Excellent article on transfer pricing
"The United States imposed the so-called "international consensus" on the taxation of multinational corporations on Europe 50 years ago, and will not back away from it, even though the government is losing tax revenue. This bad system has survived due to congressional cravenness in the face of multinational corporations arguing that competitiveness depends on not paying taxes."
"The OECD bureaucracy and American multinationals are locked in a codependent relationship that benefits both to the detriment of the federal budget. American tax professionals profit from the present system. The U.S. government throws on ineffectual fixes, while cutting secret deals with multinationals. Occasionally the government drags a multinational into court and loses badly."
"There is no perfect answer for assignment of multinationals' income to specific tax jurisdictions. The law should recognize this fact and move toward a system that is fair and administrable. The international consensus is neither. Formulary apportionment, as the Europeans have recognized, is the fairest multilateral approach."
But there are plenty of useful and well-explained analysis, and details, in there. If you want to read more about this vital subject, on formulary apportionment, on the CCCTB, and more, click on our Transfer Pricing resource page.