Key Considerations For Multinational Companies When Transferring Assets In Different Countries - PART 3

Learning Centre • Key Considerations For Multinational Companies When Transferring Assets In Different Countries - PART 3

Key Considerations For Multinational Companies When Transferring Assets In Different Countries - PART 3

Following the Organisation for Economic Cooperation and Development's (OECD) base erosion and profit shifting (BEPS) initiative, tax authorities worldwide are seeking effective methods to identify and attribute profits to their jurisdiction correctly.

Furthermore, various U.S. tax reform provisions in the Biden Administration FY22 budget, and the Treasury Department Greenbook explanation of Biden's tax proposals, could create adverse tax consequences for certain related-party transactions. Conversely, they may now present planning opportunities. Given the exponential rise of comprehensive tax policies and globalization demand for tax-related transparency in the transfer pricing landscape, here are the top transfer pricing issues that multinationals should consider:

Have Appropriate Support For Your Transfer Pricing Policy?

Taxpayers should ensure they have an appropriate level of documentation to justify their intercompany pricing. This support may be in the form of a full transfer pricing study, a benchmarking analysis, or an analysis of certain similar transactions that the taxpayer enters into with third parties.

Are Your Business Intercompany Agreements Up To Date?

It is imperative to obtain a written memorialization of the terms and conditions of the various related-party transactions and arrangements. This is particularly important for the intercompany financing of casual business transactions, license over intellectual property assets, and third-party transactions.

Are You Implementing Your Transfer Pricing Documentation And Intercompany Agreements?

Having a transfer pricing study and intercompany agreements in place is only the starting point. If a taxpayer's facts are not consistent with the taxpayer's transfer pricing documentation, the documentation will provide no protection in an audit.

Our Operational transfer pricing (OTP) approach effectively streamlines data flows, increases process efficiency, and develops automated solutions to address your company's unique policy implementation needs. In fact, OTP pricing is widely considered the best practice for advantaging intercompany pricing implementations that deliver reliable, automated, and accurate results.

Are You Considering The Impact Of Transfer Pricing Tax Matters - Direct And Indirect Taxes?

Not only can transfer pricing affect your income tax position and obligations, but it can also affect your customs and import duties, withholding taxes, value-added taxes, or even necessary licenses, registrations, certifications, and other official formalities. Any transfer pricing planning must take into account both direct and indirect obligations of the taxpayer.

What will you do now?

As business and government intensify scrutiny over the tax impact of cross-border transactions, the need to improve transfer pricing management remains a hot topic. Taxpayers that take a proactive approach to assess their transfer pricing arrangements can improve their compliance with transfer pricing regulation and mitigate your company’s risk of audit.

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