Transfer pricing is the setting of the price for goods and services transacted between controlled or related legal entities within an enterprise. Article 9 of the OECD (Organization for Economic Cooperation and Development) Model Tax Convention is dedicated to the ALP (Arms Length Principle). It regulates that the transfer price within a multi-entity company should be established based on similar transaction done between independent entities.
WHAT DO WE MEAN BY TRANSFER PRICING SERVICES?
As approximately two-thirds of cross-border transactions take place between associated enterprises part of the same multinational group, compliance with transfer pricing is a fact, which every multinational has to deal with. Pressure from international and regional organizations require full compliance with the arm’s length principle. The importance of such element is reflected in the circumstance that increasingly MNE groups rank transfer pricing as one of the highest risks to be managed, from a reputational as well as from a tax standpoint.
Thanks to our significant platform of multinational groups, we are constantly able to tackle the most challenging issues associated with the commercial and financial relations existing in transactions between associated enterprises. We have at our disposal access to the commercial and financial databases needed to perform a thorough comparability analysis.
WHAT DO WE OFFER?
TRANSFER PRICING PLANNING AND DOCUMENTATION
Ecovis transfer pricing professionals assist taxpayers with home country and foreign documentation requirements by preparing transfer pricing documentation reports that analyse the arm’s length nature of their intercompany transactions. This includes supply of goods, provision of services, as well as intercompany financial transactions. We can also assist multinationals with multiple foreign affiliates to prepare global documentation, including Country-by-Country reporting, meeting all of their documentation requirements in an efficient basis, which is compliant with international recommendations.
DISPUTE AVOIDANCE: ADVANCE PRICING AGREEMENTS (APAS)
Ecovis transfer pricing professionals assist clients with all aspects of defending their transfer prices before the tax authorities and with local audit teams. If an audit results in a transfer pricing adjustment, Ecovis helps obtain double tax relief through the tax treaty competent authority process. Ecovis also helps clients negotiate Advance Pricing Agreements (APAs) to obtain prospective transfer pricing certainty.
DISPUTE RESOLUTION: EXAMINATION DEFENSE AND MUTUAL AGREEMENT PROCEDURE/COMPETENT AUTHORITY (MAP/CA)
Ecovis works with clients to explore strategic opportunities to enhance global tax and treasury planning, by aligning the relationship between the taxpayer’s value drivers and income/cost streams to improve their effective tax rate (ETF). This can include supply chain and intellectual property strategies and global charges. Ecovis transfer pricing services help integrate operational and tax decisions in a way that allows clients to treat tax as another cost of doing business making strategic decisions on an after-tax basis.
BUSINESS MODEL AND SUPPLY CHAIN OPTIMIZATION
In light of today’s dynamic global economic environment and the potential for legislative changes, assessing a multinational’s global business model may no longer be an optional exercise. Ecovis team of transfer pricing professionals provides high quality, customized tax and business model transformation services.
WHAT DO WE OFFER HERE AT ECOVIS BEIJING?
Though China is not a member of the OECD, the Chinese tax authority has followed the recommendations by the OECD and adopts very strict local-flavoured transfer pricing laws and regulations. Related party transactions have been a focus, especially after its commitment into the BEPS (Base Erosion and Profit Shifting) Action. Even though transfer price was in the past more of a topic of concern for larger multinational companies, as a result of the globalisation and the continued growth of international trade, transfer pricing has also become an issue of increasing interest for small and medium sized companies.
Companies should take it very seriously and document their transfer pricing policies in China, in case any tax audit happens.
ECOVIS CHINA TEAM CAN OFFER THE FOLLOWING:
Contact us to learn more about how we can assist you to meet standards for transfer pricing documentation, reporting and dispute resolution – call our office at +86 10 6561 6609 or write us an email to firstname.lastname@example.org
Richard Hoffmann is a partner at ECOVIS Beijing China. Richard obtained an honors degree in law and worked in Germany, the United States, and China for various prestigious law firms prior to joining ECOVIS. In addition to being a member of the board of ECOVIS International, he is Supervisor for the China business of a respected German company and shares his extensive knowledge to students by teaching commercial law in China at SRH Hochschule Heidelberg. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV stations. Contact: email@example.com
Ecovis Beijing is the trusted tax and legal advisor to several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up for our Newsletter, give us a call +86 10-65616609 or contact us directly via firstname.lastname@example.org.