This section focuses on the new compensation price challenges associated with the transformation of the manufacturing sector and provides an overview of the expected problems, including: (i) a possible transfer of a single tested party to a multi-party framework; (ii) a trend towards regionally-oriented business models based on centralized models, with the globalization of the sector; and (iii) rapid technological innovation and its impact on MINNEN`s intangible real estate strategies. Dr. Richard Sciacca is Chief Tax Officer of Deloitte Washington National and Senior Economic Advisor for the National Advance Pricing Agreement (APA) and the Competent Authority (CA) Group. Richard is responsible for the development and economic analysis of intercompany pricing strategies for multinational companies, particularly in the context of the APP and CA, but also in complex tax plans, global documentaries and controversial audit projects and processes. It is known among transfer pricing experts as an innovative and research-oriented problem solver. Richard`s many working relationships with the APA and CA professionals are regularly required in the design, implementation and early resolution of APA and CA cases. Manufacturing continues to grow globally. Global manufacturing output grew by 5.1% in the first quarter of 2014 (3.3% in industrialized countries and 9.4% in developing and emerging countries), the highest rate in several years. This rate has been supported by strong growth in the production of durable goods such as household appliances, electronic goods and motor vehicles, said the United Nations Industrial Development Organization (UNIID) “Global production is recovering, but growth prospects for developing and emerging countries remain fragile,” 11 June 2014, unido.org/news/press/global-economie.html. As shown in Figure 2, a typical intercompany activity between a subcontractor and a subcontractor is the sale of manufactured goods to the contractor by the wage manufacturer.

The client is generally compensated by the prime contractor for a return that allows the contract manufacturer to obtain a size/arm premium on the total cost, i.e. a return on capital gains services that reflects a return on capital investments and investments in the stock of raw materials. As part of a toll manufacturer, the adjudicator entity retains ownership of the raw materials, processing and finished products during the manufacturing process. As shown in Figure 3, the tied production manager owns raw materials and makes them available to the manufacturer of tolls for processing (i.e. the toll manufacturer does not own raw materials). The toll manufacturer provides processing services and is offset by the manufacturing principle by a toll which is generally calculated as an increase on processing costs. The manufacturing manager assumes the risks associated with the stock of raw materials and finished products, as well as the risks of final demand and prices. From a transfer pricing perspective, this trend can highlight complex questions: who owns the intangible marketing relevant to telematics? Is it a separate service or intangible assets? Where were the telematics research and development activities conducted? It is likely that the connected vehicle industry will continue to grow over the next 10 to 15 years, and automakers are likely to experiment with new technologies and infrastructure and develop the business models needed to cope with this trend.