Transfer Pricing

Minimizing your footprint at arm’s length

A globally connected business environment allows businesses to increase brand recognition by finding new customers around the globe and gives them the ability to find more qualified suppliers as well. Globalization also helps companies expand across borders and opens the possibility of transferring income to lower-tax jurisdictions. US and international government authorities want to keep their income and are becoming more inventive when it comes to creating and enforcing regulations for transfer pricing. This affords them a continued flow of taxable revenue. Most countries enforce tax laws based on the arm’s length principle, as defined in the Organization for Economic Cooperation and Development Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. The guidelines limit how transfer prices can be set and ensure that those countries get to tax a “fair” amount. Proper setup and evaluation of transfer pricing methods may seem laborious, but it provides a method of protecting against double taxation, as long as the transactions are carried out between divisions in countries bound by bilateral tax treaties.

Comprehensive transfer pricing is important for maximizing value and minimizing risk. Companies do not want to overpay taxes, and businesses want to avoid double taxation or paying penalties and interests. Transfer Pricing can be a strategic tool in planning how and where your company will expand. Gravick Worldwide has performed numerous transfer pricing engagements and business reviews for organizations of all sizes. Sample projects may include, but are not limited to:

  • Develop transfer pricing strategies for the businesses and business partners in the supply chain
  • Set transfer prices for different tax or regulatory jurisdictions
  • Evaluate appropriate global transfer pricing policy
    • Traditional Transaction Method
    • Transactional Profit Methods
    • Advance Pricing Agreement (APA)
    • Mutual agreement procedures
  • Create Advance Pricing Agreements (APAs) and prepare for IRS negotiations
  • Check for compliance issues with transfer pricing regulations and look for opportunities to save taxes