42 Transfer Pricing Wisdoms – Wisdom No. 1

According to a trustworthy report in Douglas Adams’ “A Hitchhiker’s Guide to the Galaxy” the figure “42” is the answer to the meaning of life, the universe, and everything. As transfer pricing clearly falls within the category of everything, “42” is the key to its mysteries. This column will give you the necessary guidance for your dangerous voyage through the transfer pricing cosmos. 42 basic insights, 42 ‘dos’ and don’ts to make your journey safer and entertaining.

Transfer Pricing Wisdom No. 1: Don’t panic!

Those not familiar with space travel might see some differences between interstellar journeys and intercompany pricing, but believe me, the similarities prevail: When you start doing transfer pricing you enter a parallel business universe full of black holes, unknown planets and strange phenomena.

At the beginning, you’ll find you’re entering a world governed by emperors whose first commandment is: “Do as if!” Your spaceship ‘Enterprise’ has to arrange all operations within your fleet as if they were made by spaceships that don’t belong to your fleet. This is difficult. You don’t really know how such other spaceships operate, maybe you’ve heard about them and probably you’d love to know how they are doing their business, but you don’t. However, the universal rulers give you some guidance: “Find out!” And they also let you know: “If you don’t, this is not the end of the world but it may be costly for you.”

Seems to sound reassuring … a bit … somehow–, though you might find out that if things go really bad, this could result in serious trouble for the ‘Enterprise’ and your fleet. But there is hope. The emperors give you a set of rules, how your “as-if-operations” should be organized. Fuzzy rules, contradictory rules, rules with gaps and some rules with almost no discernible meaning. But there are also clear rules, loopholes and some rather safe interstellar highways that help your fleet to avoid transfer pricing crashes on your voyage through the business universe. Your fleet must have good maps and navigation gear, the navigators must be wary. But it’s manageable. So: Don’t panic!

Soon:  Transfer Pricing Wisdom No. 2 = Keep it lean!