Value chain analysis

Dealing effectively with tax transparency

Whether it is explaining the profit profile of your country by country reporting, evaluating the resilience of your transfer pricing (TP) generally or testing the application of specific methods, it is much more important now to identify which activities in your business generate value and how profits get allocated. 

Increasingly people are turning to Value Chain Analysis (VCA) to meet these needs and the OECD has devoted a significant part of its treatment of the profit split method to distinguishing the roles of VCA, which is more general, and profit split, which is the application of a specific TP method.

For an introduction to VCA for tax, our animation illustrates two different approaches and the relative merits of each.