Transfer Pricing

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What is Transfer Pricing?

Transfer pricing is a critical aspect of international business operations, involving the pricing of goods, services, or intellectual property transferred between interconnected entities. These entities typically belong to the same multinational group, often operating in different tax jurisdictions. However, transfer pricing principles can also be applied to transactions within the same jurisdiction when varying tax rates are relevant. The cornerstone of transfer pricing is the adherence to the arm’s length principle, which necessitates that these transactions be priced as if they were carried out between unrelated third parties.

Why Is Transfer Pricing Important?

In the world of international trade, a robust transfer pricing policy is paramount. The significance of transfer pricing extends to businesses planning to expand their operations overseas. Sound transfer pricing advice and strategies are crucial for maintaining compliance and mitigating risks.

Our Expertise in Transfer Pricing

Our specialist team is experienced in all aspects of transfer pricing. We will ensure that you receive comprehensive and practical support to help you remain compliant in this complex area.

Our services include:

• Risk Factor Review: We conduct a thorough review of risk factors, including but not limited to high-risk business models, consistent losses in low-risk entities, licensing payments to low-tax jurisdictions, and business restructurings.
• Transfer Pricing Documentation Requirements: Our team provides up-to-date guidance on the latest HMRC documentation requirements for businesses engaged in international trade.
• Transfer Pricing Methods: We offer expert advice on selecting the most suitable pricing method aligned with your entity’s functions and associated risks. Common methods include Comparable Uncontrolled Price, Resale Price, Cost Plus, Transactional Net Margin, and Profit Split methods.
• Exemptions from documentation rules: We assist in understanding and applying exemptions from documentation rules that are available for Small and Medium-sized Enterprises (SMEs), dormant companies, charities, and life assurance companies.
• Self-Assessment: Our team helps taxpayers confirm SME exemptions on tax returns to ensure full compliance with regulatory requirements.
• HMRC Engagement: We can act on your behalf by liaising with HMRC and handling any inquiries related to transfer pricing.

Transfer Pricing Advice that meets your Corporate Objectives:

Whether your business lacks defined transfer pricing policies or needs a review of existing ones, we can help. Our goal is to ensure that your transfer pricing arrangements align with the latest guidance and meet your corporate objectives.

For groups with established policies, we offer comprehensive reviews and provide recommendations to enhance compliance. Additionally, we have access to a network of local specialists through Alliott Global Alliance to coordinate transfer pricing reviews and documentation in multiple jurisdictions.