lnternational transfer pricing strategies for minimizing global income taxes

Optimal financiai strategies are criticai for long term survival in competitive international markets. Financial strategies pertaining to transfer pricing have become increasingly important as income tax authorities seek additional revenues through increased monitoring of company practices. In this first of two articles, optimal tax strategies are presented after reviewing the transfer pricing concept and the rationale underlying governments' increased focus on transfer pricing. In the second forthcoming article, we analyze the effect of government restrictions on optimal pricing strategies.

International transfer pricing restrictions: impact on corporate financial policy

Transfer pricing is a pervasive issue that presents significant tax savings potential concerning international enterprises. The authors discuss company incentives to manage transfer prices in an article appearing in the preceding issue of this journal. In response to these incentives, governments have increasingly enacted and enforced domestic restrictions on transfer prices. In this article, contemporary norms restricting transfer pricing are analyzed. The OEGO and US pricing standards are assessed and Brazil's recent application of these standards is considered. Transfer pricing methods are described and evidence of their use is presented. We conclude by describing an intercompany transfer pricing policy intended to facilitate internaI financiaI management and minimize externaI tax threats.

A JOINT EXPERIMENTAL ANALYSIS OF INVESTOR BEHAVIOR IN IPO PRICING METHODS

This article jointly examines the differences of laboratory versions of the Dutch clock open auction, a sealed-bid auction to represent book building, and a two-stage sealed bid auction to proxy for the “competitive IPO”, a recent innovation used in a few European equity initial public offerings. We investigate pricing, seller allocation, and buyer welfare allocation efficiency and conclude that the book building emulation seems to be as price efficient as the Dutch auction, even after investor learning, whereas the competitive IPO is not price efficient, regardless of learning. The competitive IPO is the most seller allocative efficient method because it maximizes offer proceeds. The Dutch auction emerges as the most buyer welfare allocative efficient method. Underwriters are probably seeking pricing efficiency rather than seller or buyer welfare allocative efficiency and their discretionary pricing and allocation must be important since book building is prominent worldwide.

Assessing the effects of global warming and local social and economic conditions on the malaria transmission

OBJECTIVE: To show how a mathematical model can be used to describe and to understand the malaria transmission. METHODS: The effects on malaria transmission due to the impact of the global temperature changes and prevailing social and economic conditions in a community were assessed based on a previously presented compartmental model, which describes the overall transmission of malaria. RESULTS/CONCLUSIONS: The assessments were made from the scenarios produced by the model both in steady state and dynamic analyses. Depending on the risk level of malaria, the effects on malaria transmission can be predicted by the temperature ambient or local social and-economic conditions.

Malaria transmission model for different levels of acquired immunity and temperature-dependent parameters (vector)

OBJECTIVE: Describe the overall transmission of malaria through a compartmental model, considering the human host and mosquito vector. METHODS: A mathematical model was developed based on the following parameters: human host immunity, assuming the existence of acquired immunity and immunological memory, which boosts the protective response upon reinfection; mosquito vector, taking into account that the average period of development from egg to adult mosquito and the extrinsic incubation period of parasites (transformation of infected but non-infectious mosquitoes into infectious mosquitoes) are dependent on the ambient temperature. RESULTS: The steady state equilibrium values obtained with the model allowed the calculation of the basic reproduction ratio in terms of the model's parameters. CONCLUSIONS: The model allowed the calculation of the basic reproduction ratio, one of the most important epidemiological variables.

