Transfer Pricing

Transfer pricing asks one question: would an independent party have accepted these terms? Every tax authority now treats the answer as the central audit issue. We start from the functions performed, assets used and risks assumed — not from a target margin — because the method only works when the analysis matches the reality of who does what.

OECD Guidelines and BEPS Action 13 set the documentation standard, but each country layers its own rules on top. We build the master file and local files once, to the stricter of the applicable standards, so the same documentation serves every jurisdiction.

CUP, resale price, cost plus, transactional net margin and profit split each fit different facts. We select the most appropriate method against the transaction, run the benchmarking, and document why the alternatives were rejected — because that is the first question an auditor asks.

Transactional net margin (TNMM) is the most used and most challenged. We benchmark against comparable independents, apply robustness filters, and report the interquartile range so the margin is defensible at either edge, not just at the median.

The master file describes the group; the local file describes the country's transactions; the country-by-country report shows where profit is earned and tax is paid. We prepare all three to a single consistent story, because a mismatch between the CbCR and the local file is the fastest route to an audit.

Filing thresholds differ by country and by revenue. We track who needs to file what and when, and keep the documentation current as the group changes.

An Advance Pricing Agreement fixes the method and margin with one or more authorities in advance, removing the largest source of dispute. We prepare APA requests and bilateral APAs where the group's footprint justifies the effort.

When a position is challenged, we defend the analysis at audit, pursue Mutual Agreement Procedure between the treaty partners, and support litigation where the facts warrant it. The same team that built the documentation defends it.

A functional analysis, a method selection memo, benchmarking studies, the master file and local files, the country-by-country report where required, and representation through audit and MAP. The deliverable is a margin position that holds in every country at once.