In the present economic environment, transfer pricing studies require more attention than ever before. As your business expands across borders, the business owners must understand the complexities of transactions between divisions, subsidiaries and companies that are under the same ownership but operate in different tax jurisdictions.
In recent years, some companies have exploited the complexities of transfer pricing in order to lessen their tax burdens, from Google to Amazon, or the name as Starbucks on your coffee mug, they have been in the news for their transfer pricing practices. There have been resulted in fines for certain companies and multi-billion dollar losses for tax authorities in some countries, leading to widespread overhauls in transfer pricing regulations.
Today, more than 60 governments have adopted and enforce transfer pricing rules. Unfortunately for companies operating in multiple countries, these regulations are not always consistent. For example, rules regarding qualified cost-sharing agreements and cost inclusion, as well as adjustments for the risk assumed by comparables, all differ by countries.
Failure to comply with global transfer pricing regulations can be costly so our job is to help minimize the risk. Many jurisdictions impose penalties when tax authorities have to step in and correct manipulated transfer pricing, and what are doing is to lower the possibility of seeing those authorities in the first place.
Although transfer pricing rules vary by countries, the preparation needed to manage the intricacies and avoid common pitfalls is consistent. With the confidence of having strong knowledge of both North American and Asian regulations plus the arm length principles, we recommend ourselves to engage the transfer pricing study and reporting to your business.