Transfer Pricing

Transfer Pricing

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Transfer pricing is tricky business.

It’s the setting of prices on goods, services, and intangible property on transactions between entities within an enterprise.  Transfer pricing has also been a major tool for multinational corporate tax avoidance and U.S. and global rules are being overhauled to reduce pricing abuses.  More than 67 countries have transfer pricing regulations, many with penalty regimes including the U.S.

For your protection and peace of mind, our experts provide customized transfer pricing planning and documentation that eases audits, reduces risks, shifts the burden of proof to tax authorities and provides penalty protection.

You can transfer your worries elsewhere when you rely on LBMC’s experience, expertise and vast resources to protect your corporate interests.

Services

Transfer Pricing Services include:

  • US and certain foreign transfer pricing compliance documentation
  • Transfer pricing planning and risk assessment
  • Tax controversy services
  • Risk assessment and/or FIN 48 tax provision reviews
  • Japanese business services
  • International tax support through LEA Global

Compliance Issues

Some U.S. Transfer Pricing Compliance Issues include:

  • Governed by Internal Revenue code section 482 and associated regulations (transfer pricing regulations) and section 6662 (valuation misstatement penalty regulations) which require that all related party transactions be priced at “arm’s length” 
    • Product (tangible goods) transactions 
    • Intangibles 
    • Services (with new regulations fully effective as of 2008)
    • Loans & leases
  • Transfer pricing documentation is required and provides penalty protection if “contemporaneous” and complete (no penalty for not having documentation, but must produce it when requested by the IRS)
  • Misstatement penalties can be large – 20% or 40% of the additional tax owed
  • Penalty triggers are based on large dollar values, percentage differences from arm’s length amount, or certain percentages of revenue
  • Tax preparer standards (section 6694) establish the level of assurance needed for uncertain tax positions at “substantial authority” or “reasonable basis” with “disclosure;” transfer pricing is an uncertain position

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