Transfer Pricing

Transfer pricing is a term used to describe inter-company pricing arrangements relating to transactions between related business entities. These can include transfers of intellectual property, tangible goods, services, and loans or other financing transactions.

In recent years, transfer pricing has emerged as a critical success factor in corporate strategic planning and executive decision-making. More and more, companies focused on growth and market leadership are recognizing the important role, transfer pricing can play in minimizing the corporate tax burden, enhancing operational performance, reducing legal exposure and increasing cash flow. It is an international tax issue of significant interest and impact, and now is the time to get on top of its meaning and implications.

In response to these factors, tax authorities around the world have become more aggressive in the transfer pricing arena, introducing stricter penalties, new documentation requirements, increased information exchange, improved audit staff training and increased audit and inspection activity and specialisation.

This intense scrutiny implies significant risks for the unwary and the unprepared, particularly in a complex field such as transfer pricing where each transaction must be analysed under its own unique facts and circumstances. Our professionals can assist you in all phases of transfer pricing planning and in avoiding costly defence actions. We can work with you to develop an effective, integrated global strategy for managing the many complex issues involved with moving goods, services and other intangibles across borders.

ABK acts as the advisor to your company, especially in matters concerning the effective operation of your business in India. We provide you the appropriate solution after studying your business objectives and the nature of transactions that have been carried out.

The following step-by-step procedures explain our process :

• A fact-finding exercise is carried out in order to analyze the various functions performed by the organization and the possible risks that can be encountered by each activity.
• Select the appropriate method of transfer pricing and identify the parties who have been tested with the particular method.
• Conduct a survey based on the database available from various national and international sources in order to identify the companies that can be benchmarked for the selected company and perform a financial analysis on the basis of them.
• Prepare a consolidated report on the basis of the analysis and document it appropriately.