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tax advisory

Transfer pricing

Are you seeking assistance in the identification, assessment and adoption of practices that are in congruence with transfer pricing rules and regulations?
 
Transfer pricing is one of the key aspects of global trade with multinational companies. Keeping abreast of transfer pricing rules is an absolute necessity. With globalization, the tax authorities in each jurisdiction are constantly developing measures to protect and increase their jurisdiction tax base. They will allocate ever-growing resources to enforcement of their transfer pricing laws, which means the task of setting transfer prices for inter-company transactions is becoming more complex and fraught with risk. This situation increases the challenges for multinational companies. Global companies must work harder to avoid scrutiny from various tax authorities - even potential litigation.
 
KNAV encourages its clients to maintain an appropriate record of global transactions through adept documentation requirements and provides assistance to meet this objective.
 

Enhanced level of scrutiny

Escalating documentation, strict penalties, rampant audit activity and a focus on corporations ‘paying their fair share’ have all increased the need for companies to focus on this aspect of their operations. Never before have businesses faced so much scrutiny over their transfer pricing policies. The rules are complex and onerous and are only expected to intensify with the OECD’s work on base erosion and profit shifting (‘BEPS’).
 
In the USA, the Internal Revenue Service (‘IRS’) has raised its review of cost-sharing and the transfer of offshore intangibles to a Tier 1 issue. This results in an automatic audit and examination. The IRS’s increased scrutiny has been further demonstrated when it issued a directive to IRS personnel to use the unspecified methods such as the market capitalization method, income method and the acquisition price method for the purpose of examining transfer of intangibles.
 
KNAV P.A. helps you with transfer pricing planning, documentation and execution/implementation.
 

Transfer pricing planning

It is critical to align tax strategy with your business goals and market developments. This plays a vital role in managing your overall tax burden.
 
KNAV P.A. helps you develop and implement strategies that:
 
  • Clearly identify tax-planning opportunities that are pertinent to your business operations;
  • Identify options for transfer pricing solutions;
  • Identify and address tax implications relating to supply chain restructuring;
  • Ascertain legitimate means of minimizing effective tax rates;
  • Mitigate impact of business changes on a company’s transfer pricing risk profile; &
  • Control the risk of transfer pricing adjustments and associated interest and penalties.
 

Transfer pricing documentation

Tax authorities in various countries are imposing stricter documentation on transfer pricing process. Revenue authorities lay more focus now on transfer pricing issues.
 
Developments in the context of BEPS initiative significantly expand the documentation requirements for global companies.
 
Our approach is designed to give your company an effective transfer-pricing regime:
 
  • We help you to manage risk within the current environment of transfer pricing regulations, with an objective point of view to provide consistency when analyzing and documenting transactions between related parties;

  • We help you locate all of the cross-border services and the benefits received and provided for the purpose of documentation and a cross charge;

  • We stay on top of inter-company finance transactions such as loans, guarantees and foreign exchange, debt instruments that need to be appropriately analyzed and documented; &

  • We ensure that you have matched your transfer pricing practices to your transfer pricing policies.
 

Transfer pricing implementation/execution

Execution issues have to be addressed across the entire transfer pricing lifecycle, from strategy and planning to implementation and documentation.
 
KNAV P.A. provides advice on implementing policies & procedures so as to effectively set, monitor and document inter-company transactions.
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