Transfer pricing is a key focus of the OECD’s Base Erosion & Profit Shifting (BEPS) project and has been publicly described as a device that may be used by multinational companies and their advisers to avoid paying taxes.
In general, it is important that companies regularly confirm their transfer pricing policies comply with applicable laws and regulations in form and substance, and even more so now, as we enter this period of enhanced scrutiny of transfer pricing.
• Transfer pricing policies: Where are the potentially most vulnerable points (e.g., continuing losses, valuation of transferred intellectual property)?
• Operating structures: Does income reflect economic activity (e.g., use and exploitation of intangibles)?
• International financing and organizational structures: Are the structures sustainable in light of BEPS?
Failure to achieve intended transfer pricing results can also lead to unwanted scrutiny by tax authorities in the context of BEPS. As a result, it is important that your company determine it has appropriate, Operational Transfer Pricing (OTP)-related controls and infrastructure (i.e., resources and enabling technologies) in place to help manage the intercompany process effectively.
• Operating structures: Does income reflect economic activity (e.g., use and exploitation of intangibles)?
• International financing and organizational structures: Are the structures sustainable in light of BEPS?
Failure to achieve intended transfer pricing results can also lead to unwanted scrutiny by tax authorities in the context of BEPS. As a result, it is important that your company determine it has appropriate, Operational Transfer Pricing (OTP)-related controls and infrastructure (i.e., resources and enabling technologies) in place to help manage the intercompany process effectively.
