Proceedings of the 6th International Accounting Conference (IAC 2017)

Analysis on the Tax Court Decision on the Deductibility and Arm’s Length Price of Royalty Payment (Case Study of PT A and PT B)

Authors
Nurfasti Dwi Nugraheni, Christine Tjen
Corresponding Author
Nurfasti Dwi Nugraheni
Available Online August 2017.
DOI
https://doi.org/10.2991/iac-17.2018.41How to use a DOI?
Keywords
Transfer Pricing; Intangible Asset; Tax Court Decision; Royalty; Arm‘s Length Principle
Abstract

This study aims to understand the underlying considerations of the tax court decisions on PT A and PT B related to identifying the existence and validity of royalty payments for technology (know-how) and trademarks, to assess the conformity of those decisions to the arm’s length principle in the Organization for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines, and to determine whether the distribution company could treat royalty payments for technology (know-how) and trademarks as deductible expenses. This research used a qualitative approach with a descriptive research type. The results of this study concluded that the differences in the tax court’s decision on PT A and PT B, related to royalty payments for technology (know-how) and trademarks is due to (1) the results of identifying the existence and validity of royalty payments through examining legal agreements, (2) proof of the substance and economic benefits of utilizing intangible property, and (3) proof that there is no double taxation imposed on the payment of compensation for utilizing intangible property. The implementation procedures for the arm's length principle were also made in accordance with the OECD Transfer Pricing Guidelines in order to resolve transfer-pricing disputes.

Copyright
© 2018, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the 6th International Accounting Conference (IAC 2017)
Series
Advances in Economics, Business and Management Research
Publication Date
August 2017
ISBN
978-94-6252-519-1
ISSN
2352-5428
DOI
https://doi.org/10.2991/iac-17.2018.41How to use a DOI?
Copyright
© 2018, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Nurfasti Dwi Nugraheni
AU  - Christine Tjen
PY  - 2017/08
DA  - 2017/08
TI  - Analysis on the Tax Court Decision on the Deductibility and Arm’s Length Price of Royalty Payment (Case Study of PT A and PT B)
BT  - Proceedings of the 6th International Accounting Conference (IAC 2017)
PB  - Atlantis Press
SP  - 231
EP  - 236
SN  - 2352-5428
UR  - https://doi.org/10.2991/iac-17.2018.41
DO  - https://doi.org/10.2991/iac-17.2018.41
ID  - Nugraheni2017/08
ER  -