What’s wrong?
Transfer pricing within the group may be inadequate for various reasons including:
- No intragroup pricing exists in circumstances whereby it is, in accordance with local tax laws, mandatory to charge connected parties for goods and/or services
- Intragroup pricing exists in circumstances whereby it is, in accordance with local tax laws, not mandatory to charge connected parties for goods and/or services
- Actual intragroup pricing is too high / too low
- The basis of intragroup pricing is unclear or not in line with applicable tax rules
- The necessary intra-group agreements do not exist or are insufficient
- Appropriate transfer pricing documentation doesn‘t exist or is insufficient / not in line with local requirements
Due diligence process
- Analyse the value chain, current TP policies and supporting documentation and determine, if it is in compliance with OECD standards, local regulatory standards etc. Document compliance with TP policies.
- Analyse the risks related to the TP policies of the business.
- Define new TP policies and documentation if necessary.