Transfer pricing has become the key issue in the field of international taxes. Our team can bring you a global perspective based on our long-standing experience of what really works in transfer pricing.
In a global economy expanding each day, where multinational companies play a very important role, transfer pricing is high on the agenda of tax offices and taxpayers across the world. States need to make sure that the taxable profits of multinationals are not artificially shifted out of their jurisdictions and that the tax base reported by multinationals in their countries shows the true and fair economic activity developed therein.
Tax authorities are in a continuous search to protect their national tax bases through any effective way possible. All over the world we can see a greater examination for even stricter regulations on transfer pricing policies. Though companies face a gradual increasingly uncertain landscape, the many complexities faced with transfer pricing can provide opportunities to boost profits, increase cash flows, and moderate taxes.
All companies which trade worldwide and have cross border transactions between group entities are likely to face transfer pricing issues. These issues, generally consist of enquiries from the tax authorities, in one or more countries, depending on the place of the transactions.
It is extremely important to adopt accurate transfer pricing policies, otherwise the company could be found to have the following issues:
- Undercharged for its sales of goods or services to its foreign affiliates;
- Overcharged for purchases of goods or services from associated companies abroad.
Being over or under charged can trigger additional taxes and often interest plus penalties which are imposed by the tax authority, which can have a huge impact for the international groups.
Below you can find the main ways our transfer pricing team can help your business:
Advising on prices for intragroup transactions
Most international trading groups have to make key decisions when setting prices for transactions between group companies. The wrong decisions when setting intra-group prices can significantly increase tax liabilities or result in costly transfer pricing enquiries from tax authorities
Consulting on restructuring business functions
For commercial purposes, business operations or functions are often transferred to another jurisdiction. Such businesses must confirm and value the tangible and intangible assets which have been transferred. Otherwise a significant transfer pricing risk arises.
Assisting with documenting intra-group prices
Once decisions have been made on the prices to be charged for intra-group transactions, it is essential that the reasoning behind the decisions is fully documented.
Defending a group’s transfer pricing policies
How and when a national tax authority opens an enquiry into an international group’s transfer pricing policy and the effect upon a company within its jurisdiction differs from country to country.
Negotiating advance pricing agreements
Sometimes the right approach to the challenges of transfer pricing is to meet them head on, by seeking the prior agreement of national tax authorities to a proposed pricing policy for intra-group transactions.