| Abstract [eng] |
Tax Base Erosion and Profit Shifting (OECD) Measures on Combating Abuse of Tax Treaties, Multilateral Convention, Its Implementation in Lithuania. Summary Tax Base Erosion and Profit Shifting (OECD) Measures on Combating Abuse of Tax Treaties, Multilateral Convention, Its Implementation in Lithuania Independent subjects are going to base their transactions on economic benefits they can receive from it, therefore in uncontrolled transactions there is no significant difference between the contribution subject made and profit he received. However, Multinational enterprise can use its control over other subjects and distort the ratio between subject’s contribution and profit by unevenly dividing profits. If we seek so ensure fair taxation of controlled transactions, we have to force arm’s length principle between controlled subjects. Correctly applied, this principle will ensure, that conditions of controlled transactions will match those that would be agreed by uncontrolled subjects and will allow to collect taxes that would otherwise be moved to another country. Another benefit of application of these rules is that it would protect tax payers from unjustified double taxation. Transfer pricing principle is based on appropriate comparison of circumstances in controlled and uncontrolled transaction. These circumstances do not have complete list, therefore, every detail in transaction can be compared. But it is crucial, that when choosing criteria for comparison, this process took into account OECD’s recommendations on comparable and in situation where it is hard to make accurate decision based on OECD’s recommendations, then evaluator has to make the most reasonable decision. As far as Lithuania is concerned, there is no significant problems in application or regulation of these rules and Lithuania is compliant with all requirements as transfer pricing has been covered by Lithuanian laws for relatively long time and rules there based on OECD’s recommendations. Because of that, ratification of BEPS action plan did not bring any significant changes on transfer pricing. |
