Transfer Pricing - Tax and Accounting Services
Robert Verzi, CPA
Partner, International Tax | Transfer Pricing Advisor
What is transfer pricing, and how can Aprio help?
Intercompany transactions make up roughly 33 percent of all the world's trade. This is a huge amount of global trade traffic, and it's introduced a big challenge for businesses worldwide: accounting for transfer pricing.
Transfer pricing refers to the rules and methods governing pricing transactions that occur between enterprises under shared ownership or control. Whenever different parts of a company transact with each other — i.e., trading parts and supplies between separate entities in different countries — the cost of these transactions is a form of transfer pricing.
Companies are always looking for ways to increase their efficiency in order to remain competitive and profitable. Many businesses look to minimize their overall tax liability by operating in countries with lower tax rates.
Unfortunately, this introduces new problems. When businesses change their structures and adjust their transfer prices, the affected countries suddenly lose a share of tax revenue. To mitigate such losses, these countries introduce transfer price adjustments. So, if a company restructures its worldwide operations without considering these variables, they could face significant penalties and double taxation.
This is why working with Aprio is so important. As one of the largest international tax, accounting, and business advisory practices in the Southeast, we're a leader in transfer pricing and can help your company manage international operations with minimal exposure to penalties and other consequences related to intercompany transactions and issues concerning tax jurisdictions.
What you get from Aprio's Transfer Pricing Services
Tax laws are constantly shifting. In light of modern transfer pricing practices, some regulations are even being totally reset. For example, the OECD/G20 Base Erosion and Profit Sharing project is an initiative that will permanently alter the tax landscape for global businesses. Recent changes to the U.S. Tax Cuts and Jobs Act have also added new tax concerns for enterprises.
If you're not aware of and flexible to these changes, you can be hit with crippling penalties. This is why Aprio's services are so critical.
We connect businesses with transfer pricing tax and accounting services to ensure internal trading is optimized for tax purposes, but we also provide ongoing support to help in the event of transfer pricing controversies. We can even alert you to new tax laws and changes that introduce risks to your company. Additional benefits of working with Aprio include:
- Multilingual support: We speak over 30 different languages, ensuring that our clients enjoy clear and accurate communications around the world.
- Optimized global tax strategies and reduced global effective tax rate: We know that transfer pricing is a unique opportunity to optimize your global tax strategies, regardless of the maturity or size of your operations. We can help you reduce your business's global effective tax rate.
- Risk mitigation: With our five-step transfer pricing study, we'll not only identify your current risk and calculate your exposure but also provide ongoing support in the event that you encounter an issue with transfer pricing adjustments.
Optimizing your transfer pricing practices is essential, especially following changes to policies such as the U.S. Tax Cuts and Jobs Act. These reforms often change variables such as the U.S. corporate tax rate while also introducing new taxes or modifying key definitions. Sometimes, these changes present totally new liabilities for companies.
Business owners with operations around the world are especially at risk since each nation is constantly revising its own tax laws. So, you need not only be aware of U.S. tax laws but all regulations that are in effect for each country where you do business.
This is important for all global businesses, from startups to long-running industry leaders. Aprio offers the following services to provide optimal transfer pricing solutions to companies at various stages of maturity:
- Transfer Pricing Benchmark: This service is ideal for startups. Aprio's proprietary transfer pricing benchmark analyzes the transaction data of comparable companies. Using this information, we can determine an appropriate transfer price that will satisfy the transfer pricing rules in whichever countries where you operate.
- Comparable Company Refresh: This service helps companies maintain benchmark data and documentation, guaranteeing that these records follow all industry and regulatory changes.
- Transfer Pricing Study: Our transfer pricing study service includes a transfer a full transfer pricing analysis that is sufficient for penalty protection purposes. We'll also prepare and submit the required transfer pricing documentation for all countries where you operate. This service is ideal for mature companies.
Contact Aprio for Help With Transfer Pricing, Accounting, and More
If you're worried about transfer pricing pitfalls, get started with a transfer pricing study. This unique process follows these five steps:
- Risk assessment: We conduct a risk assessment, analyzing all current pricing policies in each country where you operate.
- Exposure estimate: Based on the results of the risk assessment, we can determine your company's tax exposure.
- Strategic planning: Next, we develop and implement pricing strategies to meet your overall tax objectives. This includes working with your legal counsel to develop the required agreements between your companies.
- Documentation: We create documentation outlining the pricing methodology for all material intercompany transactions.
- Support: We stand by to support clients in the event of a transfer pricing controversy.
The United States has led the charge in the aggressive regulation of transfer pricing. In recent years, however, many of the nation's key trading partners have followed suit, adding new regulations and penalties to keep global companies from exploiting transfer pricing loopholes. Though these regulations have introduced significant compliance and reporting burdens, working with a partner like Aprio means you can still benefit from international transfer pricing without falling behind in terms of accounting and reporting.
Since 1952, clients throughout the U.S. and in more than 40 countries have counted on Aprio to build value, manage risk, and drive growth. If you're facing a transfer pricing challenge, let us help you turn it into an opportunity.