APAs are useful weapon against periodic adjustments
March 12, 2009
Under long-anticipated regulations published by the US Internal Revenue Service (IRS), cost sharing arrangements (CSAs) remain an effective tool that multinational taxpayers can use to efficiently develop and manage ownership of valuable intangible property among subsidiaries. But valuations of pre-existing, platform intangibles contributed to CSAs will be scrutinised by the IRS going forward
The new regulations expand upon principles and methods found in the IRS’s cost sharing guidance promulgated over the last three years, creating a complex set of rules for determining whether the compensation received by the licensor (often a US parent) in these platform contribution transactions (PCTs) is arm’s length.
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