Transfer Pricing Study
A Transfer Pricing Study (TPS) analyzes possible business transactions between your existing company in a high tax country and your new company in a low tax jurisdiction. Some tax havens offer business development as services to existing mainland companies, meaning you can receive tax cuts through legally transferring income establishing a business as a service provider offshore. Although this should be accomplished harmoniously with TPS, so you don’t get PTSD, when taxman decides to audit you.
Owning related businesses in different tax jurisdictions can be a juggle. So long as you cover your bases by getting a TPS and showing intent of compliance, you limit your exposure and risks as much as possible. TPS covers a variety of issues… it’s not a mere legal opinion, but a full length study on products or services, comparable market pricing, market fluctuations, labor costs, fair market value, arms length transactions through the use of comparables, etc. It’s an economic study of your business. The time it takes to complete the study, depends on the intricacies of your business, so be aware it may take a while to produce a TPS.
We provide Transfer Pricing Study based on the information / documents given by the clients. We further provide suitable tax advise and consulting on fixation of the Arm’s length price and selection of the most appropriate methods.
What areas does a Transfer Price Study include
Because every international company has its own dynamics, and some countries have little or no transfer pricing regulations, every transfer pricing study has to be performed case-by-case. However, there a few basic areas transfer price studies generally review.
- Current documentation
- Existing intercompany transactions
- Totalization agreements
- Documentation requirements for host and originating country
- Application of tax reductions and credits
- Current tax regulations