Compliance within the transfer pricing discipline is about meeting all guidelines and regulations, both national and international. More and more countries are implementing regulations for transfer pricing documentation. For your company, this can mean an increase in the compliance burden. Documents that form an important part of this compliance burden are the master file, the local files and the country-by-country report.
QG’s 4-step process: how to manage the compliance burden efficiently and mitigate risks
To properly manage the compliance burden and determine the compliance strategy, we suggest a 4-step process:
- Determine your overall tax risk strategy
- Determine the level of compliance you wish to achieve: distinguish between formal compliance and material compliance
- Determine which type of documentation process suits your company
- Draw up a priority list and obtain buy-in from stakeholders
The compliance strategy
Defining a compliance strategy is a process that takes time and costs effort. Determining a compliance strategy is important because of multiple factors. For example, it may not be feasible to pursue the highest level of compliance due to limited resources. You may have to make choices, so it is important to determine your optimal level of compliance. The level of compliance that suits your company will largely depend on the company’s risk strategy. Other things to consider are the various options for preparing transfer pricing documentation. The final factor in the process that is important is to create a priority list and timeline that includes deadlines and budget required.
How can Quantera Global support your company?
At Quantera Global, we work together with you to determine the level of compliance that best suits your company. We take into account your risk appetite, how you wish to structure your overall transfer pricing documentation, which files need to be prioritized and how to best organise the different roles in preparing the documentation (yourself, colleagues, external advisors like us and whether software is useful). If your company needs support with transfer pricing matters or compliance strategy, our advisors are happy to help. After our support, your company will have a proper compliance strategy, based on the risks and opportunities for your company.