What services do we cover in Transfer Pricing?

1. Transfer Pricing Risk assessment

Not all intra-group transactions are undertaken with a view to avoiding payment of taxes. We help MNEs manage their transfer pricing risks, strengthening their TP documentation and obtain greater assurance regarding their tax and transfer pricing positions in compliance with internationally accepted transfer pricing principles and local Transfer Pricing laws.

2. Transfer Pricing Planning

We help clients in developing and implementing transfer pricing policies for their proposed and existing intra-group transactions, document policies and outcomes which would help meet business and commercial objectives and at the same time reduce the risk of adjustments and penalties by tax authorities during audits. This includes:

• Developing the most optimum transfer pricing methodology for inter-company transactions
• Undertaking appropriate benchmarking studies to arrive at arm’s length price
• Developing the transfer pricing policy document to document the pricing mechanism
• Review of inter-company agreements from a transfer pricing perspective
• Supporting clients in implementation of transfer pricing policies and undertake periodic reviews to identify any gaps.

3. Transfer Pricing Documentation

A robust and comprehensive transfer pricing documentation is the first step and serves as the first line of defense when tax authorities challenge a company’s transfer pricing practices.

We help clients in meeting local and global Transfer Pricing documentation requirements. This includes:

• Local File/ Local Transfer Pricing documentation preparation in line with the requirements as per the local transfer pricing laws and the experience gained during Income Tax/ Transfer Pricing Audits
• Master File preparation in line with the requirements as per the local transfer pricing laws and aligned with OECD requirements
• Country by Country reporting, meeting notification requirements and assessing the exposure and transfer pricing risk for clients on account of submission of such data relating to global operations to tax authorities in different jurisdictions in which the multinational group operates.

4. Transfer Pricing advisory services

We assist clients in meeting their business objectives and advise them on their specific queries and pressure points including the following:

• Alignment of transfer pricing policies with commercial objectives
• Review existing inter-company arrangements and assess whether any tax efficiencies may be built into the documentation
• Supply chain transformation to ensure that transfer prices are in line with value creation
• Profit attribution to Permanent Establishments

International Taxation

With increased focus of tax authorities globally on BEPS implementation measures, disclosure norms (DAC6, CBC reporting) and the focus on taxation of digital business models, it has become practically difficult for multinational companies to determine and monitor the ever-evolving tax rules that apply during all phases of a cross-border project or activity. Tax regulations as well as administrative obligations and cost that may be relevant for a project, whether short-term or long term, need to be taken into account and examined in the offer phase for such project due to the impact they could have on the structure and execution of the project.

Entities need to have an agile tax strategy in line with their corporate goals in order to have a global competitive edge in today’s market. This includes having robust policies for cross border operations, local statutory/reporting requirements and planning of applicable effective tax rate to achieve efficiencies adherent to a company’s risk profile.

We assist with the determination of the tax consequences and other impacts for cross-border projects. We further help our clients structure their activities in the most efficient way to minimize tax expenses and risk exposure. We advise clients in identifying the relevant tax factors beforehand and include them into their project calculations. Subsequently, further support may be required in contract negotiations or contract reviews pertaining to tax
clauses and other tax relevant aspects of contracts may be given.

Some concerns company management might have in relation to a cross-border project or activity:

• How should they structure operating companies and where should the holding company be located (considering, tax efficiencies achieved, sustainable structure and future foreign investor attractiveness)?
• What are the tax residency rules and substance requirements in a particular jurisdiction?
• Are there any risks of creating a deemed permanent establishment in a jurisdiction?
• What are the tax costs and benefits of entering into a new market?
• What are the tax, accounting and regulatory requirements?
• How should operations be financed in tax efficient way?
• Are there any tax incentives available if the operations are established in a particular jurisdiction?
• What is the impact to the effective global tax rate considering a foreign subsidiary’s local income tax, foreign withholding taxes and the foreign tax credit in home country?

How services do we cover in International Taxation?

AAYU Management team of tax professionals have advised clients on the following areas to help navigate the complex global tax environment.

• Managing complexities of multiple tax systems and regulations
• Country and permanent establishment analysis
• International group restructuring
• Coordination of international tax reporting and global compliance management
• Group tax health checks
• Global capital structure planning, including efficient cross-border finance, repatriation and cash access planning
• Withholding tax implications for cross border transactions
• Entry/Exit strategies
• Transfer pricing planning and documentation support