Definition
Transfer price policy is generally aimed at evaluating financial performance of different business units (profit centers) of a conglomerate, and/or to shift earnings from a high tax jurisdiction to a low-tax one. Tax authorities usually frown upon transfer pricing aimed at tax avoidance and insist that each internal part of the firm deals with the other on ‘arm’s length’ (market price) basis. Also called transfer cost.
Transfer pricing
Transfer Pricing Associates approach transfer pricing from a multi-disciplinary perspective covering management control, economics, legal, tax, finance and cost accounting. Transfer Pricing Associates offers all of those elements globally – in a mix that suits your needs and circumstances.
Transfer Pricing Associates developed the Transfer Pricing Process, a methodology that allows you to manage your transfer pricing system yourself in a more focused and cost efficient way. The Transfer Pricing Process also allows you to make an assessment of your transfer pricing risks.
Although a large number of multinationals have devoted time and efforts to transfer pricing documentation and controversy, few have made an explicit connection between their business and operational model and the transfer pricing system they apply. Making such a connection allows a multinational – based on sound economic arguments – to align its transfer pricing system with its (new) business model and at the same time develop the arguments needed to justify and defend the transfer pricing policy towards internal and external stakeholders, e.g. subsidiary companies, internal and external auditors, potential investors, and the tax authorities in all the countries where you operate your business.
The Transfer Pricing Process enables you to make a complete transfer pricing risk assessment. It will assess your current and/or future transfer pricing system against ‘best practices’ of designing, documenting and defending a transfer pricing system in multiple countries.
Transfer Pricing Associates
Assignments undertaken around the world by the Transfer Pricing Associates group cover the following broad areas:
- Design of transfer pricing systems – assistance to multinational clients in the design of global transfer pricing systems and pricing policies, to meet their commercial needs and to reduce the group’s global transfer pricing risk.
- Global/Regional (Masterfile) and country-specific transfer pricing documentation – preparation of docu¬mentation (with expert economic analysis and appropriate benchmarking) in respect of the pricing of all types of international related party transactions, in accordance with the OECD Guidelines and the local tax requirements.
- Provision of advanced transfer pricing documentation and compliance process management software (Vantage).
- Performance of global benchmarking services (via the Global Benchmarking Platform) and advanced economic and financial analysis.
- Advance pricing arrangements (APAs) – preparation of all types of APA applications supported by expert financial and economic analyses, negotiation with the relevant tax authorities and strategic management of the application process to ensure the best possible outcome.
- Transfer pricing risk assessment and contingency evaluation, including FIN 48 reviews – conduct of prudential reviews of transfer pricing systems, utilizing our in-depth knowledge and experience of the practical approach taken by tax authorities in order to advise clients of their key transfer pricing exposures, and the impact on the calculation of tax contingencies for accounting disclosure purposes.
- Strategic audit defence – adopting a proactive and strategic approach to the conduct of transfer pricing reviews and/or audits, to minimize disruption to the day-to-day business of the company, and with the ultimate objective to reduce the risk and amount of transfer pricing adjustments, interest and penalties by the relevant tax authority.
- Transfer pricing and value chain planning – devising global and regional transfer pricing policies and value chain strategies, and assisting multinational clients with the implementation of those strategies, to manage their transfer pricing risks more effectively and/or to minimize as far as possible their overall effective tax rate.
Transfer Pricing | Service
The services of Transfer Pricing Associates are structured so as to help you enhance your transfer pricing management and set priorities in the field of transfer pricing issues. Examples of our service offering include:
- Design of global transfer pricing systems based on sound economics
- Preparing and managing global transfer pricing documentation, including defining disclosure policies
- Implementation of all intra-group service charges, whether cost based or value based, e.g. for high value adding centralized procurement services
- Management of international transfer pricing risks
- Design, implementation and documentation of transfer pricing systems for treasury departments
- Design and implementation of research and development cost sharing arrangements
- Management of transfer pricing controversy
- Advance Pricing Agreements
- Benchmarks
- A “coaching model” which allows multinationals with their own transfer pricing professionals to use Transfer Pricing Associates to discuss ideas and for the exchange of best practice
Transfer Pricing Associates provides specific services designed to address the particular needs of selected industries.
The TPA Global group is an independent and specialist provider of expert transfer pricing, tax valuation and customs services, headquartered in Amsterdam and with our own offices and coverage in over 30 countries around the world.
