TRANSFER PRICING: CHALLENGES AND SOLUTIONS WITHIN THE ASEAN REGIME

Abstract

Transfer pricing has recently gained a prominent highlight in ASEAN countries. Eventhough transfer pricing policy has already been enacted by most of each ASEAN member states, there still exists loopholes-especially involving the transactions of cross border transfer prices. This research paper will discuss and further scrutinize the legal issues constituted by these loopholes, which affect both PHPEHUUVWDWHVVDQGG0XOWLL1DWLRQDOO(QWHUSULVHVVV³01(V´´´´´SDUWLFXODUO\\WKRVHHDVVRFLDWHGGZLWKKGH¿FLWW tax revenue suffered by the member states, as a result of transfer pricing manipulations conducted by the MNEs. Transfer pricing concealed in the form of crossborder transactions; including but not limited to acquisitions, joint venture, and supply chains-impedes the movement of trade and capital, even catalyzes a tax distortion. Aside from ASEAN member states, MNEs are also being put at a disadvantage-to be subjected to a much greater burden on paying a higher cost of compliance, due to its responsibility to comply with more than one country's jurisdiction and to have them imposed towards a susceptible double taxation.The result of this study encourages and essentially demonstrates WKHHQHFHVVLW\\RII$6($11WRROHYHUDJHHDD¿UPPOHJDOOIUDPHZRUNNRQQWUDQVIHUUSULFLQJJWKDWWHPSKDVL]HVVRQQWKHH manifestation of 'arm's length principle' in all ASEAN countries' jurisdictions.