All intercompany transactions of a multinational organisation must be identified, priced, implemented and supported. Devising the policy around your transfer prices systems requires careful upfront consideration to ensure it is efficient, effective and risk-managed.
Transfer pricing policy development is relevant to all intercompany transactions, including:
- Provision / receipt of services such as management services, sales support, contract R&D, back-office support, IT development etc.
- Sale / purchase of products that your company produces, processes or on-sells
- Use of intellectual property such as brandnames, know-how, processes, etc.
- Intercompany financing transactions such as loans, cash-pooling arrangements and guarantees
Developing transfer prices and the systems that support those prices requires an understanding of the corporate group and its business. Only once we have the full context in which intercompany transactions occur can their prices be appropriately determined. We work with you to understand your business, your risk profile and your transfer pricing objectives so we can develop transfer pricing policies that address the unique goals of your organisation. Policy development is particularly relevant for new transactions such as a merger, restructure, acquisition, sale or license arrangement.
Q – how are transfer pricing policies used?
A – A transfer pricing policy is usually manifested in a document that summarizes methodologies for pricing the sale/use of goods, services, IP, other assets and financing arrangements within a corporate group. It is the result of identifying, understanding, benchmarking and analyzing results and modelling the impacts of the group’s intercompany transactions. The policy document can be a tool used to educate internal finance and audit personnel, company management, as well as a communication tool for external financial statement and tax auditors.
To discuss your company’s transfer pricing policies, contact firstname.lastname@example.org.