| Abstract [eng] |
This master 's thesis analyses the mechanism of transfer pricing between associated entities and focuses on the periodically updated recommendations on transfer pricing of international organisations such as the OECD and the EU, as they form the basis of national practices. The main objective of this work is to reveal the concept of the mechanism and to identify the main challenges that arise when ensuring the effective operation of the mechanism in the context of global business. The first part of this work analyses the concept of transfer pricing, its origins and historical development. Such the analysis allows to determine the causes of occurrence of this institute and what led to its establishment as an international consensus. The second part of the work is devoted to the regulations of transactions between associated entities. As the regulations of the transfer pricing mechanism derives directly from the standards formed by the OECD and the EU, both the legal acts and interpretations of transfer pricing rules of these organisations and national legislation transposing international standards by creating requirements for business entities operating here in Lithuania are examined. Also, this section analyses in detail the procedure for resolution of disputes between EU Member States over the avoidance of double taxation arising from the adjustment of the profits of one of the associated companies by one country under the „arm‘s length“ principle and the refusal of another to make the corresponding adjustment in another country. The third part delves into the essential elements of transfer pricing in detail, such as the analysis of the comparability of controlled and uncontrolled transactions, transfer pricing methods, which help to determine whether a transaction concluded by associated entities complies with the “arm's length” principle. The peculiarities of transfer pricing documentation and the criticism expressed to the „arm‘s length“ principle and the counter-arguments to these criticisms are also analysed in this section. |
