Transfer pricing should always be a hot topic for multinational groups who can expect at some stage to be scrutinised over their intragroup pricing policies.
Transfer Pricing Policies should reflect the legal, financial and economic reality of transactions and ensure that group companies are appropriately rewarded for their functions, risks, and assets owned and used. Transfer pricing should be legitimately used to manage tax liabilities across international jurisdictions. Policies should cover the full range of transactions between related parties including sales of goods and services, intellectual property and royalties, management charges, loans and intra-group financing.
Transfer pricing should never just be looked at in isolation because of its interaction with other important areas of legislation (e.g. diverted profits tax; anti profit fragmentation rules)
Having an effective transfer pricing strategy and appropriate documentation in place is invaluable in reducing the risk of challenge by Tax Authorities. Being the subject of a Transfer Pricing enquiry can be costly in terms of both management time and the significant potential financial implications including penalties.
In the current pandemic, the way in which international groups operate may inevitably have changed which will therefore require an updating of transfer pricing policies. We would also expect Tax Authorities to be increasingly active in transfer pricing enquiries as we emerge from the pandemic, making significant challenges where groups have not reviewed their policies nor updated their documentation.
Transfer Pricing Services
We recognise that “one size does not fit all” and so we offer a bespoke service.
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 can work with you to:
- perform a functional analysis to understand your business, identify relevant transactions and the economic substance of those transactions.
- perform an economic analysis and benchmarking study to provide you with meaningful contemporary pricing levels for the range of transactions you may undertake.
- Prepare relevant documentation needed for compliance with local country rules.
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.
Contact Menzies Transfer Pricing team
To speak to a partner or for more information about the services we offer please contact one of the Menzies LLP offices or complete the contact form below.