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In today's fast changing transfer pricing environment, it is more critical than ever to fully understand your company's transfer pricing position. This will give you the ability to craft a transfer pricing policy that aligns your company's tax goals with the worldwide transfer pricing regulatory scheme.
To help you formulate a coherent strategy, our team of economist will perform a free, in-depth transfer pricing risk assessment. Simply fill out the information on the following pages and when we meet in our scheduled meeting, we will walk you through the results and hopefully illuminate some issues for you to consider.
We look forward to speaking with you.
In today's hyper-nationalistic environment, it is critical that a taxpayer prepare documentation for both sides of an inter-company transaction that satisfies the local revenue authority requirements. A generic study or even worse a one country analysis will no longer suffice. In a similar vein, it is important that each study be consistent with one another as revenue authorities now regularly share documentation with one another.
A defining characteristic of a profit-based approach is the use of commercial third party databases. These databases contain descriptions and financial information on thousands of companies located throughout the world. These are utilized to identify comparable uncontrolled entities whose profitability will be compared to the profitability of the tested party. Revenue authorities often prefer taxpayers to choose comparable companies in the same country and region.
In transfer pricing, all inter-company transactions are not created equal. Instead, revenue authorities are more likely to ask for documentation surrounding service and intangible transactions.
Almost every country that subscribes to the arm's-length standard requires taxpayers to prepare documentation on an annual basis. Without contemporaneous documentation in place, taxpayers are not protected from penalties.
Today, over 100 countries have adopted regulations requiring taxpayers to prepare documentation that demonstrates compliance with the arm's-length standard. However, there are countries that accord transfer pricing a higher level of focus and are more apt to scrutinize a taxpayers adherence to the regulations. Many of the stricter countries have adopted penalty regimes to encourage compliance.
With the advent of BEPs, certain multinational corporations are required to complete a MasterFile that provides revenue authorities with a 60,000 foot overview of their transfer pricing operations. While this document is required for large companies, many countries are asking smaller taxpayers to also provide this information.
Traditionally, due to expense and effort, companies have only prepared documentation for the largest, most visible transactions. Other inter-company transfers have been routinely ignored. Many revenue authorities have begun to exploit this compliance gap and will now demand documentation on transactions that were one considered immaterial. With this in mind, it is important for a taxpayer to document all of the companies inter-company transactions.
We truly appreciate you taking the time to answer the questions in our risk assessment. Our economists will now take your answers and craft a Risk Assessment Report that provides you with an overview of your company's transfer pricing strengths and weaknesses. We truly look forward to sharing this report with you at our scheduled meeting time.
See you soon!