In its opinion, it states that only consultation solution 43/2015 should apply in the event that, since it is intended to be paid under cost-sharing agreements, it should apply only to solution 43/2015; It represents the decision to pay the CIDE tax, as it applies to the payment of technical services and mutual assistance; and the act of remuneration of other organizations for the provision of services triggers the CIDE and the income tax owed. A cost-sharing agreement is concluded if, with common interests, there are costs for the respect of the assets and rights of one of the group`s companies – which they make available to others – according to justified distribution criteria. A cost contribution would be, given the fruitification, a means of repaying the costs to the entity that owns the right or asset. Last April, this column presented transfer pricing as one of the priorities of LA BIR`s keen interest in conglomerates, in accordance with the Order of Revenue Memorandum (RMO) No. 36-2010. The RMO, which imposes a “conglomerate audit program for the 2009 taxable year,” aims to simultaneously review companies that include the conglomerate. This section now deals with cost-sharing agreements as another priority of the conglomerate`s audit program. Regardless of the plan, tax issues – in particular whether shared costs constitute taxable income, the deductibility of these costs, and documentation issues arising from cost-sharing agreements – remain unchanged. In essence, hiring a third party abroad is not neglected, since there is always only a simple division by reimbursement of costs of common interest or common interest. Cost-sharing is set up by a conglomerate to take advantage of the inherent economies of scale offered by networking these companies.
At the same time, it generally offers the tax advantage of being able to recognize a tax deduction on money transferred by corporations as your share of the costs incurred, for example, by the parent company. Table 1 shows the differences between service agreements and cost-sharing agreements. The growth of economic groups has led to a general expansion of cooperation agreements. In their modern definition, economic groups often work through a number of companies in different fields, both national and international. The emergence of the new model has led to the signing of agreements with the intention of centralizing a large number of non-essential joint activities in a single company. iii) ISS – because there is no service delivery, because there is no price that includes costs and value as a profit margin. Accordingly, for such types of reimbursements, the bir audit will focus on questions of fact and law, namely whether the supplier does not make an increase and whether the allocation is based on the actual costs corresponding to the actual benefits of the supplier; Whether services are provided outside Philippine tax jurisdiction; and the tax residence of the service provider. The main feature of the cost-sharing agreement is that the fees are simply reimbursed. This is because these costs are only distributed between the parties, as the parent company does not provide services to benefit from such activities. Finally, the majority rejected the subjuged person`s claim that the characteristics of the cost-sharing agreement should be adapted to art.