Transfer pricing documentation
If you carry out transactions with related parties, you should know that you have the formal obligation to prepare a transfer pricing documentation file and present it to the tax authorities.
Our services include:
- planning and prioritizing the inter-company transactions to be documented based on a risk assessment analysis, resource availability and your budget;
- review of the transfer pricing documentation prepared internally by your team, which needs updates or which is prepared at the group level but needs compliance with local requirements;
- development of benchmarking studies to support the transfer prices charged;
- advice on the most appropriate transfer pricing methodology for a given transaction;
- assistance with the functional interviews and financial analysis.
The purpose of a benchmarking study is to identify comparable transactions that are further used to assess whether the inter-company transactions under review comply with the arm’s length principle.
Performing a benchmarking study to test the arm’s length nature of an inter-company transaction is a complex process that requires examination of various databases and sources of information such as Amadeus, Royalty Stat, Loan Connector, Bloomberg etc.
We can either perform these benchmarking studies as part of the transfer pricing documentation file or as part of your planning exercise
Advance Pricing Arrangements applications and assistance
As transfer pricing is a complex subject with a lot of room for interpretation, more and more multinationals look for upfront agreement with the tax authorities on the pricing policy they would like to apply. This can be done through an Advance Pricing Agreement (APA).
An APA is a contract, usually for 5 years, entered into by a taxpayer and one or more tax authorities specifying the pricing method that the taxpayer will apply to its related-company transactions.
The APAs are extensively used as a risk avoidance strategy as they help taxpayers voluntarily resolve actual or potential transfer pricing disputes in a proactive, cooperative manner with the tax authorities.
Assistance with APA requests is one of our core services. If you are interested to apply for an APA, we can guide you through the whole process. This includes arranging for a preliminary meeting with the tax authorities, drafting the APA application and assisting you during the negotiations with the tax authorities so that you obtain a favorable outcome