Why Are Transfer Pricing Methods Employed?
Transfer pricing methods are used by companies that have common ownership when they exchange goods and services with each other. For example, if a subsidiary and holding companies both sell goods or render services to each other, they must agree on a transfer pricing method, in order to price these transactions and avoid violating U.S. antitrust law that prohibits price-fixing agreements between competitors. The professionals at Cendrowski Corporate Advisors guide companies of all sizes through the complexities of transfer pricing methods.
It is critical for businesses to have a well-designed transfer pricing policy and implementation to address tax liabilities, potential exposures, expensive penalties or even PR damage. A lesser known fact? Transfer pricing doesn’t only apply to companies doing business globally. Companies of all sizes, even those who only operate domestically, need a transfer pricing plan.
Benefits of Robust Transfer Pricing Policies
Transfer pricing is an integral part of any multi-operational business. The benefits are numerous, but those benefits must be mitigated by risks like regulatory scrutiny and complexities in international law. In our current political climate, changes to tax policy could make it even more challenging for business owners to manage their transfer pricing policy.
In order to design a transfer pricing policy that works for your company's needs, there must be careful consideration of transfer pricing methods and the types and volumes of intercompany transactions you engage in.
Transfer Pricing Planning
Transfer pricing planning is a smart way to keep your organization in compliance with all local and international standards. Cendrowski Corporate Advisors can help your organization set up an efficient system for documenting and monitoring transactions, as well as testing any irregularity or discrepancy between two companies’ books before they are submitted to tax authorities.
Transfer Pricing Compliance
To avoid financial and reputational risks, companies need to make sure they are in compliance with international and national tax rules for transfer pricing. The best way to do that is through documentation studies of all countries involved, setting up and following advance pricing agreements and mutual agreement procedures, FIN 48 analysis, ongoing assessment of transfer pricing matters, and staying up-to-date with Base Erosion and Profit Shifting (BEPS) readiness support.
Regulations evolve and shift, so being challenged by government tax authorities isn’t unusual. When faced with a tax controversy, Cendrowski Corporate Advisors provides our clients with audit defense, expert witness representation, mediation, and direct negotiations with tax authorities.
Our professionals are an experienced team of international tax experts, accountants, and economists. Whether your company needs guidance with transfer pricing policies or help with implementation or a simple check-up, we’re ready to assist.
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