When it comes to the determination of the prices charged between associated companies within the same group, Transfer Pricing is the one that deals with it.
Transactions between related parties should be at arm’s length (i.e. in market terms), from a tax point of view.
Any difference between transfer prices and arm’s length prices will require an adjustment of taxable profits for CIT purposes. Taxpayers are required to provide documentary support for their transfer pricing assessment, at request of the Tax Authorities.
1. Identification and understanding of transactions with related parties (types, volume, pricing mechanisms, contracts);
2. Analysis of the functions performed, risks assumed and assets used by the company to understand its business model and role within the group;
3. Selection of appropriate transfer pricing methodology for assessment of whether transfer prices are at arm’s length;
4. Identification of sources of information for external and internal comparables;
5. Review of existing group transfer pricing documentation to assess its applicability and appropriateness for use in the local company;
6. Assistance in preparation and updates of local transfer pricing documentation by documenting the results of the analysis;
7. Assistance in assessing local transfer pricing implications of the proposed group business restructuring;
8. Support during tax audits performed by the tax authorities.