Source: mental.com, 24 March 2017
“Amazon.com Inc on March 23 won a US Tax Court case, fending off IRS transfer pricing adjustments relating to a cost-sharing agreement (CSA) buy-in payment. The transfer pricing adjustments would have increased the online retailer’s taxable income by more than $1.5 billion in 2005 and 2006.
The case concerns a 2005 CSA pursuant to which Amazon.com, Inc., and its domestic subsidiaries transferred to the Luxembourg subsidiary intangible assets required to operate Amazon’s European website business.
Siding with Amazon, the Tax Court rejected the IRS’s recalculation of the buy-in payment, concluding it was arbitrary, capricious, and unreasonable. The CUT method, used by Amazon, was the best method to calculate the CSA buy-in payment, the Court said.”