Case Study: Tax Savings with Transfer Pricing & Compliance Solutions
September 16, 2022
About the Client:
Aprio engaged an international supply chain logistics company that specializes in the warehousing space and is based in New Zealand. Since its inception, the company has grown to become one of the largest third-party logistics organizations in New Zealand, working with both B2B and B2C customers to provide supply chain consulting and strategy; picking, packing and project management services; and IT development to offer end-to-end fulfillment solutions.
The client had United States-based employees in one of its warehouses and struggled with managing the financial and accounting aspect of the operation from abroad. Additionally, the company did not have an advanced transfer pricing policy in place, nor did it have an optimal process for allocating income. Aprio explained to the client that a sustainable transfer pricing policy could help fulfill its business and tax objectives.
Aside from transfer pricing, Aprio also determined the client needed a knowledge base for US tax and accounting, as well as a qualified management team on-deck to navigate these issues.
Based on Aprio’s review of the client’s financial statements, the team determined that there were transfer pricing opportunities the client could seize to significantly maximize its cash flow in New Zealand. We also minimized US tax obligations based on the transfer pricing policy we helped draft.
Aprio worked hand-in-hand with the client’s New Zealand tax and business management advisors to help ensure that it complied with tax regulations in both the US and New Zealand. Aprio’s team reviewed and suggested viable solutions before ultimately providing the client with a sophisticated transfer pricing policy, which helped maximize profits and cash flow into New Zealand while achieving the organization’s business and tax goals.
The transfer pricing solution that Aprio designed helped the client achieve $150,000 in first-year US tax savings. The client will reap these savings on an annual basis, and the savings will continue to grow as the organization grows. Aprio’s analysis also found that the client did not need to pay dividends to repatriate funds back to New Zealand, thus avoiding a 5% dividend withholding tax and securing further cost savings.
This success story illustrates how transfer pricing can be an essential tool multinational businesses can use to manage cash flow and liabilities. A documented transfer pricing policy can also provide companies with valuable substantiation in case of an audit.
Aprio’s International Tax Team can help companies minimize risk and tax dollars paid by providing transfer pricing benchmarking, studies and policy development, helping ensure that intercompany transactions are structured correctly. Our team can also provide clients with US tax compliance support when doing business across borders.
If you are interested in partnering with Aprio to navigate transfer pricing or US tax compliance, contact us today.
About the Author
Specializing in corporate tax, U.S. business expansion, international tax compliance and advisory for SaaS and technology companies
Robert is an international tax partner with more than 27 years of experience providing international tax solutions to publicly and privately-held corporations on an array of international tax matters, such as foreign tax credit management and utilization, structuring foreign and domestic operations, international mergers and acquisitions, and export tax incentives. He also has many years of experience serving foreign-owned U.S. businesses.