Corporate transfer pricing has become a key issue for any international business with internal cross-border services and transactions. There are tax and regulatory implications to getting your Head Office IT team to setup your regional offices, or for your Head Office HR team to manage your local hiring.
The tax rules related to transfer pricing documentation are complicated, and tax authorities are increasingly proactive in scrutinising transfer pricing policies of businesses operating in multiple jurisdictions. Transfer pricing isn’t based on the prices of services in your HQ location, but on the prices in your subsidiary’s country. And this is where it can get problematic.
Auditing transfer pricing activities can be time consuming and stressful, but the penalties for breaching strict tax rules can be significant – in both monetary and reputational terms.
To add even more complexity to international transfer pricing, as each country has different tax regimes, global transfer pricing must be treated slightly differently for all your subsidiary locations.
Auxadi can help.