Transfer Pricing

Overcoming the Transfer Pricing Risk

Today’s business organisations are operating in a complex environment, filled with unprecedented uncertainty. The globalisation has brought in a huge volume of inter-company transactions, which have brought the onset of a number of regulations and law enforcements, making transfer pricing a major risk management concern for multinational businesses.

Like any other preceding issue, finance and audit companies have seized this opportunity to create a globally managed transfer pricing network, catering to global business operations. The objective here is to reduce the risk, using a strategic approach to support these pricing activities, thus resolving disputes efficiently.

Transfer Pricing Planning and Documentation

Global businesses are faced with both risk and opportunities, as they expand their volume of related party transactions and meet supply chain demands. This fuels the need for tax authority collaborations.

Strategic approaches and extensive documentation are a necessity to enable companies to achieve their tax planning objectives, both international and operational. A centralised global approach is necessary to facilitate uniformity andfor the elimination inconsistencies that may arise while a company caters to different supply markets. Hence, having a proper process in place forshielding a company’s financeis very important.

Dispute Avoidance and Advance Pricing Agreements

Transfer pricing leads to many operational and legal challenges, but most importantly it gives rise to a magnitude of taxation uncertainties, which include the potential of the management to carry out proper examination and implementation. For almost all businesses, such uncertainties are unacceptable business risks that need to be eliminated or reduced.

Advance pricing agreements enable the companies to enter into agreements with one or more tax authorities, well in advance. This helps them achieve a level of certainty, especially in areas of double taxation relief, etc.

Dispute Resolution

Missteps that are the outcome of transfer pricingbring in the tax authority enquires. The most effective and efficient defence mechanism for any company is to bring in the early involvement of an experienced team of specialists. The team should be able to carry out careful examinations through the advance pricing agreements, thus finally able to build administrative appeals, and lead litigation processes in any jurisdiction.

Business Model Optimization

The current economic scenario is pigeonholed by the racing technology upgrades, implementation of the best business practices and the numerous legislative changes. Business Model Optimization helps balancing the demands of both operations and tax laws, integrating them into one unit model.

This ensures that the tax planning does not curtail the company’s bottom line and also further helps sustain the business values.