Where do taxpayers go from here?
Navigating the choppy waters of international tax
Current developments and the survey responses indicate that taxpayers may need to reassess or reorient their priorities throughout the transfer pricing life cycle.
Our survey found evidence that companies are struggling to align their resources with sources of controversy, particularly in emerging market economies.
Potential actions include:
- To avoid unpleasant VAT and customs surprises, make sure that your transfer pricing practices take into account indirect tax implications.
- Pay more attention to how you implement and account for intercompany transactions, rather than concentrating exclusively on documenting your transfer pricing policies. Processes and outcomes matter and will be tested as much as underlying policies.
- Align your transfer pricing resources to respond to increased transfer pricing documentation requirements and controversy in rapid-growth markets that may have been lower priorities in the past.
- Preempt difficult technical disputes over marketing intangibles, location savings and the source and exploitation of customer relationships through more rigorous transfer pricing documentation.
- Bolster your transfer pricing defense by developing high standard documentation in a wider range of countries than ever.
- Be aware that your intercompany pricing may be affected by a broader array of enforcement mechanisms, such as permanent establishment provisions and anti-avoidance rules.
- Mutual agreement procedures are increasingly under strain. Be prepared to rely on other channels of resolution, including those you may not have considered to date, such as advance pricing agreements and arbitration.
- Keep in mind the reputational risk that the public debate over transfer pricing generates and engage in a dynamic way with internal and external stakeholders to minimize the possibility of unfavorable outcomes.