Glen Rectenwald (J.D. 2012, Duke), Note, A Proposed Framework for Resolving the Transfer Pricing Problem: Allocating the Tax Base of Multi-National Entities Based on Real Economic Indicators of Benefit and Burden, 22 Duke J. Comp. & Int'l L. 425 (2012)

Part I of this paper details the transfer pricing problem in the context of taxing multinational entities and the prevailing legal mechanism for setting transfer prices, the arms-length standard. Part II details the deficiency of [the arm's length standard ("ALS")] as a legal standard that misrepresents the economics of intra-firm transfers and accordingly fails as a mechanism for allocating the global corporate tax base. Part III considers alternatives and reforms to ALS, evaluating existing unilateral and multilateral reform proposals in terms of their ability to index proportional taxability of MNE income to burdens and benefits in particular jurisdictions using real, readily ascertainable economic factors.