Transfer Pricing refers to the allocation of profits between related entities. It relates to numerous types of transactions including but not limited to:
The performance of services between parties
The loans between parties
The sales of tangible property between parties
The transfers of intangible property between parties
The lease of real or tangible personal property between parties
As discussed at all recent G-20 conferences, Transfer Pricing continues to gain increasing attention from taxing authorities from all around the world with some taxing authorities viewing these strategies as tax shelters and levying criminal charges on individuals and companies alike. Countries have continued to revise and/or introduce new legislation with detailed requirements for taxpayers to adhere to and more importantly, document on a contemporaneous basis that their intercompany pricing agreements are at arm’s length. This mitigates the ability of companies to shift income from high-tax rate jurisdictions to low-tax rate jurisdictions.
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