Articol de: Nilanjan Nag, Transfer Pricing Manager, PKF Finconta
Alternatively, similar results may be achieved by entering co-development agreements with related companies in tax favored jurisdictions, known as „cost sharing arrangements”. Under a cost sharing arrangement, technology development is jointly funded and owned, regardless of where the development activities physically take place. Payments may be made for the use of proprietary assets or methodologies developed offshore. Fees can be paid into a finance company or other foreign holding company, where the foreign entity performs services for other members of the group.
If an offshore entity performs functions or bears risk, economic analysis can support the allocation of a portion of worldwide profits to these entities. Careful structuring and planning for the placement of functions and risks can minimize effective tax rates worldwide and increase earnings.
Of course, any transfer pricing planning must occur in the context of other international tax rules, some of which can severely limit the benefits of allocating profits to tax jurisdictions. The ability to gather information and effectively monitor processes often leads companies to modify or refine supply chain operations.
Operational restructuring presents clear planning opportunities to align tax and legal structures in the business operation. Transfer pricing should be a key element in achieving new operational business objectives. Tax planning strategies that influence the location of activities can also create opportunities for minimizing VAT and similar taxes, customs duties, and other indirect taxes because these taxes are triggered by the receipt of goods or services measured by the value of the goods or services.
The tax planning strategies outlined above offer examples of transfer pricing being used as an integral part in business strategy. For maximum benefits to be realized, transfer pricing needs to be part of early strategic planning rather than an after the fact consideration.
Conclusion
Transfer pricing has become an increasingly important tax issue for multinational corporations, as revenue authorities around the world have increased their scrutiny of transfer pricing transactions. As tax authorities have individually and not necessarily consistently interpreted the arm’s length standard, multinational companies increasingly have grasped the value of a comprehensive and proactive global transfer pricing management strategy. As companies use transfer pricing planning to increase earnings and reduce risks around the world, transfer pricing has transcended being simply the tax issue and is becoming a strategic business tool.
Foto: Pixabay
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