The DEMPE framework plays a crucial role in ensuring the fair allocation of returns from intangible assets like brands and intellectual property.
DEMPE comprises:
Development: Creating or improving an intangible asset.
Enhancement: Increasing the value or functionality of an intangible.
Maintenance: Preserving the value of an intangible.
Protection: Safeguarding an intangible from infringement or loss.
Exploitation: Utilizing the intangible to generate revenue.
The DEMPE framework ensures that multinational enterprises (MNEs) allocate profits fairly among entities that contribute to the value of intangible assets.
Example: Consider a well-known brand developed by a parent company and used by various subsidiaries. Even if subsidiaries are not directly involved in DEMPE activities, their performance impacts the brand’s value.
The GST implications on DEMPE are complex and not restricted to cross border. Both the parent company and the subsidiaries benefit to some extent, so it is not a clear case to classify the parent as the sole supplier.
The key question is whether DEMPE activities constitute a supply from the parent to the subsidiary (or vice-versa) followed with the valuations?
Share this content: