Transfer Pricing Algorithm - Revision history

Walid ELJAAFARI: /* Rules */

2025-01-29T09:37:16Z

Rules

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 |Only one value is acceptable for a given segment of the analysis, see Rule mapping
 |Yes
 |-
 |National taxation
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 # The process stops after 20 iterations (to be studied),
 # Sum all the TPA values compute throughout the iterations to generate the total TPA.
 === Tax impact computation ===

Walid ELJAAFARI: /* Development Program */

2023-12-14T08:39:23Z

Development Program

← Older revision		Revision as of 08:39, 14 December 2023
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	== Development Program ==		== Development Program ==
	The Transfer Pricing Algorithm presented in this is an ongoing work and its documentation on this wiki is also a work in progress. It is by no means complete and definitive, and changes will occur in the upcoming weeks and months.		The Transfer Pricing Algorithm presented in this page is an ongoing work and its documentation on this wiki is also a work in progress. It is by no means complete and definitive, and changes will occur in the upcoming weeks and months.

	Both GitHub and MediaWiki are amazing tools to manage collaborative work and track the progress and modifications that happen with time.		Both GitHub and MediaWiki are amazing tools to manage collaborative work and track the progress and modifications that happen with time.

Walid ELJAAFARI: /* General logic of the algorithm */

2023-12-14T08:37:27Z

General logic of the algorithm

← Older revision		Revision as of 08:37, 14 December 2023
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	== General logic of the algorithm ==		== General logic of the algorithm ==

			== Development Program ==
			The Transfer Pricing Algorithm presented in this is an ongoing work and its documentation on this wiki is also a work in progress. It is by no means complete and definitive, and changes will occur in the upcoming weeks and months.

			Both GitHub and MediaWiki are amazing tools to manage collaborative work and track the progress and modifications that happen with time.

			The detailed to-do list is presented [[Transfer Pricing Algorithm Development Program]].

	== Data structure ==		== Data structure ==

Walid ELJAAFARI: Title formatting

2023-12-12T10:57:41Z

Title formatting

Show changes

Walid ELJAAFARI: /* Impact of rules */

2023-10-08T19:45:40Z

Impact of rules

← Older revision		Revision as of 19:45, 8 October 2023
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	Optimization under constraints:		Optimization under constraints:

	Objective function: Sum of the input ATP Tax expenses and the output ATP Delta Tax at the exit the Final tax computation for the entire group.		Objective function: Sum of the input ATP Tax expenses and the output ATP Delta Tax at the exit the Final tax computation for the entire group, and/or the entire file series.

	Constraints defined by the ATP Benchmark tags from the rule ~~file~~, considering for each unique rule:		Constraints defined by the ATP Benchmark tags from the rule files, considering for each unique rule:

	* ATP Benchmark first quartile as the lower bound.		* ATP Benchmark first quartile as the lower bound,
	* ATP Benchmark third quartile as the upper bound.		* ATP Benchmark third quartile as the upper bound,
	* ATP Benchmark target below/in/above as the input variables.		* ATP Benchmark target below/in/above as the input variables.

			If several structured files are configured with the same rule file, they can either be configured as separate variables or as single unique variable across the different structured files.

	The goal is to find a local minimum of the objective function while respecting the constraints mentioned above.		The goal is to find a local minimum of the objective function while respecting the constraints mentioned above.

Walid ELJAAFARI: /* Output */

2023-10-08T19:37:08Z

Output

← Older revision		Revision as of 19:37, 8 October 2023
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	\|Taxation		\|Taxation
	\|ATP Tax losses carryforward N-1		\|ATP Tax losses carryforward N-1
	\|Represents the tax losses from the previous year (N-1), where "N-1" refers to the year immediately preceding the current year (N). These losses~~, too,~~ can be carried forward to offset profits in subsequent years, according to the relevant tax laws		\|Represents the tax losses from the previous year (N-1), where "N-1" refers to the year immediately preceding the current year (N). These losses can be carried forward to offset profits in subsequent years, according to the relevant tax laws.
	\|Couple (Decimal;ISO 3 Currency Code)		\|Couple (Decimal;ISO 3 Currency Code)
	\|If multiple defined, are aggregated for computation		\|If multiple defined, are aggregated for computation
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	==== Output ====		==== Output ====

			==== Serie of files ====
			A series of structured files corresponds to the selection of a sequence of structured files whose data and rules can be processed in a coordinated manner in the dashboard or the calculations of the algorithm.

