Global trading and transfer pricing: application of the transfer pricing methods and OECD BEPS Action Plan 9 to global trading of financial instruments by MNE groups in the financial services sector
This dissertation focuses on the Organisation for Economic Co-operation and Development ('OECD') transfer pricing methods and its application to Multinational Enterprise ('MNE') groups in the financial sector. This study examines whether the OECD's Base Erosion and Profit Shifting ('BEPS') Action Plan 9 is an appropriate framework for MNE groups in the banking sector or whether it creates further challenges. Additionally, the dissertation scrutinises MNE groups in the financial sector that are involved in the business of global trading of financial instruments. It further explores the functions of a global trading entity, the arm's length principle and the OECD BEPS Action Plan 9. This dissertation concludes that the global trading of financial instruments using the integrated trading model is challenged when the OECD traditional transfer pricing methods are applied. Multinational financial institution groups in the banking sector that are involved in the business of global trading of financial instruments are subject to rigid regulations. Furthermore, the report concludes that these rigid regulations mitigate some of the complications that arise when applying the OECD BEPS Action Plan 9. Taxing authorities need to focus greater attention on the global trading of financial instruments by multinational financial institutions groups. As South Africa's financial institutions expand across borders, the concerns over transfer pricing and BEPS are likely to intensify. It is therefore imperative that the South African revenue authorities prioritise the recruitment of skilled personnel in order to address the complexities posed by the global trading of financial instruments by multinational financial institution groups.
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