A large percentage of international trade takes place between related companies, generally multinational companies that transfer goods or services between various business units controlled by them, which have their seats in different countries.
When these business units obey a common commercial strategy, operations can be planned to locate the source of the profit in the tax jurisdictions with the least tax pressure, preventing the benefits from being generated in the countries with the highest taxation.
Transfer pricing relates to the price non-arm’s length entities located in different jurisdictions charge each other for goods and services. The tax rules related to transfer pricing are complex and governments are increasingly proactive in scrutinising transfer pricing policies and practices. Government audits of transfer pricing activities can be time consuming and stressful, and the penalties for running afoul of transfer pricing rules can be significant.
Our global transfer pricing professionals help you develop transfer pricing policies that maximise the potential for increasing your after-tax income, while minimising the likelihood that you will be subject to tax adjustments and penalties.