			The selected structured files must form a sequence where their temporal referencing perimeters follow each other in a disjointed and adjacent manner (e.g., a succession of months, quarters, years).

			===== Impact of series on Financial data =====
			Initially, these relative temporal reference values are sought within the same structured file, and then in the preceding structured file that corresponds to the correct relative reference in the matching file within the sequence.

			Only one single value works this way for TP computation : ATP Tax losses carry-forward N-1.

			===== Impact of rules =====
			The optimization calculation will be further impacted as transfer pricing rules can cover a reference period exceeding a single structured file. The optimization calculation will then treat the rule file variable as a shared variable.

	=== Computational steps ===		=== Computational steps ===

Walid ELJAAFARI: /* Tax losses treatments */

2023-10-08T18:39:16Z

Tax losses treatments

← Older revision		Revision as of 18:39, 8 October 2023
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	Delta WHT TP due (thus paid by others) =		Delta WHT TP due (thus paid by others) =

	* Delta WHT Royalty due = Sum for all declaring entities of (WHT rate x WHT Base x TPA_c ) +		* Delta WHT Royalty due = Sum for all declaring entities of (WHT rate x WHT Base x TPA_c )
	* Delta WHT Management fee due = …		* <s>Delta WHT Management fee due = …</s>

	Delta WHT paid (settled for others) =		Delta WHT paid (settled for others) =

	* Delta WHT Royalty paid = - WHT rate x WHT Base x TPA_d +		* Delta WHT Royalty paid = - WHT rate x WHT Base x TPA_d
	* Delta WHT Management fee paid = …		* <s>Delta WHT Management fee paid = …</s>

	Possible WHT Tax credits =		Possible WHT Tax credits =

	* Additional Tax credit royalty due = (-1) x Sum for all declaring entities of (WHT rate x WHT Base x TPA_c x Tax credits x (1-rate of exemption)) +		* Additional Tax credit royalty due = (-1) x Sum for all declaring entities of (WHT rate x WHT Base x TPA_c x Tax credits x (1-rate of exemption))
	* Additional Tax credit management fees due = …		* <s>Additional Tax credit management fees due = …</s>

	Delta PBT WHT due =		Delta PBT WHT due =

	* Delta PBT WHT Royalty due = (-1) x Sum for all declaring entities of (WHT Base x WHT Rate x TPA_c x rate of exemption) +		* Delta PBT WHT Royalty due = (-1) x Sum for all declaring entities of (WHT Base x WHT Rate x TPA_c x rate of exemption)
	* Delta PBT WHT Management fee due =		* <s>Delta PBT WHT Management fee due =</s>

	Delta PBT WHT paid =		Delta PBT WHT paid =

	* Delta PBT WHT Royalty paid = WHT Rate x WHT Base x TPA_d x WHT Deductibility		* Delta PBT WHT Royalty paid = WHT Rate x WHT Base x TPA_d x WHT Deductibility
	* Delta PBT WHT Management fee paid = …		* <s>Delta PBT WHT Management fee paid = …</s>

	===== Tax losses treatments =====		===== Tax losses treatments =====
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	TLCF_consumed_init = max(0; (TLCF_N-1 x (1-TLCF_depreciation) – TLCF_N))		TLCF_consumed_init = max(0; (TLCF_N-1 x (1-TLCF_depreciation) – TLCF_N))

	Unexplained_Consumed_TLCF = TLCF_consumed_init - min(TLCF_N-1 x (1-TLCF_depreciation); MAX(0; min(TLCF_ceiling; +ATP PBT)) + Share_TLCF x max(0; ATP PBT - TLCF_ceiling))		Unexplained_Consumed_TLCF = TLCF_consumed_init - min(TLCF_N-1 x (1-TLCF_depreciation); MAX(0; min(TLCF_ceiling; ATP PBT)) + Share_TLCF x max(0; ATP PBT - TLCF_ceiling))

	TLCF_created_init = -min(0; (TLCF_N-1 x (1-TLCF_depreciation) – TLCF_N)		TLCF_created_init = - min(0; (TLCF_N-1 x (1-TLCF_depreciation) – TLCF_N)

