Transfer Pricing

When doing business internationally, transfer pricing can be a complex issue to stay on the right side of - most countries operate transfer pricing regimes, but not all will have the same regulations.

Transfer pricing refers to the terms and conditions of transactions between connected parties, such as companies within the same group. Transfer pricing rules aim to ensure that transactions between connected parties are carried out at the same price as they would be between two independent parties in the same circumstances. This is known as the “at arm’s length” principle.

Under the UK’s Transfer Pricing tax regime, the Small and Medium Enterprise exemption means that certain SMEs are exempt from transfer pricing rules. However, complications can arise when a company exempt in the UK is doing business with a related company in a different location, which does not have an equivalent exemption or a double tax treaty with the UK. A double tax treaty is an agreement between two countries which prevents taxpayers, either individuals or businesses, being liable for tax on the same income in both countries.

Transfer pricing transactions

Transfer pricing will be an important consideration for your business if you carry out transactions including:

• Intra-group trading
• Intra-group financing
• Contract R&D and other intra-group service provision
• Business restructuring
• Management charges

How we can help

The international landscape is constantly evolving, as are the guidelines around transfer pricing. Governments and tax authorities around the world are increasingly focused on ensuring that multinational businesses are not exploiting the differences in tax regulations between the various countries they branch into.

Our specialist International Tax team can support you in optimising your global tax position while ensuring that your pricing policies are robust and adhere to the relevant regulations in every jurisdiction your business operates in.

We have the in-depth knowledge and practical experience to help you:

• Review transfer pricing requirements in all the territories in which you carry out business.
• Analyse the role of each entity in your business and consider intra-group pricing policies accordingly.
• Develop the necessary documentation to demonstrate that your transfer pricing model meets the required standards and regulations.
• Access specialist local transfer pricing advice through our Moore Global network.