From entity X in country A to entity Y in country B															
																	
		country A	country B														
		division X	division Y														
	CIT rate	40%	10%														
	COS for division X	300	600	Selling price for division Y													
TP																	
scenario a:	550																
scenario b:	350																
																	
	Profit margin	250	50														
	CIT	100	5														
	Total CIT		105		195	EAT scenario a											
	Effective CIT		35%	scenario a													
		83%	17%	profit split													
																	
																	
	Profit margin	50	250						From country with higher tax burden to country with lower tax burden								
	CIT	20	25							TP is close to COS i.e. 350 vs 300							
	Total CIT		45							Biggest share of profit stays in country with lower tax burden							
	Effective CIT		15%	scenario b	255	EAT scenario b											
		17%	83%	profit split													
																	
																	
	Tax saving in case of shift in TP from 550 to 350 is:				133%												
																	
																	When stock is acquired/produced in country with high tax burden but sold in country with low tax burden then TP which helps to minimize tax CIT expense will be close to COS of such stock
		From entity Y in country B to entity X in country A															When stock is acquired/produced in country with low tax burden but sold in country with high tax burden then TP which helps to minimize tax CIT expense will be higher than COS of such stock  => need to prove that such TP meets arm's length requirements
																	
		country B	country A														
		division Y	division X														
	CIT rate	10%	40%														
	COS for division Y	300	600	Selling price for division X													
TP																	
scenario a:	550																
scenario b:	350																
																	
	Profit margin	250	50						From country with lower tax burden to country with higher tax burden								
	CIT	25	20							TP is far from COS i.e. 550 vs 300							
	Total CIT		45							Biggest share of profit stays in country with lower tax burden							
	Effective CIT		15%	scenario a													
		83%	17%	profit split													
																	
																	
	Profit margin	50	250														
	CIT	5	100														
	Total CIT		105														
	Effective CIT		35%	scenario b													
		17%	83%	profit split													
																	
	Tax loss in case of shift in TP from 550 to 350 is:				133%