| Abstract [eng] |
The rapid pace of globalization and the growth of transactions between associated persons are increasing the redistribution of tax revenue between countries, i.e., tax revenue is shifted from countries with higher tax rates to the budgets of countries with lower tax rates. In many cases, multinational companies, in order to maximize their net profits, pursue this latter objective by using transfer pricing as a manipulative tool to reduce their tax base. This is a great concern to national legislators and tax administrations, as transfer pricing abuses distort fair competition and result in losses to the national budget. This problem is not only being raised at national level but also at international. This master’s thesis analyses the regulation of transfer pricing between related (associated) persons in Lithuania through the prism of the OECD Recommendations and the arm's length principle and outlines the imperfections of this regulation. The content of the master thesis consists of 3 main parts. The first part examines what transfer pricing is in general, presents possible concepts and chooses those that are relevant in the context of this thesis. This part of the thesis also elaborates on the differences between related and associated parties and defines to whom exactly transfer pricing rules apply. The second part of the paper analyses the arm's length principle, its application and the most common problems encountered in its application. This principle is particularly important as it is the international standard on which the OECD Recommendations and the Lithuanian transfer pricing rules are based. The third part of the paper turns to the impact of the OECD Recommendations on the Lithuanian model of legal regulation and, once the legal significance of the Recommendations is understood, moves on to an examination of the national transfer pricing rules and its individual features. This research paper does not analyze specific transfer pricing provisions. The master’s thesis concludes with a brief summary of the author's conclusions and possible suggestions for regulatory improvement. |
