With changes in international tax environment, transfer pricing has become a complex area for many businesses. We can help you maneuver these ever-changing complexities, while helping you maintain your competitive edge.
Rapidly changing international tax environment
The Base Erosion and Profit Shifting (BEPS) Actions, issued by the OECD in October 2015, had prompted Hong Kong to issue Hong Kong's transfer pricing regulations in July 2018 followed by a series of Departmental Interpretation and Practice Notes (DIPNs) – DIPN 58, 59 and 60. The changes taken together are aimed at ensuring that multinational profits are taxed where value is created.
The onset of the COVID-19 pandemic has also brought with it new guidance issued by OECD on how to deal with transfer pricing issues arising from the pandemic.
Key recent themes to have emerged include:
- Transparency - Multinational Enterprises (MNEs) may have to face enhanced tax disclosure requirements for the entire group and these information may be automatically exchanged by tax authorities in different tax jurisdictions;
- Focus on substance – The focus of recent tax regulation and tax authority activity has been on aligning tax outcomes with value creation. As a result, MNEs with cash boxes, shell companies and limited function entities, will have to demonstrate commercial substance to take advantage of tax incentive regimes or to access treaty benefits; and
- Increased compliance - Enhanced reporting of related party transactions and significant documentation requirements like Local Files, Master Files, Country-by-Country Reporting.
Failing to manage transfer pricing effectively can lead to:
- Tax audits and reassessments, with the potential penalties,
- Costly and time-consuming dispute with tax authorities,
- Double taxation in multiple jurisdictions, and
- Reputational damage to brand and business.
How we can help
We can cater to all your transfer pricing needs at every stage of the business cycle, from the moment you setup your business/enter into a cross border transaction to when you decide to wind-up your business.
As part of the BDO Global network, we have a dedicated team of experienced transfer pricing professionals to assist multinational companies in managing transfer pricing risks, delivering robust transfer pricing solutions while identifying planning opportunities. Our professionals work to develop transfer pricing policies that are defensible, flexible, and congruent with your company's overall business organisation and global tax objectives.
Our service offerings include:
- Transfer pricing advisory & value chain optimisation
► TP risk assessment
► TP policy design or tax structuring
► IP valuation
► Value chain optimisation and business restructuring
- IPO/ Pre-IPO transfer pricing review
- Documentation & BEPS/ Country-by-country reporting compliance
► Hong Kong or China TP documentation
► Country-by-country reporting preparation or notification
► Authorised OECD Approach 'AOA' (TP for branches) documentation
► Covid-19 loss analysis and related documentation
► Group masterfile preparation or review
- Financing, debt pricing & thin capitalisation
► Debt/ equity analysis
► Financing and debt structuring
► Thin capitalisation or debt capacity analysis
- Transfer pricing implementation & compliance management
► TP health check
► TP policy implementation design
► Transfer pricing/ tax calculation and modelling
► Review of Intercompany agreements
► Legal entity monitoring
- Dispute resolution & APAs
► Dispute resolution
► Advance pricing agreements 'APAs'
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