate dispute resolution competent authority rules, increased double taxation could be a very costly result.

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Please remember that the Vertex blog provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in the Vertex blog are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.

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Bernadette Pinamont: Vice President of Tax Research at Vertex Inc. Vertex delivers the world’s most valued tax solutions for companies to connect, transact, and comply while growing their business.

Bernadette Pinamont

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Bernadette Pinamont is Vice President of Tax Research responsible for leading a global team of 85 tax professionals who contribute subject matter and technical expertise to build and maintain content for all products, powering millions of effective tax rate determinations for customers in over 19,000 global jurisdictions.

Prior to joining Vertex, Bernadette was Vice President of Tax for Endo Pharmaceuticals. Bernadette's 30 plus year tax career also includes the corporate tax departments of AstraZeneca, DuPont, Syngenta, Tyco Toys, and, initially, EY. When Bernadette joined Vertex in 2013, she was a thought leader in the Chief Tax Office and engaged both industry and clients on the trends, patterns, and emerging solutions to address the global challenges associated with regulatory compliance and tax technology.

Bernadette regularly speaks at local and industry events about tax and the importance of technology, including the annual International Tax Review’s (ITR) Women in Tax Forum. She leads the Philadelphia Women’s Tax Network and is a graduate of Seton Hall University, from which she earned both a B.S. in Accounting, Summa Cum Laude, and her Juris Doctor. Bernadette is also a licensed attorney and a CPA.

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