Transfer pricing – the pricing of transactions between connected parties – is an increasingly important issue owing to the ever-onward march of globalisation, along with the demand for greater tax transparency from tax authorities.
Transfer pricing has been a hot topic in recent years, and any group that trades in multiple jurisdictions may expect at some stage to be scrutinised over its intra-group pricing decisions by tax authorities in one or more of those countries, no matter how conscientiously their pricing decisions have been determined. An effective transfer pricing strategy will be invaluable in significantly reducing the risk of a successful challenge from those authorities, along with the associated financial implications which may include punitive tax penalties and the loss of access to double tax relief.
There are also many proactive reasons for managers to consider their transfer pricing strategies. From a commercial perspective, greater transparency will allow managers to better assess the true sources of profit within a multinational group, which for example may be important in executive remuneration decisions. Furthermore, providing that pricing policies follow the economic substance of transactions, transfer pricing can legitimately be used to manage tax liabilities across jurisdictions in a non-aggressive way.
Transfer pricing strategies should cover the full range transactions undertaken between connected parties, which would include intra-group sales of goods and services, the licensing of intellectual property and management charges among others.
Transfer Pricing Services
Our Transfer Pricing team consists of experts in the fields of international tax and pricing economics to provide an all-round perspective to our work.
We work with you in performing a functional analysis to understand your business, identify relevant transactions and the economic substance of those transactions. This is then considered in conjunction with market research for reliable benchmark data, in order to provide you with meaningful contemporary pricing levels for the range of transactions you may undertake.
Our membership of the HLB International network of firms means that we are able to draw upon local expertise where appropriate, while our close ties with reputable law firms in the specialism also mean that we can point you in the right direction for any ancillary legal requirements.