Correlation between HIV and HCV in Brazilian prisoners: evidence for parenteral transmission inside prison

OBJECTIVE: It is an accepted fact that confinement conditions increase the risk of some infections related to sexual and/or injecting drugs practices. Mathematical techniques were applied to estimate time-dependent incidence densities of HIV infection among inmates. METHODS: A total of 631 prisoners from a Brazilian prison with 4,900 inmates at that time were interviewed and their blood drawn. Risky behavior for HIV infection was analyzed, and serological tests for HIV, hepatitis C and syphilis were performed, intended as surrogates for parenteral and sexual HIV transmission, respectively. Mathematical techniques were used to estimate the incidence density ratio, as related to the time of imprisonment. RESULTS: Prevalence were: HIV -- 16%; HCV -- 34%; and syphilis -- 18%. The main risk behaviors related to HIV infection were HCV prevalence (OR=10.49) and the acknowledged use of injecting drugs (OR=3.36). Incidence density ratio derivation showed that the risk of acquiring HIV infection increases with the time of imprisonment, peaking around three years after incarceration. CONCLUSIONS: The correlation between HIV and HCV seroprevalence and the results of the mathematical analysis suggest that HIV transmission in this population is predominantly due to parenteral exposure by injecting drug, and that it increases with time of imprisonment.

A mathematical model for malaria transmission relating global warming and local socioeconomic conditions

OBJECTIVE: Sensitivity analysis was applied to a mathematical model describing malaria transmission relating global warming and local socioeconomic conditions. METHODS: A previous compartment model was proposed to describe the overall transmission of malaria. This model was built up on several parameters and the prevalence of malaria in a community was characterized by the values assigned to them. To assess the control efforts, the model parameters can vary on broad intervals. RESULTS: By performing the sensitivity analysis on equilibrium points, which represent the level of malaria infection in a community, the different possible scenarios are obtained when the parameters are changed. CONCLUSIONS: Depending on malaria risk, the efforts to control its transmission can be guided by a subset of parameters used in the mathematical model.

Entomological aspects of Chagas' disease transmission in the domestic habitat, Argentina

OBJECTIVE: To study the risk of Trypanosoma cruzi domestic transmission using an entomological index and to explore its relationship with household's characteristics and cultural aspects. METHODS: There were studied 158 households in an endemic area in Argentina. Each household was classified according to an entomological risk indicator (number of risky bites/human). A questionnaire was administered to evaluate risk factors among householders. RESULTS: Infested households showed a wide range of risk values (0 to 5 risky bites/human) with skewed distribution, a high frequency of lower values and few very high risk households. Of all collected Triatoma infestans, 44% had had human blood meals whereas 27% had had dogs or chickens blood meals. Having dogs and birds sharing room with humans increased the risk values. Tidy clean households had contributed significantly to lower risk values as a result of low vector density. The infested households showed a 24.3% correlation between time after insecticide application and the number of vectors. But there was no correlation between the time after insecticide application and T. infestans' infectivity. The statistical analysis showed a high correlation between current values of the entomological risk indicator and Trypanosoma cruzi seroprevalence in children. CONCLUSIONS: The risk of T. cruzi domestic transmission assessed using an entomological index show a correlation with children seroprevalence for Chagas' disease and householders' habits.

Missed opportunities for congenital syphilis and HIV perinatal transmission prevention

OBJECTIVE: To estimate the prevalence of missed opportunities for congenital syphilis and HIV prevention in pregnant women who had access to prenatal care and to assess factors associated to non-testing of these infections. METHODS: Cross-sectional study comprising a randomly selected sample of 2,145 puerperal women who were admitted in maternity hospitals for delivery or curettage and had attended at least one prenatal care visit, in Brazil between 1999 and 2000. No syphilis and/or anti-HIV testing during pregnancy was a marker for missed prevention opportunity. Women who were not tested for either or both were compared to those who had at least one syphilis and one anti-HIV testing performed during pregnancy (reference category). The prevalence of missed prevention opportunity was estimated for each category with 95% confidence intervals. Factors independently associated with missed prevention opportunity were assessed through multinomial logistic regression. RESULTS: The prevalence of missed prevention opportunity for syphilis or anti-HIV was 41.2% and 56.0%, respectively. The multivariate analysis showed that race/skin color (non-white), schooling (<8 years), marital status (single), income (<3 monthly minimum wages), having sex during pregnancy, history of syphilis prior to the current pregnancy, number of prenatal care visits (<6), and last prenatal visit before the third trimester of gestation were associated with an increased risk of missed prevention opportunity. A negative association with missed prevention opportunity was found between marital status (single), prenatal care site (hospital) and first prenatal visit in the third trimester of gestation. CONCLUSIONS: High rates of non-tested women indicate failures in preventive and control actions for HIV infection and congenital syphilis. Pregnant women have been discontinuing prenatal care at an early stage and are failing to undergo prenatal screening for HIV and syphilis.

