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Taxation of Multinational Enterprises

  • Teacher(s):   V.Chand  
  • Course given in: English
  • ECTS Credits: 3 credits
  • Schedule: Autumn Semester 2019-2020, 2.0h. course (weekly average)
  •  sessions
  • site web du cours course website
  • Related programmes:
    Master of Science (MSc) in Accounting, Control and Finance

    Master of Law (MLaw) in Law and Economics

 

Objectives

The course discusses the various profit allocation approaches that States can choose from a tax policy perspective to tax a Multinational Group that operates with separate entities or permanent establishments throughout the globe. The course is divided into three parts.

The first part of the course starts by providing an overview of the various structures through which a Multinational Enterprise (MNE) organises itself (horizontal vs. vertical structures). Thereafter, the various approaches that could be deployed to tax such MNEs, in particular, the arm's length approach will be discussed.

The second part of the course, which is core of the course, provides a holistic overview of the arm's length principle i.e. Transfer Pricing Rules, especially, the operation of such rules in the Post BEPS world. Specifically, the discussion will focus on accurately delineating the transaction (in particular, the role of a value chain, value shop and value network analysis) and applying the transfer pricing methods to the controlled transaction. Moreover, the application of the arm's length principle to selected intra group transactions will be discussed in a detailed manner. Furthermore, this part will also discuss tax planning using the arm's length principle. The latter part will also contain presentations that will be made by in house tax experts (from leading multinationals such as Procter and Gamble as well as Richemont) on international tax planning structures adopted by them in their respective industries.

Finally, the third part of the course will discuss the future of the arm's length principle from a policy perspective, especially, in light of digitalization of the economy. Should the arm's length principle be abandoned in favour of multi factor formulary apportionment or a residual profit allocation system or a destination based cash flow tax system? This part of the course will be structured in a debate format.

The course follows a case study approach and will discuss several transfer pricing issues and policy solutions with practical illustrations. Specifically, the structures adopted by players in the digital space (such as Amazon, Google, Air BnB, Uber, Apple and Microsoft) and non-digital space (such as Starbucks, Mc Donalds, Fiat and Ikea) will be discussed.

The course has empowered the former participants to work effectively in the international tax consulting environment, especially, the International Corporate Tax and Transfer Pricing departments of the Big 4 firms.

Contents

Participants following the course will learn the following topics relevant to taxation of MNEs from an international and comparative tax policy perspective: types of formulary apportionment (multi factor or single factor), application of the arm's length principle, functional and value chain, value network & value shop analysis, transfer pricing methods and comparability analysis, special consideration for intangibles, services & financing (through loans, guarantees, cash pooling and captive insurance), the use of cost contribution arrangements, business restructurings, taxation of business activities (permanent establishments and related attribution requirements), state aid & transfer pricing rules, dispute prevention and resolution avenues, supply chain management (principal structures), reduction of effective corporate tax rates and the future of the arm's length principle in the post BEPS and Digitalized world.

References

Detailed course content with the suggested reading materials will be circulated to all participants who have registered for this course. The course material will also be uploaded on Moodle.

Pre-requisites

Although this is not mandatory, participants should be familiar with the basic rules of a domestic tax system, in particular direct taxation of domestic companies, and the fundamentals of international tax rules. For instance, the participant could have followed the courses taught by Prof Danon.

Moreover, the course follows a practise based approach and is highly interactive. Participants wishing to register for this course should send in a motivation email (ten lines maximum) to vikram.chand@unil.ch with a cc to natacha.fauconnier@unil.ch

Evaluation

First attempt

Exam:
Oral 0h20 minutes
Documentation:
Allowed
Calculator:
Allowed
Evaluation:

Participants will be required to do an oral exam. The exam will consist of a short case study that the participant will have to analyze and present. One session of the course will be dedicated towards answering all queries associated with the exam.

Retake

Exam:
Oral 0h20 minutes
Documentation:
Allowed
Calculator:
Allowed
Evaluation:

Participants will be required to do an oral exam. The exam will consist of a short case study that the participant will have to analyze and present. One session of the course will be dedicated towards answering all queries associated with the exam.



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