In today’s global economy, companies of all sizes transfer goods and services, fund operations, and leverage intangible assets among multiple countries. With ever-changing guidelines and various compliance requirements, the cross border, related party movement of physical goods, services, funding, intangible assets, and other unique transactions requires effective transfer pricing planning in coordination with global tax planning.
Effective global tax planning is a significant issue for global businesses considering expansion, supply chain optimization, and local country operating strategies. It takes a holistic approach to tax planning to ensure that other jurisdictions are not adversely impacted and that the most efficient and defensible tax strategy prevails when considering the impact across all jurisdictions.
The OECD’s Base Erosion & Profit Shifting (BEPS) guidance targeted increased transparency and a consensus redesign of international taxation for the modern economy, with significant focus on and impact to transfer pricing. The OECD's Inclusive Framework on BEPS has continued the evolution towards a more modern and relevant system of international taxation with a variety of anti-abuse and revenue raising mechanisms designed for countries to “get their fair share” of global taxation and ensure multinationals are not benefiting from so-called “double non-taxation”.
Weaver’s international tax team offers a range of services and support to businesses and individuals to help maximize the benefits of overseas operations and investments. Our participation in global affiliate networks gives us access to a full portfolio of services and resources for global companies and allows for local service delivery where our clients do business. Weaver’s global reach includes access to a coalition of knowledge and experience via extensive connections in the Americas, Europe, Middle East, India and the Asia Pacific Regions.
Our transfer pricing services include:
Transfer pricing advisory can help multinationals identify opportunities and risks, model scenarios and impacts, benchmark arm’s length outcomes, and appropriately value functions, assets, and risks, including difficult to value intangible property and complex financial transactions. Effective transfer pricing planning is key to managing global effective tax rate, to maintaining optimal supply chains and intangible property structures, and to establishing defensible transfer pricing policies and governance globally. Robust transfer pricing policies and methodologies can also help multinationals increase certainty and mitigate risk arising from the complexities of uncertain tax positions, financial reporting reserves, double taxation, controversy, and penalties.
Effective transfer pricing methodologies are a significant tool for globally efficient cash deployment and repatriation. Transfer pricing typically focuses on corporate income taxes. However, transfer pricing positions and potential adjustments can have significant secondary impacts to customs duties, state or provincial income taxes, value added taxes (VAT), goods and services tax (GST) / harmonized sales tax (HST), excise taxes, sales and use taxes, and more. Additionally, businesses that reasonably anticipate entering into a transaction will want to ensure they have appropriate intercompany agreements, transfer pricing methodologies, and transfer pricing documentation in preparation for due diligence to avoid unnecessary impacts to deal pricing, holdbacks, or delays in a deal closing driven by transfer pricing issues.
Weaver can provide transfer pricing planning, risk assessment, modeling, benchmarking, and valuation to help multinational businesses optimize tax outcomes, manage tax risk, and ensure they have defensible transfer policies in place. Well-developed transfer pricing policies will support organizational priorities such as cash management, financial reporting, supply chain optimization, intangible property (IP) planning, and transaction due diligence.
Countries worldwide have greatly increased the focus and reach of transfer pricing documentation requirements and international dealings reporting to comply with local tax regulations.
Master File, Local File, International Dealing Schedules, Country-by-Country Reporting (CbCR) and notifications, controlled foreign corporation (CFC) reporting, and other localized regimes create a significant burden. Challenges may include evaluating compliance requirements and corresponding penalty provisions and maintaining compliant documentation to support transfer pricing positions taken on tax returns. In jurisdictions across the world, various penalty regimes exist directly or indirectly related to transfer pricing compliance. Timely preparation of transfer pricing documentation and reporting offers the most effective means of mitigating transfer pricing controversy and penalty risk. For example, taxpayers meeting the contemporaneous transfer pricing documentation requirement are not subject to transfer pricing penalties in the U.S.
Weaver can assist businesses with navigating U.S. and foreign transfer pricing regulations and preparing compliant documentation in accordance with specific local country compliance requirements.
Audit and Controversy Support
Tax authorities globally are focused on transfer pricing as a high-risk area for tax base erosion, driving a significant increase in enforcement resources, transfer pricing audits, transfer pricing controversy, and adjustments to local tax due.
Double taxation caused by transfer pricing adjustments represent the most significant and fundamental risk in transfer pricing. The management of transfer pricing policies and compliance are critical in mitigating double taxation. Transfer pricing audits and controversy are on the rise globally as countries expand their focus and capabilities to audit transfer pricing issues. Transfer pricing audits can be time consuming, regardless of outcome, but transfer pricing audits that end in controversy can cause a significant burden on businesses in terms of time, effort, and fees incurred to mitigate double taxation. Relief may be available with treaty partners, but the cost benefit analysis of pursuing available avenues for relief can be prohibitive in terms of fees, length of process, and uncertainty of outcomes.
Weaver’s professionals can help prevent controversy as well as navigating the complexities of transfer pricing audits, controversy, penalties, and relief options.
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