One consequence of doing business across borders is flows of goods and services within groups. Tax authorities subject transactions within groups to critical scrutiny, as the countries for which they act want to prevent profit-shifting by way of prices that do not conform to the arm's length principle. Many of them have now brought in legislation regulating transfer pricing, enforcing the arm's length principle, namely that prices charged within a group must correspond to those that independent third parties would agree between themselves. Companies are required to produce a great deal of documentation to demonstrate that they do; they are obliged to highlight intra-group transactions and produce evidence that the prices invoiced were appropriate. This is a challenging requirement, and failure to comply with it is penalised by heavy fines and the determination of prices and profits by estimation.
Different requirements are imposed by different countries and their laws and authorities, and so BDO AG helps companies prepare the analysis of the intra-group transactions, their documentation, with any database searches that may be required, and with the justification of the transfer pricing systems they opted for.
- Analysis of intra-group transfer pricing with reference to country-specific tax legislation
- Setting up transfer prices within a corporate group
- Determining transfer prices with reference to the arm's length principle
- Justification of the transfer prices selected
- Documentation of transfer prices with reference to country-specific requirements
- Assistance and support in dealing with the tax authorities in various countries (including for the purpose of an Advance Pricing Agreement - APA)