Transfer pricing is the most important international tax issue for many businesses. Onerous new compliance laws are being introduced globally, but opportunities remain for non-aggressive tax planning.
Huge risks and opportunities make specialist advice in this complex area invaluable. RSM’s team of tax and economics experts, including former HMRC specialists, have advised hundreds of businesses and can provide you with the insight you need in reviewing your transfer pricing requirements.
What does it mean for your business?
Transfer pricing refers to the pricing of transactions between related parties and covers goods, services, intangible property and debt. If your business has any transactions between related entities, such as group companies, then you will need to consider transfer pricing issues.
The good news is that competition between countries to attract investment by lowering corporate tax rates means that transfer pricing can be used entirely legitimately to manage tax liabilities, providing the pricing reflects commercial substance and reality.
The bad news is that aggressive transfer pricing policies by some multinationals has led to the introduction of onerous new compliance rules in the UK that take effect from 1 January 2016. The changes are a direct result of the Base Erosion Profit Shifting (BEPS) action plans compiled by the Organisation for Economic Co-operation and Development (OECD) in response to perceived tax avoidance by multinationals. Risks of non-compliance include:
- harsh penalties;
- additional tax liabilities;
- reputational damage; and
- the potential for misstatement in financial reports.
The new rules mean that even businesses with existing transfer pricing strategies and compliance documents are likely to need to revise them. RSM can help to ensure you comply with these complex rules and also make use of the opportunities that arise.
Transfer pricing issues are closely related to the rules concerning the diverted profits tax and permanent establishment. Therefore, any business that operates in more than one country needs to consider these aspects.
Please do not hesitate to contact us to discuss how we may be able to help your organisation.