Transfer pricing

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Transfer Pricing

Multinational organisations are operating in an environment of unprecedented complexity. The goal of Deloitte’s transfer pricing network is to help companies manage risks by aligning practical transfer pricing solutions with their overall global business operations and objectives, assist with strategic documentation to support their transfer pricing practices and resolve disputes efficiently. Deloitte has a well-earned reputation for quality and delivering results.

Transfer pricing advisory and documentation

Multinational businesses are expanding the volume of related-party transactions and continuously improving their supply chains. This, coupled with increased tax authority collaboration across borders, presents both risks and opportunities. Deloitte provides practical solutions such as strategic approaches to transfer pricing documentation requirements, which help global businesses to achieve their operational and international tax objectives.

Deloitte has a Global Transfer Pricing Center, that includes economists, tax professionals and MBAs who have on-the-ground international transfer pricing experience in Europe, the Americas or the Asia Pacific regions. This centralised global approach facilitates uniformity of reporting and eliminates internal inconsistencies which can arise from multiple service providers, thereby making the process more effective, efficient and easier to explain to the relevant authorities.

To deliver transfer pricing documentation services, Deloitte has a Global Dox Insight methodology. This is powered by TP Search Smart technology, streamlining the gathering and processing of data and information needed to make informed business decisions.

Dispute avoidance: Advance pricing agreements

Advance pricing agreements (APAs) allow taxpayers to achieve greater certainty via advance agreements on their transfer pricing methods with one or more tax authorities. Deloitte's experience with the APA process spans the development of the national programmes and this historical knowledge and insight combined with more recent practical experience helps us help companies to manage their transfer pricing issues – particularly the risk of double taxation – on a prospective basis.

Dispute resolution: Examination defense and mutual agreement procedure/competent authority

Often it is the actions and responses in the initial stages of a tax authority enquiries or interviews that affect the course or outcome of a transfer pricing examination. Accordingly, effective and efficient explanations of business transfer pricing policies include early involvement of an experienced global team that has practical experience of all levels of the tax authority process, from proposed adjustments by field agents, through Advance Pricing Agreements, administrative appeals, litigation, voluntary disclosure programmes and the MAP process.

Deloitte takes an integrated approach to resolving transfer pricing disputes in the MAP process. Our teams include transfer pricing MAP specialists from both countries in dispute teamed with professionals who specialise in local country requirements for indirect taxes, taxes imposed by local or state/provincial jurisdictions, international tax and interest calculations for late payment that invariably affect the outcome.

Country by Country Reporting (CbCR) assistance

Country by Country Reporting (CbCR) is part of the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan 13 which has been incorporated in the Revised OECD Transfer Pricing Guidelines, 2017. Deloitte assists clients in strategically determining the overall approach, constituent entities and associated tax jurisdictions of residence, business activity code selection, financial data sources, definition interpretation, data mapping and the CbC report / notifications preparation and filing assistance.

Deloitte has developed the CbCR matrix for its clients which is constantly updated to provide insights on the respective countries’ unique requirements and timelines. Deloitte’s cutting-edge technology tools facilitate gathering, monitoring and analysing CbC-required data across countries and entities on a regular automated basis with customised analytics. Further, these tools help with the generation of the actual CbC report in XML format for different jurisdictions.

Transfer Pricing Risk Assessments

Deloitte assists in reviewing of the taxpayer’s actual results for years that may be subject to examination and identify ways to improve their existing defense strategy such as, (1) preparing documentation when there is none, (2) preparing supplemental non-contemporaneous TP reports and audit defense documentation (such as loss-factor analysis, cost-benefit documentation) to address positions that the tax authority is likely to assert in an examination, or (3) representing taxpayers in tax authority voluntary disclosure programmes if there are material risks.

BEPS Contract Analysis

Intercompany contracts are the starting point that initially define the functions and risks undertaken by the related parties and their expected outcomes at the time of entering into a transaction. Without the clear articulation of the intended risk allocation and risk management responsibilities in a contract, tax authorities may rely solely on the parties’ conduct, which may result in more challenges from them, such as longer and more contentious transfer pricing audits and potential double taxation.

At Deloitte, we help in analysing inter-company contracts to identify significant risks and management and control and funding of those risks, including DEMPE activities relating to creation of intangibles. Accordingly, Deloitte assists in the determination of whether any changes to existing contracts or conduct would be helpful to support the intended allocation of functions and risk and characterisation of the entity consistent with BEPS.

Operational Transfer Pricing (Transforming the process and managing the change)

As a result of intensifying revenue authority scrutiny and many tax authorities’ desire to request and analyse data, it is imperative that tax functions not only review if their Transfer Pricing policies are fit for purpose, but also how these policies are being implemented within the business. Creating the requisite momentum for change can be challenging, but an expanding universe of Transfer Pricing-specific technology options is creating new opportunities to implement efficient approaches to Operational Transfer Pricing (‘OTP’).

Process automation ultimately enhances both clarity and consistency and helps tax departments to address increasing global compliance demands with confidence. We at Deloitte are ready to assist with your OTP concerns, including articulation of a policy, creation of a business case for change, identification of business requirements, evaluation of technologies, process optimisation, project implementation and organisational governance.

Value Chain Alignment

There is a global tax reset underway. Legislation and regulations are evolving rapidly and driving change to traditional approaches to managing tax and tax reporting. At the same time, commercial pressures are requiring companies to modify their traditional business models to operate more regionally or globally, to expand into international markets, or to adapt to new (and potentially disruptive) technologies.

Value Chain Alignment (VCA) is the process of integrating a multinational company’s operating model and global tax strategy and is designed to assist business leaders to make more effective decisions on an after-tax basis and create an efficient operating model poised for growth that is scalable and sustainable. Our VCA Transformation Methodology is structured into a set of Workstreams which flow through four phases (Assess, Design, Implement, and Sustain), providing a rigorous overall framework for an integrated business, systems and tax transformation.

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Sim Kwang Gek

Sim Kwang Gek

Country Tax Leader

Kwang Gek has more than 20 years of experience in providing tax and business consulting services for local and multi-national corporations in the manufacturing, construction, engineering, property dev... More

Theresa Goh

Theresa Goh

Transfer Pricing Leader

Theresa Goh is the National Transfer Pricing Leader of Deloitte Malaysia, with more than 30 years of experience as a tax professional encompassing both tax and transfer pricing matters. Based in Kuala... More