Managing Global Tax Risk Through Robust Transfer Pricing Practices
Complying with international transfer pricing guidelines: The Client had entities in the U.K., Hong Kong and India that provide marketing and other support services to the U.S. parent. In order to manage potential risks in its countries of operation — and to preserve its global reputation — the Client sought to follow the Organisation for Economic Co-operation and Development’s (OECD’s) transfer pricing guidelines and implement related best practices.
Determining the market value of similar services in each jurisdiction: The Client needed objective data showing how other companies priced similar services in the open markets of each jurisdiction.
Obtaining unbiased, authoritative transfer pricing studies: The Client needed an experienced third party to provide a transfer pricing study for each jurisdiction, placing the Client’s own intercompany transactions within the context of comparable transactions in the open market.
- Conducted an analysis of functions, assets and risks to identify and characterize the Client’s intercompany transactions.
- Researched recognized databases and identified similar independent companies, measuring them to benchmark the arm’s length nature of the Client’s intercompany transactions.
- Provided the Client with comprehensive and detailed studies that included the percentage range of profit for companies providing similar services in the open market and a determination as to whether the Client was operating on the required arm’s length basis.
- Reduced risks by demonstrating Client’s adherence to OECD transfer pricing guidelinesand local documentation requirements.
- Enabled Client to competitively and compliantly price cross-border intercompany transactions by providing data showing open-market pricing of similar services in each jurisdiction.
- Provided Client with objective studies to justify transfer pricing practices to fiscal authorities in each jurisdiction in the event of tax audit.