• Service: Tax, Global Transfer Pricing Services
  • Type: Regulatory update
  • Date: 4/06/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Tony Gorgas

Tony Gorgas
Partner, Tax

+61 2 9335 8851

Value Chain Management in the Digital Economy 

by Tony Gorgas, Transfer Pricing Specialist

There is great consensus among tax professionals that the 'digitalisation' of the global economy has outgrown tax frameworks globally, which were largely built around trade of tangible goods.

As part of its Base Erosion and Profit Shifting (BEPS) initiative, the Organisation for Economic Co-operation and Development (OECD) is in the process of addressing the apparent ‘gaps’ that exist in global tax frameworks, and has dedicated an entire working group to deal exclusively with the challenges posed by the digital economy.


While changes to international tax frameworks seem inevitable, it is likely that basic transfer pricing principles will remain valid.


  • the allocation of functions, assets and risks within a multinational enterprise (MNE), and their role in the allocation of corporate profits, will remain important
  • risks and any associated returns or losses should continue to be attributed to the enterprises within the MNE that manage such risks
  • the ownership of intangible assets requires that the enterprise within the MNE has the capability and authority to maintain and protect the value of these assets.

KPMG recently launched its Value Chain Management (VCM) group globally. VCM deals with the ever increasing need from our MNE clients for a holistic approach to managing their business operations globally, with a focus on business performance as well as tax efficient arrangements.


VCM is a cross-functional, systematic approach that can assist our MNE clients to identify their key commercial value drivers and how these should be allocated across their entire supply chain. Our VCM process can support the efficient allocation of resources within an MNE client, as well as whether the tax outcomes of an MNE are supported by substance. In the current BEPS environment, our MNE clients need greater certainty that their business dealings are likely to be accepted by tax authorities.


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