RELATED PARTY TRANSACTIONS - OVERVIEW

The purpose of the present investigation is to provide a short overview of themain implications arising from carrying related parties transactions: accounting reporting(related party disclosures - IAS 24), auditing (audit procedures for related partytransactions), taxation (issues regarding the transfer prices used for intra-grouptransactions). Although this research does not identify a problem with the scope to solve ithowever the utility might be observed by its contribution to the future developments, byproviding premises for forthcoming studies in the ‘related party transactions‘ field.Related party transactions, related party disclosures, transfer pricing

Investigation about the Complex of Related Party Transactions

The present investigation is aiming to provide a general overview of academic literature on related party transactions topic. The study is based on the positive perspective and on fundamental (descriptive – conceptual) research type. The main investigation techniques used were: the literature review, the documents analysis, the comparative analysis, the non-participative observation. The principal result is that the literature generally provides two opposite theories based on which the related party transactions could be explained, namely:  the efficiency theory and the conflict of interest theory. However, a recent investigation proposed the related party transactions to be explained under a contingency perspective, which implies the overlap of these two theories mentioned above

BUSINESS MODELS FOR TAX AND TRANSFER PRICING PURPOSES

In order to remain competitive, the multinational enterprises (MNEs) are forced by the globalization phenomenon (which manifestation has became more and more stringent) to analyze continuously its effectiveness. In this respect, the structure of the business represents an element which might have an important impact for the enterprise’s overall results. This is why, in the last decades, the MNEs granted special attention to business structures and put significant efforts in business restructurings, where the case, with the scope to keep the efficiency and to remain on the market. Generally, the operational business restructuring process follows one of the business model globally developed, namely manufacturer or sales business models. Thus, according to the functions performed, assets used and risks assumed, the entities within the group are labeled into limited risk units (such as toll manufacturer or commission agent), medium risk (contract manufacturer, commissionaire, stripped distributor) or high risk units (fully fledged manufacturer, fully fledged distributor). Notwithstanding the above, there should be emphasized that the operational business restructuring has to be undertaken with maximal care, as it might have important fiscal impact. Having this regard, the purpose of the present investigation is to provide, from a tax and transfer pricing point of view, a systematic and structured analysis of the generally characteristics of business models (manufacturer and sales business models) used by multinational enterprises in the process of business reorganization, with the scope to increase their performance and the sustainable competitive advantages. Thus, by using the fundamental (theoretical) and qualitative research type, this paper is aiming to present the most important characteristics of each business model (general overview of each model, the principal risk assumed, the usual transfer pricing method used for the remuneration of intra-group transactions). The principal investigation techniques (research methods) used were the literature review and the analysis of international regulation in the taxation field. The present paper follows the positive research perspective