Successful cross-border businesses use transfer pricing to optimise profit distribution across their subsidiaries. It is a challenging process involving strategic, operational and legal policy development, country by country, with robust documentation, transparent reporting and financial control.
The recent widespread introduction of trade tariffs will inevitably impact the profit strategies of many multinational businesses, so that re-assessing existing transfer pricing (TP) policy will be essential. What’s more, ongoing attempts by global tax authorities to simplify and harmonise transfer pricing rules means the regulatory environment seems to be in a constant state of flux. TP has never been more complex.
Working together
At UHY we have always recognised the value our TP specialists can bring to international clients. Our local knowledge is invaluable and because we work together often and know each other well, we are able to provide excellent TP solutions. TP requirements and tax authority examinations are increasing in scale and scope. In turn, UHY member firms have been building resources, investing in developing transfer pricing tools and expertise to help clients maintain best practice and achieve optimum outcomes without fear of fiscal audits or risking tax penalties. To consolidate UHY’s value as trusted advisors on TP, the network has established a global transfer pricing special interest group (SIG).
Donna Frye, Director of Transfer Pricing at US member firm UHY Advisors Inc., is the group’s chair. “Our SIG is an additional means to exchange knowledge and support clients with the most up-to-date thinking and advice. All our tax-certified member firms have access to the latest changes in regulation and we discuss technicalities, case examples and implications for client businesses. There are a lot of details to get right for putting together an effective TP position and staying compliant, and in my experience clients do not regret asking for expert help.”
Staying agile
Donna believes that agility is critical. “Moving financial risk between business entities in different countries within your trading group can have a dramatic effect on the appropriate pricing mechanism you require. For example, with new tariffs, your TP cost base directly impacts what you pay. Many businesses are having to re-evaluate their supply chain activity. They are assessing short-term mitigations but also longer-term TP strategies to minimise the risk from future tariffs. We’re keeping a close watch on this.”
Read the full story in Issue 20 of the UHY Global Magazine published by UHY International.
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