Abstract

This thesis analyzes the evolution of the arm's length standard (ALS) as the key element of the transfer pricing control system in the US. This thesis also addresses some issues on creation of transfer pricing legislation in the Russian Federation and focuses on three sets of problems. First, it provides the general outline of the legislative history of the ALS as well as the history of the ALS' application in the US, including an overview of landmark cases, which revealed some conceptual problems with respect to the ALS. Secondly, the thesis addresses core problems associated with the ALS, such as disability of the ALS to cope with the taxation of income in the absence of comparable transactions, difficulties of the application of the ALS with respect to e-commerce issues and problems of tax base allocation in cases involving multiple tax jurisdictions. The analysis of the place of the ALS in the modem tax legislation is also made from the angle of what alternative approaches can be plausibly applied instead of the ALS. Finally, the thesis explores the set of problems with regard to the development of the ALS in the emerging transfer pricing legislation of Russia, where the potential impact of the US transfer pricing rules and international trends should not be overlooked. This part of the thesis is not a comparative analysis, but rather an attempt to find out which parallels may be drawn and which lessons may be learned from the evolution of the ALS in the US in order to determine how the Russian legislature may finally address the ALS in Russia and to what extent it shall be developed.

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