	Unexplained_Created_TLCF = TLCF_created_init + min(0; ATP PBT)		Unexplained_Created_TLCF = TLCF_created_init + min(0; ATP PBT)
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	TLCF_consumed_new = max(0; min(TLCF_N-1 x (1-TLCF_depreciation); min(TLCF_ceiling; New_ATP_PBT) + Share_TLCF x max(0; New_ATP_PBT - TLCF_ceiling) + Unexplained_consumed_TLCF)		TLCF_consumed_new = max(0; min(TLCF_N-1 x (1-TLCF_depreciation); min(TLCF_ceiling; New_ATP_PBT) + Share_TLCF x max(0; New_ATP_PBT - TLCF_ceiling) + Unexplained_consumed_TLCF)

	New_TLCF_N = TLCF_N-1 x TLCF_depreciation + TLCF_created_new + TLCF_consumed_new		New_TLCF_N = TLCF_N-1 x (1-TLCF_depreciation) + TLCF_created_new + TLCF_consumed_new

	===== Final tax computation =====		===== Final tax computation =====
	Delta Tax init = Sum of National tax rate x TPA - Sum((National rate – Specific rate) x TPA_c _royalty received)		Delta Tax init = Sum of National tax rate x TPA - Sum((National rate – Specific rate) x TPA_c _royalty received)

	We must ensure that any possible blank ~~counterparty~~ line correctly matches with tax rules.		We must ensure that any possible blank counterpart line correctly matches with tax rules.

	Average taxpayer tax rate = Delta Tax init/Delta PBT		Average taxpayer tax rate = Delta Tax init/Delta PBT

Walid ELJAAFARI: /* Tax impact reallocation */

2023-10-08T18:04:52Z

Tax impact reallocation

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 ==== Tax performance analysis ====
 ===== Description of the optimization problem =====
 ===== Resolution with genetic algorithm =====
-===== Tax impact reallocation =====
+* ATP PBT -> linear

Walid ELJAAFARI: /* Tax impact reallocation */

2023-10-08T17:46:44Z

Tax impact reallocation

← Older revision		Revision as of 17:46, 8 October 2023
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	Tax_final = Delta_Tax_bis - Consumable WHT Tax credits + WHT TP due		Tax_final = Delta_Tax_bis - Consumable WHT Tax credits + WHT TP due

	~~===== Tax impact reallocation =====~~

	==== Tax performance analysis ====		==== Tax performance analysis ====
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	===== Resolution with genetic algorithm =====		===== Resolution with genetic algorithm =====

			===== Tax impact reallocation =====

Walid ELJAAFARI: /* Tax losses treatments */

2023-10-08T17:45:14Z

Tax losses treatments

← Older revision		Revision as of 17:45, 8 October 2023
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	===== Tax losses treatments =====		===== Tax losses treatments =====
	Within the framework of the loss ~~carryforward~~ computation, we start with the following simplifications:		Within the framework of the loss carry-forward computation, we start with the following simplifications:

	* Not knowing the application modalities before calculation, these are recalculated in a simplified manner to retain uncaptured effects (see "Unexplained").		* Not knowing the application modalities before calculation, these are recalculated in a simplified manner to retain uncaptured effects (see "Unexplained").
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	Unexplained_Created_TLCF = TLCF_created_init + min(0; ATP PBT)		Unexplained_Created_TLCF = TLCF_created_init + min(0; ATP PBT)

	~~TLCF_created_new~~ = ~~max(0; -min(0; ATP PBT + Delta PBT + Delta PBT WHT (paid + due)) + Unexplained_Created_TLCF)~~		Delta_PBT = TPA

	TLCF_consumed_new = max(0; min(TLCF_N-1 x (1-TLCF_depreciation); min(TLCF_ceiling; ~~ATP PBT + Delta PBT + Delta PBT WHT (paid + due)~~) + Share_TLCF x max(0; ~~ATP PBT + Delta PBT + Delta PBT WHT (paid + due)~~ - TLCF_ceiling) + Unexplained_consumed_TLCF)		New_ATP_PBT = ATP PBT + Delta_PBT + Delta PBT WHT (paid + due)

			TLCF_created_new = max(0; -min(0; New_ATP_PBT) + Unexplained_Created_TLCF)

			TLCF_consumed_new = max(0; min(TLCF_N-1 x (1-TLCF_depreciation); min(TLCF_ceiling; New_ATP_PBT) + Share_TLCF x max(0; New_ATP_PBT - TLCF_ceiling) + Unexplained_consumed_TLCF)

	New_TLCF_N = TLCF_N-1 x TLCF_depreciation + TLCF_created_new + TLCF_consumed_new		New_TLCF_N = TLCF_N-1 x TLCF_depreciation + TLCF_created_new + TLCF_consumed_new