Sharing income or Profit split: A sovereign method in Transfer pricing?

Résumé

Transfer Pricing represents the non-operational challenge having the strongest impact on a Group's results. The question which is frequently asked is how to define the most effective strategy in terms of method selection, documentation and defense in case of a tax inspection. Indeed, the theory has examined in-depth the issue of Transfer Pricing before its regulation by the OECD, which presents numerous methods for determining Transfer Pricing. These are: Comparable Uncontrolled Price method (CUP), Resale Price method (RP), Cost Plus method (CP), Transactional Net Margin method (TNM) and Profit Split method. In view of this varied landscape of methods for determining Transfer Pricing, we focused in this article to shed light on the Profit Split method through shedding light on its strengths and weaknesses with regard to the OECD and BEPS, the difficulties hindering its practical implementation as well as the extent of its implementation in the Moroccan context.