Transfer Pricing (TP) refers to the prices agreed upon in transactions between related international companies, such as the sale of goods, the provision of services, financing or the transfer of intellectual property. TP has become one of the most important international tax issues faced by multinational corporations, regardless of their size. Globally, it has captured the attention of the tax authorities, who are trying to secure their fair share of tax revenues globally.
With the adoption of the BEPS action plan (Base Erosion and Profit Shifting), which seeks to avoid the erosion of the tax base and the transfer of profits, it is expected to lay the foundations of a modern international fiscal framework under which profits will be taxed where economic activities and Value Creation occur. For international companies, the risk of being challenged by their TP practices is growing fast.
Organizations that do not meet the required standards suffer the risk of incurring high financial costs in terms of taxes, interest and fines charged by the tax authorities. While penalties can be very high for organizations that do not meet the required standards, TP represents an opportunity. We believe that TP is a tool to help manage your tax exposure, maximize business opportunities and, where appropriate, identify your optimal tax structure.