Transfer Pricing
“Transfer price, also known as transfer cost, is the price at which related parties transact with each other”, such as during the trade of supplies or services within a group of companies. Transfer prices may be used in transactions between a company and its subsidiaries, or between divisions of the same company in different countries.
- Transfer prices that differ from market value will be advantageous for one entity while lowering the profits of the other entity.
- Multinational companies will strategize transfer prices to shift profits to low-tax regions.
- remedy this, regulations enforce an arm’s length transaction rule that requires pricing based on similar transactions between unrelated parties.
- MNC UAE businesses will need to comply with transfer pricing rules and documentation requirements set concerning the OECD Transfer Pricing Guidelines.
- Transfer prices that differ from market value will be advantageous for one entity while lowering the profits of the other entity.
- Cross-border transactions between associated enterprises (international transactions) can be like the transfer of goods, services & intangibles.
- Transfer Price: amount paid or received by a person in a transaction with associated enterprises for the use of property or as consideration for services.
- Arm’s length price: price at which independent enterprises enter into a comparable transaction(s). The transfer price should not differ from the prevailing the market price for a comparable transaction.
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How Corporate Tax Consultants Can Help You?
We work closely with our clients to understand their business in-depth that how the value is created, assets used, transactions performed and risks borne by the related parties. We assist our clients in providing transfer pricing solutions that are implementable and operational, considering the facts and concerns of our clients in local GCC subsidiaries of foreign-owned multinationals and GCC-owned groups.
Our Transfer Pricing services include:
- Transfer pricing risk assessments
- Transfer pricing efficiency studies and review of operating models from a transfer pricing perspective
- Transfer pricing policy design
- Review of related party transactions
- Benchmarking analysis
- Preparation of OECD standard and local GCC standard transfer pricing documentation (Master Files and Local files)
- Attribution of profits to permanent establishments analysis