Hi, and welcome back to the fifth video of the module on transfer pricing.
In this video we will be dealing with the application of the arm's-length
principle to a peculiar kind of transaction, business restructuring.
Business restructuring is the cross-border redeployment
by a multinational group of functions, assets, and risks.
A business restructuring can involve cross-border transfer of valuable
intangibles, or the termination or
substantial renegotiations of existing arrangements.
Restructurings are implemented by multinational groups to maximize synergies
and economies of scale, to streamline the management of business lines,
and to improve the efficiency of the supply chain.
Thus taking advantage of the development of internet based technologies
that have facilitated the emergence of global organizations.
In addition, in recent years, business restructuring have been
used to preserve profitability or limit losses in a downturn economy,
such as in the event of an over-capacity situation.