INTANGIBLES : OECD DISCUSSION DRAFT TP ASPECT (Case I)


As the following issue of PT ABC – XYZ case, it is said in the TP Documentation that the marketign functions is helb by XYZ as regional hub. It is XYZ who define the marketing strategies and brand management, PT ABC Indonesia only implement the strategies set by XYZ. By this reasons, taxpayer define that all marketing intangible is held by XYZ.

On Para. 89 it is said that the legal owner of an intangible is entitled to all returns attribuable to the intangible only if , in substance it:
  1. performs and control all of the important functions
  2. control other functions outsourced
  3. provides all necessary assets
  4. bears and controls all of the risks and costs.

On the OECD guidelines, the is a clear acknowledgement on development and enhancement of marketing intangibles. But does it imply and clarify also if there is distinction between the entity who develop marketing strategies and other entity who implement the strategy made. Does it emphasis more value of function in the first mentioned?

In para. 94 it is said that one important issue to attribute marketing intangible value is whether the marketer/distributor provides promotion and distribution services, or should also be compensated for enhancing the value of trademark by virtue of its functions performed, assets used, and risks assumed. There is no distinction if any between the marketing strategy developed and the other who implement. Whereas, we should confirm whether an entity have more functions on marketing then the other.

Para. 96 also states when the distributor actually bears the cost of its marketing activities and there is no arrangement for the legal owner of intangible to reimburse the expenditures, the analysis should focus on the extent to which the distributor is able to share in the potential benefits deriving from its FAR and cost incurred currently or in the future.

So, the main attention on marketing intangibles in this case is the “potential benefit” of activities done by the entities, not which entity made the marketing strategies, and which entity does implementation only.


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