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Mr. Ernie Ross
asked the Secretary of State for Industry if his Department investigates the transfer pricing policy of multinational companies before deciding whether a request for assistance under the Industry Act 1972 is to be granted.
Mr. MacGregor
It depends on the individual case. Assistance is given through a number of schemes whose criteria differ to some extent. The coverage and depth of appraisal depend on the form of the scheme in question and the size and significance of each case. In some cases it is necessary to consider a company's transfer pricing policy in order to decide whether or not the criteria are met, and in such cases appraisal covers this aspect.
| Grant-Equivalent Expenditure*†‡ by Incentive Type as a Percentage of Total Grant Equivalent Expenditure: Selected EEC Countries, 1980 | ||||||||
| Incentive Types | ||||||||
| Country | Grant Related Aids | Loan Related Aids | Accelerated Depreciation Allowances | Other Tax Concession | Employment Related Aids | Mixed Aid Types | Other Aids | Total |
| United Kingdom | 88 | 2·0 | 0 | 0 | 2·4 | 1·3 | 6·3 | 100 |
| West Germany | 65·5 | 15·0 | 4·4 | 0 | 8·5 | 6·5 | 0 | 100 |
| France | 44·1 | 23·1 | 0·8 | 4·3 | 5·4 | 21·2 | 1·1 | 100 |
| Italy | 12·8 | 14·9 | 0 | 0 | 52·6 | 17·6 | 1·8 | 100 |
| Netherlands | 29·8 | 20·5 | 0 | 0 | 0 | 48·7 | 1·0 | 100 |
| * The expenditure figures exclude the target employment and training. | ||||||||
| † The rate of interest used for discounting purposes in the grant equivalent calculations is based on the 'broadly commercial' rate charged in the different countries. Principal repayment holidays and interest free periods are taken into account as appropriate. | ||||||||
| ‡ Figures relate to direct financial assistance from central government to industrial enterprises and exclude: assistance to nationalised or state-owned concerns and aids to specific firms; assistance to primary industries; construction; tourism; consumer services and passenger transport; expenditures specific to Public administration and defence. | ||||||||