Tax authorities are taking an increasingly critical stance on transactions between related parties – and the underlying transfer pricing. BDO supports you in analysing your international group transactions. We help you select transfer pricing methods, document their appropriateness and compile all the necessary documentation.
Authorities base their assessments largely on the arm’s length principle, which dictates that transfer pricing should be comparable to pricing arrangements between independent third parties.
Many countries have already released their own transfer pricing regulations, some of which already incorporate aspects of the OECD’s project on Base Erosion and Profit Shifting (BEPS). Transfer pricing regulations generally require companies to document intragroup transactions and prove that they are conducted at arm’s length. If a company fails to observe these rules, the tax authorities may determine pricing based on their own assessment, which can lead to taxable profit adjustments or even fines.
- Transfer pricing analysis based on country-specific transfer pricing regulations
- Support preparing intragroup transfer pricing policies
- Supply chain optimisation
- Defining transfer pricing at arm’s length
- Documenting arm’s length status of transfer pricing adopted
- Support with international restructuring or acquisitions from a transfer pricing perspective, including but not limited to transfer and valuation of intangible assets
- Documenting transfer pricing, taking into account country-specific requirements and assisting with CbCR compilation
- Providing support throughout the negotiation process with tax authorities in various countries (including for advanced pricing agreements (APAs).
COVID-19 Transfer Pricing Considerations
The unprecedented COVID-19 crisis has affected the cash fl ow of otherwise healthy organisations, reducing revenue with little or no reduction in costs. Established transfer pricing policies may no longer give rise to arm’s length outcomes due to extreme disruptions to global workforce, supply chains, and customer demand. To avoid future challenges by tax authorities, companies should review their transfer pricing policies now and consider whether – and what – adjustments are necessary.