If your company does not have a formal transfer pricing policy in place, now might be the time to look into it – especially as more countries have found that they can generate billions of dollars in incremental revenues each year by tightening up transfer pricing policies.
In this month’s Financial Executive article Transfer Pricing Strategies and the Impact on Organizations, Brian Tully, VP and Head of ONESOURCE Transfer Pricing at Thomson Reuters, shares key strategies to creating an end-to-end transfer pricing process that will reduce tax bills, as well as the risk of an audit.
The right transfer pricing strategy and execution plan can save a company millions of dollars in taxes, while the wrong strategy can trigger penalties that are two or three times greater than the original tax. This risk is increasing with the wave of regulatory reforms. As a result, it is no surprise that transfer pricing compliance has become a top priority for global companies.
Here’s a snapshot of the 4 steps Tully says every transfer pricing tax department should take:
- Step ONE: Data – Identifying and Collecting Transfer Pricing Information
- Step TWO: Policy – Designing and Implementing Intercompany Procedures
- Step THREE: Pricing – Analyzing and Fine-Tuning Policies
- Step FOUR: Documentation – Preparing Required Paperwork
Want to get an edge on transfer pricing? Find out how to take an end-to-end approach HERE.