Transfer pricing is widely considered the most contentious tax issue faced by multinational companies. It’s a critical factor when operating in multiple taxing jurisdictions. For a company to successfully manage its effective tax rate, careful consideration must be given to the various functions performed by a company in each of its locations.
Recent changes to the global economic environment have triggered a number of business restructurings and consolidations, which often impact existing transfer pricing arrangements. Governments are increasingly focused on raising revenues through taxation. As a result, more jurisdictions are ramping up their enforcement efforts — not only in developed nations but also in many emerging markets such as China, India, Russia and Brazil. Tax authorities are upgrading and increasing their staffing while placing greater demands on corporations in areas such as documentation. Meanwhile, the OECD is revising and updating key provisions of its transfer pricing guidance. Consequently, the number of regular tax audits focusing on transfer pricing issues has been on the rise, requiring significant effort on the part of multinational corporations which, in some cases, may not even result in a satisfactory resolution. As a result, companies must work harder in defending their transfer pricing policies and practices.
Implementing Practical Solutions
Thought Metrix can help your multinational team implement practical solutions to address transfer-pricing risks globally. Our transfer pricing professionals help you review, document, manage and defend your transfer pricing policies and processes – aligning them with your business strategy. Our talented people work with clients to build the proactive, pragmatic and integrated strategies that address the tax risks of today’s businesses and help them achieve their potential. Our multi-disciplinary teams work with clients on supply chain design, business restructuring, systems implications, transfer pricing, direct and indirect tax, customs and accounting. We can help you build and implement the structure that makes sense for your business, improve your processes and manage the cost of trade. We regularly work with European and U.S. multinationals and European and U.S. subsidiaries of multinational companies. If your company has cross-border intercompany transactions, our specialty is providing practical advice for managing transfer pricing audit risks on a global basis. Our suite of services include assisting accounting firms, law firms and other multinational consultants with transfer pricing advice for their clients. Thought Metrix can complement clients’ services seamlessly.
Consistency is Key
Thought Metrix is committed to explaining our clients’ transfer pricing approach in plain language to avoid raising suspicions with a confusing explanation of key facts or analyses. We believe that consistency is key, and we strive to ensure that documentation prepared for one jurisdiction does not contradict an analysis prepared for another tax authority. Above all, we keep it simple, since a straightforward transfer pricing approach is easier to administer, reduces audit risks and facilitates cash management strategies. Thought Metrix believes a proper transfer pricing strategy helps a company manage cash and does not disrupt day-to-day operations. Thought Metrix can help clients build and implement the structure that makes sense for their business, improve processes and manage the cost of trade. Our talented people work with clients to build the proactive, pragmatic and integrated strategies that address the tax risks of today’s businesses and help businesses achieve their potential.
Tax Strategy Optimization (TSO)
In light of today’s dynamic global economic environment and the potential for legislative changes, assessing a client’s global business model may no longer be an optional exercise. Thought Metrix’s Tax Strategy Optimization (TSO) team provides high quality, customized tax and business model transformation services. With our focus on helping clients integrate their operational and tax planning in a scalable and sustainable way, TSO aims to enable business leaders to make more effective decisions on an after-tax basis. TSO is an approach for creating value through business transformation. Our services include:
Transfer Pricing Planning
Aligning tax strategy with business imperatives and market developments plays a vital role in managing overall tax burden. Thought Metrix can help develop and implement strategies that:
- Align tax planning objectives with business operations
- Identify transfer pricing re-design options
- Contribute to the management of effective tax rates
- Mitigate business change impact on a company’s transfer pricing risk profile
- Identify strengths to deal with potential transfer pricing controversy
- Control risk of transfer pricing adjustments and associated interest and penalties
As clients contemplate business transformation and how to gain competitive advantage, Thought Metrix can help redesign business functions, implement new structures and re-engineer flows of goods and services, embedding tax considerations into the business change process.
Dispute Avoidance: Advance Pricing Agreements
Thought Metrix’s transfer pricing professionals assist clients with defending their transfer prices before the tax authorities and with local audit teams. If an audit results in a transfer pricing adjustment, Thought Metrix helps obtain double tax relief through the tax treaty competent authority process. Thought Metrix also helps clients negotiate Advance Pricing Agreements (APAs) to obtain prospective transfer pricing certainty
