Archives: Glossary Terms

Corporate Tax refers to the tax imposed by governments on the income or capital of corporations. Corporations, considered separate legal entities, are taxed on their

A Corporate Tax FrameworkA Corporate Tax FrameworkA Corporate Tax Framework is the structure through which governments impose taxes on business income. This framework includes laws, regulations, and guidelines that outline tax liabilities, eligible deductions, credits, exemptions, and compliance requirements for corporate entities. These frameworks are essential in guiding multinational enterprises (MNEs) on how to align their tax practices with national and international standards while adhering to... is the structure through which governments impose taxes on business income. This framework includes laws, regulations, and guidelines

Cost AllocationCost Allocation involves assigning common or indirect costs—such as administrative expenses, research and development (R&D) costs, or IT infrastructure fees—to the business units that

The Cost AllocationCost Allocation involves assigning common or indirect costs—such as administrative expenses, research and development (R&D) costs, or IT infrastructure fees—to the business units that benefit from them. This allocation is based on a pre-determined formula or allocation key that reflects the proportionate use or benefit derived by each unit. Methods for cost allocation can vary, but common allocation keys include... ModelThe Cost Allocation ModelThe Cost Allocation Model is a systematic method used to distribute indirect costs across various business units, projects, or services. The purpose is to accurately reflect each segment's share of common expenses, ensuring fair and transparent financial reporting. Commonly employed in transfer pricing, management accounting, and budgeting, the Cost Allocation Model is vital for understanding how shared resources contribute to... is a systematic method used to distribute indirect costs across various business units, projects, or services. The purpose

Cost-Plus MarginCost-Plus Margin is a pricing method used to determine the arm’s length price for intercompany transactionsIntra-Group Transactions are interactions between entities within the same multinational enterprise (MNE). Such transactions form the backbone of related-party dealings and are essential in managing global operations and aligning business objectives across jurisdictions. Understanding intra-group transactions is critical in international tax and transfer pricing, as they directly impact a company's tax obligations, profitability, and compliance standing. Tax professionals, accountants, lawyers,..., particularly in transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of.... Under this method, the

The Cost-Plus MethodThe Cost-Plus MethodThe Cost-Plus Method is one of the five primary transfer pricing methods outlined by the OECD Transfer Pricing Guidelines. It is used to determine the arm's length price of intercompany transactions, particularly for services or products provided between associated enterprises. The method applies a standard markup to the costs incurred by the supplier, ensuring that the resulting profit margin reflects... is one of the five primary transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... methods outlined by the OECD Transfer Pricing GuidelinesThe OECD Transfer Pricing Guidelines serve as a critical framework for multinational enterprises (MNEs) and tax administrations worldwide. They provide detailed principles for the pricing of intra-group transactions to ensure that profits are allocated fairly across jurisdictions, based on the arm’s length principle. In essence, these Guidelines are instrumental in preventing tax base erosion and profit shifting by MNEs. The.... It is used to

Cost-Sharing ArrangementsCost-Sharing Arrangements (CSAs) are agreements between related entities within a multinational enterprise (MNEWhat are Multinational Enterprises (MNEs)? Multinational Enterprises, commonly referred to as MNEs, are corporations that operate in multiple countries through various subsidiaries, branches, or affiliates. These entities maintain a central management structure while leveraging diverse resources, labour markets, and customer bases across borders. The fundamental aspect that distinguishes MNEs from other corporate forms is their cross-border activity, which can include...) to share the costs and risks of developing, producing, or acquiring

Council Directive 2011/16/EUCouncil Directive 2011/16/EUCouncil Directive 2011/16/EU, often referred to as the "Directive on Administrative Cooperation" (DAC), establishes a comprehensive framework for the exchange of tax information among EU Member States. Its primary objective is to promote transparency and combat tax evasion, ensuring all EU countries have access to information on taxpayers' cross-border income, assets, and activities. This directive mandates administrative cooperation among national..., often referred to as the “Directive on Administrative Cooperation” (DAC), establishes a comprehensive framework for the exchange of tax information

Directive 2018/822Directive 2018/822, also known as DAC6Directive 2018/822, also known as DAC6, is an amendment to the European Union's Directive on Administrative Cooperation in the field of taxation (DAC). Effective from June 25, 2018, DAC6 mandates the reporting of certain cross-border tax arrangements to ensure transparency, combat aggressive tax planning, and prevent tax avoidance. This directive focuses on specific arrangements that may present potential tax risks,..., is an amendment to the European Union’s Directive on Administrative Cooperation in the field of taxation (DAC). Effective

Cross-border tax arrangementsCross-border tax arrangements refer to any financial, operational, or structural plans designed by entities with activities or investments across multiple countries. These arrangements