공식분배법(Formulary Apportionment)에 따른 이전가격 과세방식에 대한 소고

There have been ample controversies over the effectiveness of arm’s length principle (‘ALP’) as the global standard for transfer pricing taxation not only because the ALP already lost its role as reasonable and consistent taxation norm as it turned out to be just a lucrative vehicle for tax authorities as well as multinational enterprises (‘MNEs’), but also because it gives the MNEs an incentive to artificially shift its taxable income to low tax nations at the expense of the tax revenue of high tax nations such as the U.S.A. As an alternative of the ALP, the critics propose that the ALP be replaced with the formulary apportionment (‘FA’) in the transfer pricing taxation regime. FA refers to a transfer pricing taxation method using mathematical formula based on real economic ‘factors,’ e.g. payroll, property or sales, to divide worldwide income of a ‘unitary business’ among members of MNEs and the nations in which they operate, whereas the ALP, which is also known as ‘separate accounting,’ is based on the general principle that members of MNEs should treat transactions with their affiliated firms as if they were undertaken with separate, independent entities. FA has three key economic components: apportionable income(tax base), the composition of the formula and the definition of the factors, and the scope of the unitary business. FA has its origin in the state level income taxation in the U.S.A., and the European Commission is now working on switching to FA regime for the business activities in EU territory in place of the ALP. Although FA has a few advantages in that from the theoretical perspective it reflects accurately the economic reality of international business activities by MNEs, and also might do away with the tax incentive for shifting income among countries, it is anticipated that it would be very difficult to reach agreements on each component of FA at the global level largely due to the conflict of interests among countries. In addition, many scholars opine that FA will pave the way for wider tax evasion loopholes and thus increase the social cost in both terms of tax compliance and tax administration. Despite the controversies over the FA, it is anticipated that the proposal for the global FA in place of the ALP will draw more and more attention at the level of within USA/EU or wider international organization like OECD. Under such circumstances, I suggest that we do far more empirical research to evaluate how the adoption of the FA would affect the Korean economy, along with paying more attention to the global trend over the controversies, in order to secure the proper level of tax revenue as well as the competitiveness of the Korean economy.