1 CARLETON UNIVERSITY Department of Economics ECON 3880 ...

CARLETON UNIVERSITY Department of Economics ECON 3880 B Special Studies in Economics: Transfer Pricing

Instructor: Ron Simkover

2011 Fall

E-mail: [email protected] Lectures and Discussions: Tuesdays, 14:35–17:25, in Southam Hall, Room 502, starting Sep.13 Office: A-821 Loeb

Office hours: Tuesdays, 12:45–13:45

Telephone: 613-520-2600 x 3745 Prerequisite: As stated in the Undergraduate Calendar, the prerequisite for this course is ECON 1000 or FYSM 1003. Students who believe they have taken a similar background course or courses from another university must provide appropriate documentation to the Department of Economics Undergraduate Advisor, Amanda Wright. Objectives: The aim of this course is to make students knowledgeable of the economics of transfer pricing, which will give them the opportunity to get outstanding jobs with Canada Revenue Agency, consulting firms, and multinational firms where one deals with transfer pricing, which is the biggest issue in international taxation all over the world. Required Text: OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2009 edition), which can be found in the Carleton University Bookstore. Evaluation: There will be a mid-term examination (35%) and a final examination (65%). Bonus marks will be awarded on the basis of consistent oral participation during lectures. Students will be expected to come to each lecture. In some, but not all lectures, students will be expected to have read certain material and/or prepared certain items to be discussed in that class. The mid-term examination will be ninety-five minutes in duration and will likely take place on October 18. Students who can document a compelling reason for missing this exam will be excused and their grade will then be based on the final examination only. The three-hour final examination will take place during the December examination period at a time and place set by the University. It will cover all the material discussed throughout the term. Failure to write the mid-term examination (without a documented compelling reason) will result in a grade of FND (“Failure with No Deferred final examination allowed”). Failure to write the final examination when the student has achieved satisfactory performance during the term 1  

will result in a grade of ABS (“ABSent from a required final examination”). See Academic Regulation 2.3 for the official meanings of these grades, and note that it stipulates that no course grades are final until approved by the Faculty Dean. Application to write a deferred final examination must be made at the Registrar’s Office. Course Outline: The first class will be spent introducing the students and the instructor to one another. The instructor will provide background about his career, particularly about his work in transfer pricing, where he was the first Canadian Economist in this field, as well as the great jobs that are available in this field. He will explain the meaning of transfer pricing and then give some background on the various topics to be covered in the course. He will also explain the usual way that lectures and discussions will take place in each class, types of workshops, as well as suggestions about the order of the topics. In addition, he will discuss how transfer pricing material can be found by students. In the final (twelfth) week, the instructor will review the material covered throughout the course and will be ready to answer questions that students have prior to the final exam. There might also be an additional transfer pricing topic. Here are various topics that we will endeavour to cover in weeks 2 through 11: •

History of multinationals and significance of transfer pricing

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Tax rules of transfer pricing in Canada, the U.S., and the world in general according to the OECD guidelines

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The impact of being a multinational that is not covered by the OECD approach

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Accounting versus economic costs and profits

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Fact-finding (functional analysis)

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Methodologies used to solve transfer pricing problems

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How to find comparable unrelated companies using screens and adjustments

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Dealing with the U.S.

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Preventing double taxation

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Advance Pricing Arrangements (APAs)

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Range of acceptable transfer pricing results and further suggestions

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Restructuring including consignment

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Location savings

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Guarantees

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Cost contribution arrangements

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Management services

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Specific industries including the most difficult to handle; namely, pharmaceuticals

For further details, see http://www.carleton.ca/economics/ccms/wp-content/ccms-files/electivecourse-offering-2011-fall.pdf and/or WebCT. 2