Transfer Pricing is considered the single most important international tax issue. Multinational companies maximize after-tax profits and manage risks through a well thought out transfer pricing policy and supporting documentation plan. The transfer pricing case studies below illustrate how WTP Advisors helps multinational clients successfully plan, implement, and defend transfer pricing policies and results around the world.
Transfer pricing is the pricing of goods, services, and intangibles transferred within related entities across borders. It matters because it determines where profits are reported and taxed.
The arm’s length principle requires that related-party transactions be priced as if conducted between independent entities, ensuring fair allocation of income and tax.
The OECD recommends methods such as Comparable Uncontrolled Price (CUP), Resale Price Method, Cost Plus Method, Transactional Net Margin Method (TNMM), and Profit Split.
Governments seek to combat profit shifting and protect tax bases. Transfer pricing audits ensure compliance with local rules and OECD guidelines.
Documentation includes a master file, local file, and country-by-country report (CbCR), providing transparency into global income allocation.
Intangibles like intellectual property are difficult to value, leading to disputes and stricter guidance under OECD BEPS Actions 8–10.
APAs allow businesses to agree in advance with tax authorities on acceptable transfer pricing methods, reducing disputes and uncertainty.
Transfer pricing adjustments can alter declared import/export values, impacting customs duties and VAT.
Technology, pharmaceuticals, and finance industries face heightened scrutiny due to the heavy use of intangibles and intra-group services.
By maintaining robust documentation, aligning operations with economic substance, and proactively seeking APAs or mutual agreement procedures.