Articol de: Nilanjan Nag, Transfer Pricing Manager, PKF Finconta
The benefits of Transfer Pricing management
Greater transfer pricing risk in the current global environment is accompanied by greater opportunities for effective tax management and planning. The first step is to use global transfer pricing management. There are four key advantages to adopting the global approach to transfer pricing.
- Consistency – Given that different tax jurisdictions have different interpretations of the arm’s length standard, adopting a global approach allows a multinational company to frame each local transfer pricing study within the context of the overall global transfer pricing strategy thereby avoiding the risk of inconsistent transfer pricing reports.
- Cost effectiveness – Strategic global transfer pricing analysis affords firms the opportunity to reap economies of scale that maximize consistency and minimize cost compared to separate localized efforts.
- Certainty – Undertaking a global transfer pricing analysis allows a firm greater certainty in risk management of tax costs.
- Improved performance measurement – In many cases, transfer pricing policies which are not arm’s length adversely influence the measurement of performance of different business units on each end of a revenue stream.
Opportunities in the strategic approach of the Transfer Pricing
In practice, good faith application of the tax laws and regulations requires an investment in time and effort. To solve the transfer pricing problem, a company must understand its value drivers and economic contributions made by the related members of the group, as well as how these value drivers differentiate the company from its competitors.
In addition, a company must identify and value its intellectual property and determine how well that intellectual property is exploited throughout the world. With information on infrastructure gained from a principled global transfer pricing approach, companies can incorporate transfer pricing to operational and financial strategies. The activities undertaken to effectively manage transfer pricing compliance act as a springboard to earnings opportunities.
Transfer pricing tax planning plays a key role in structuring cross-border operations and investments. Transfer pricing offers a methodology for the strategic location of economic activity in the context of global tax planning. By identifying functions and risks which can be in tax favored jurisdictions, transfer pricing can play a key role in minimizing worldwide taxes and thus increase earnings.
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