Transfer pricing
Transfer pricing is one of the most significant issues facing multinational enterprises. Regulations vary by jurisdiction and transaction type, and tax authorities worldwide are keen on ensuring their fair share of tax revenue. As a result, the risk of being challenged on transfer pricing practices is an all-too-present reality.
While the penalties can be steep for organisations failing to fulfil the required standards, transfer pricing also represents an opportunity. We believe transfer pricing can be a tool to help manage your tax exposure, maximise business opportunities and, where appropriate, identify your optimal tax structure. This will form a key part of your tax governance processes.
Whether your group is expanding internationally for the first time or implementing a new transaction flow, it is essential that your approach aligns with the arm's length principle.
We analyse transactions in detail and provide design recommendations that consider not only the principles set by the Organisation for Economic Cooperation and Development (OECD), but also related tax issues eg customs duty, withholding taxes and indirect taxes, enabling you to make informed decisions about the best model to implement.
Although often viewed as a compliance exercise, transfer pricing documentation can also showcase the group’s supply chain and transfer pricing policy in the best way possible to tax authorities.
Our approach is flexible, efficient and centrally managed, while allowing for localisation where necessary to ensure that local requirements are met.
We support all documentation needs, including Master Files, Local Files, Local Forms, Country-by-Country (CbC) reports, and benchmarking studies.
Once you establish an appropriate transfer pricing design, you must ensure it works effectively day-to-day.
We support you by reviewing calculation methods, assessing the approach to recharges and ensuring operational documentation (eg operating manuals, legal agreements and invoices) reflects actual transactions. When needed, we collaborate with our technology teams to connect your financial data with your recharge calculations and identify automation opportunities to streamline processes.
Transfer pricing enquiries can take several years to resolve, taking up significant management and adviser time. We can help manage these enquiries by pinpointing the key issues and helping you reach a conclusion at the earliest opportunity.
We also support proactive engagement with tax authorities through Advance Pricing Agreements (APAs) and Mutual Agreement Procedure (MAP) applications, helping you secure beneficial multi-year agreements that cover your intercompany transactions.
When UK companies borrow funds from related parties, such as other group companies or private equity (PE) investors, they must show they’re not thinly capitalised to deduct interest costs.
We have extensive experience in helping taxpayers demonstrate an arm’s length quantum of debt and interest rate to support the amount of interest deducted in their tax return. We can prepare a report to back up the tax return or, if required, negotiate an Advanced Thin Capitalisation Agreement with HMRC.
Transfer Pricing Manager
The Transfer Pricing Manager module within RSM Tax InSight (our proprietary tax management platform) provides the technology tools to further support the management of your global transfer pricing activities, including documentation, compliance and risk. Transfer Pricing Manager’s flexibility means that we can work with you to define project stages, set timelines and designate responsibilities in a way that reflects the reality of your transfer pricing model.
We are also authorised technology implementers for a range of bespoke and off-the-shelf transfer pricing technology solutions, helping clients automate processes, enhance risk control and review and leverage AI.
Our combination of global reach and local expertise allows us to share our experience and advice with you in a coordinated way that aligns with your wider commercial objectives and tax profile.
To discuss transfer pricing further and learn how we can specifically help your business, please contact Paul Minness or Simon Taylor.