Thomson Reuters Checkpoint Catalyst has released a Topic on the U.S. federal transfer pricing rules to help multinational corporations and their advisors establish effective transfer pricing policies and manage transfer pricing risk exposure.
“Transfer pricing” refers to the pricing of transactions between related entities within an enterprise. Effective transfer pricing policies can offer tax saving opportunities to the extent tax rates differ across jurisdictions, but tax law prevents the use of intercompany pricing to inappropriately shift income attributable to the U.S. to other taxing jurisdictions by requiring that transactions with related parties be priced at “arm’s-length.”
Checkpoint Catalyst Topic #2001, Transfer Pricing: General Principles examines prevailing transfer pricing principles, including the arms-length standard, the concept of comparability in controlled and uncontrolled transactions, and the best method requirement for determining an arm's-length pricing strategy.
In addition, the topic provides guidance on how arm’s-length transfer prices should be computed for the full range of related-party transactions, including transfers of tangible goods, transfers of intangibles, services and financial transactions. It also helps multinational organizations and their advisors reduce an enterprise’s exposure to unfavorable U.S. transfer pricing-related adjustments, create defensible transfer pricing policies, and comply with documentation requirements.
“Cross-border transactions have generally become subject to heightened scrutiny by tax authorities, including the IRS, because of the perceived potential for tax avoidance,” said Salim Sunderji, managing director, Checkpoint, with the Tax & Accounting business of Thomson Reuters. “Establishing and maintaining formal transfer pricing policies that conform with the arm’s-length standard is essential to avoid double taxation, protracted tax disputes, and substantial penalties and interest on tax underpayments.”
The new Checkpoint Catalyst topic is a valuable resource for tax practitioners, corporate tax departments, and other advisers across a broad range of industries. It includes a comprehensive examination of the legal principles and authorities governing transfer pricing, proposed regulations on global dealing transactions, and the most recent court cases applicable to intangible transfers and cost sharing arrangements.
Checkpoint Catalyst is a collection of multijurisdictional analyses of specific tax issues and business transactions from a practical, workflow perspective, covering implications at the federal, state and U.S. international levels. Content includes practical examples, commentary, and embedded workflow tools. Checkpoint Catalyst also provides expert guidance on a range of other related subjects, including:
- Controlled Foreign Corporations
- Earnings and Profits
- Entity Classification/Disregarded Entities
- Intercompany Transactions
For more information about Checkpoint Catalyst, visit checkpointcatalyst.com.