Ratz Defined

Definition of Rationalization & Abusive Transfer Pricing:

Rationalization is a globally known technique of imposing a Corporate-based monocultural agricultural system on an otherwise locally sustainable small-scale multi-crop systems in order to turn local independent persons and small businesses into wage earners for the sake of financial rewards to distant shareholders, thus converting the agricultural system from one of local marketing and use into one dominated by an export distribution paradigm.  Rationalization regimes are generally subversive to democracies, as the consolidated political power of the multinational resource acquiring “kleptocracy” from home nation firms dominates governance in order to control host nation policy-making and avoid tax and other burdens of sustaining the once-vibrant local economies it has replaced by imposing its monocultural export regime on the host country.

When multinational enterprises (MNEs) encounter unaudited (or loosely audited) oversight by the host nation, they can use the illicit accounting techinques of ABUSIVE TRANSFER PRICING (ATP) to launder the profits offshore (away from host nation taxation) through the products they export.  This is also known as PRODUCT LAUNDERING.  It occurs because related affiliates of the same MNE can transfer across borders its own products and services at rates it determines independent of market forces – i.e. at controlled prices.  The OECD measure of proper valuation starts with the concept of AN ARM’S LENGTH PRICE, one negotiated between unrelated parties, and enforcement utilizes what is known as a COMPARABLE, UNCONTROLLED PRICE (CUP) or TRANSACTION (CUT) methodology.

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