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Cost or Value?

Last week the famous (infamous?) BEPS project released a discussion draft on the topic of how activities that create intangibles should be remunerated. According to existing guidelines and practice, when multiple entities work together to create an intangible, each entity is rewarded according to its share of the costs incurred during that process. However, the BEPS group working on this issue is now suggesting that each entity should instead be rewarded based on the “value” it has contributed rather than its share of costs. This suggestion has some problems…

The full post, Value Creation and the Lightbulb, can be found at the WTP Advisors transfer pricing blog, where I will be posting regularly.