Transfer pricing
What is transfer pricing?
Transfer pricing refers to the process of determining the price at which goods or services are transferred between companies that are part of the same multinational enterprise (MNE).
It is an essential aspect of international trade and investment, and it is used to ensure that profits are allocated fairly among the different parts of the MNE.
This practice involves setting the price at which one subsidiary transfers goods or services to another subsidiary in a different country to minimize tax liability.
How it works?
The goal of transfer pricing is to ensure that the prices set are fair, reasonable and reflect the market value of the goods or services being transferred.
This involves analysing various factors such as the nature of the product or service, market conditions, and the tax regulations in different countries.
The process requires careful planning and coordination between different departments to avoid tax and legal issues.
Transfer pricing involves setting prices at arm’s length, which is difficult for firms due to unique products, different interpretations by tax authorities, and requires detailed documentation. Non-compliance can lead to penalties, interest charges, disputes, and resource diversion.
Why First Partner?
Our Services include:
- Identifying and analysing comparable transactions and prices to ensure that prices charged within your multinational enterprise are in line with the arm's length principle.
- Detailed documentation and analysis required to support prices charged.
- Our firm has a wealth of experience in preparing comprehensive transfer pricing documentation that can withstand scrutiny by tax authorities.
- We will work with your team to ensure that your transfer pricing documentation is up-to-date and complies with transfer pricing regulations.