Surveillance of mother-to-child HIV transmission: socioeconomic and health care coverage indicators

OBJECTIVE: To identify clustering areas of infants exposed to HIV during pregnancy and their association with indicators of primary care coverage and socioeconomic condition. METHODS: Ecological study where the unit of analysis was primary care coverage areas in the city of Porto Alegre, Southern Brazil, in 2003. Geographical Information System and spatial analysis tools were used to describe indicators of primary care coverage areas and socioeconomic condition, and estimate the prevalence of liveborn infants exposed to HIV during pregnancy and delivery. Data was obtained from Brazilian national databases. The association between different indicators was assessed using Spearman's nonparametric test. RESULTS: There was found an association between HIV infection and high birth rates (r=0.22, p<0.01) and lack of prenatal care (r=0.15, p<0.05). The highest HIV infection rates were seen in areas with poor socioeconomic conditions and difficult access to health services (r=0.28, p<0.01). The association found between higher rate of prenatal care among HIV-infected women and adequate immunization coverage (r=0.35, p<0.01) indicates that early detection of HIV infection is effective in those areas with better primary care services. CONCLUSIONS: Urban poverty is a strong determinant of mother-to-child HIV transmission but this trend can be fought with health surveillance at the primary care level.

HIV rapid testing as a key strategy for prevention of mother-to-child transmission in Brazil

OBJECTIVE: To assess the feasibility of HIV rapid testing for pregnant women at maternity hospital admission and of subsequent interventions to reduce perinatal HIV transmission. METHODS: Study based on a convenience sample of women unaware of their HIV serostatus when they were admitted to delivery in public maternity hospitals in Rio de Janeiro and Porto Alegre, Brazil, between March 2000 and April 2002. Women were counseled and tested using the Determine HIV1/2 Rapid Test. HIV infection was confirmed using the Brazilian algorithm for HIV infection diagnosis. In utero transmission of HIV was determined using HIV-DNA-PCR. There were performed descriptive analyses of sociodemographic data, number of previous pregnancies and abortions, number of prenatal care visits, timing of HIV testing, HIV rapid test result, neonatal and mother-to-child transmission interventions, by city studied. RESULTS: HIV prevalence in women was 6.5% (N=1,439) in Porto Alegre and 1.3% (N=3.778) in Rio de Janeiro. In Porto Alegre most of women were tested during labor (88.7%), while in Rio de Janeiro most were tested in the postpartum (67.5%). One hundred and forty-four infants were born to 143 HIV-infected women. All newborns but one in each city received at least prophylaxis with oral zidovudine. It was possible to completely avoid newborn exposure to breast milk in 96.8% and 51.1% of the cases in Porto Alegre and Rio de Janeiro, respectively. Injectable intravenous zidovudine was administered during labor to 68.8% and 27.7% newborns in Porto Alegre and Rio de Janeiro, respectively. Among those from whom blood samples were collected within 48 hours of birth, in utero transmission of HIV was confirmed in 4 cases in Rio de Janeiro (4/47) and 6 cases in Porto Alegre (6/79). CONCLUSIONS: The strategy proved feasible in maternity hospitals in Rio de Janeiro and Porto Alegre. Efforts must be taken to maximize HIV testing during labor. There is a need of strong social support to provide this population access to health care services after hospital discharge.