The foundation of any good transfer pricing system is a robust design that takes full account of the commercial and operational framework of the business.
Our approach to design ensures that all relevant parameters are considered in the development of a transfer pricing model that works in tandem with your company’s accounting and legal framework and is supported by economic substance. The optimal design of a transfer pricing system will enable effective tax rate management as well as a significant reduction in the likelihood of an audit or tax authority scrutiny in the future.
We can assist you to identify the risks and optimise the opportunities associated with the design or re-design of your transfer pricing system.
Quantera Global can work with you to evaluate your current transfer pricing system and explore potential improvements that can reduce risk and/or compliance costs, and mitigate overall effective tax rates. As part of this review, we can perform scenario analyses to test and maximise benefits derived from any proposed business restructuring. Our approach aims to optimise the transfer pricing system within the operational and cultural settings of the business, so the system aligns with the economic substance and commercial reality of the business.
If the decision is taken to restructure the business operations for greater efficiency, we work with you to identify the functions, assets and risks that can be moved and advise on the associated transfer pricing, tax and commercial considerations and impacts. For example, in any business restructuring, it is important that the intangible assets are identified and if necessary, accurately valued in order to evaluate potential exit charges, as well as to assess the required return from these assets going forward. We can assist to address, evaluate, cost and manage other tax issues, as appropriate, such as the deductibility of royalty payments, withholding tax, GST/VAT/customs duties and capital gains tax on the sale of any intangibles associated with the proposed restructure.
Our design approach ensures that all relevant factors are considered in developing the transfer pricing system and that the revised business model is consistent with the economic substance, commercial imperatives of your business and your accounting and legal framework. Optimising the design of your transfer pricing system helps to underpin strategies to reduce overall effective tax rates and also minimises tax and transfer pricing risks in the event of future tax authority scrutiny.
The final step in the transfer pricing system design process is the effective implementation of the revised transfer pricing system. In order to counter challenges from the relevant tax authorities, it is important not only to design a highly effective transfer pricing system, but to develop and maintain comprehensive and current transfer pricing documentation, implement legal agreements for all related party transactions, ensure the accounting and transfer pricing systems are aligned, and all appropriate internal processes and controls are in place to manage the governance aspects. This holistic and professional approach will assist in reducing the risks of adjustment arising from future transfer pricing reviews and audits around the world.
Benchmarking is an integral part of any transfer pricing design (or documentation) process and is often the primary means of testing or evidencing compliance with the arm’s length principle.
Quantera Global has significant experience in performing benchmarking studies across a range of industries, transactions and geographies. Through our dealings with revenue authorities globally, we understand their expectations and have developed a best practice approach to benchmarking that meets the needs of all stakeholders.
By harnessing our extensive experience in performing benchmarking studies for multinational clients that satisfy the demands of local tax authorities, and our knowledge of the OECD Guidelines, we have developed leading processes and deliverables to meet our clients’ needs.
Through our Quantera Global offices we have access to industry standard databases, globally:
- Bureau van Dijk’s Osiris database for global coverage of listed companies;
- Bureau van Dijk’s Oriana database for Asia Pacific;
- Bureau van Dijk’s Amadeus database for Europe;
- Compustat database for North America;
- Bloomberg terminal for financial transactions;
- Company 360 database; and
- Royaltystat for determining arm’s length royalty and license fee rates globally.
We are happy to discuss requests for high volume benchmarking studies, prepared in a consistent and timely manner and reflecting significant volume discounts. Contact us today for a quote on single or multiple benchmarking studies.