Benefits of a Timely Transfer Pricing Study

July 2, 2024

Importance of Timely Local File Reporting

Having a Transfer Pricing Study and a timely local report is not only a legal obligation, but also a key business strategy. This document, required by the tax authorities, ensures that transactions between related parties are carried out at market values, thus avoiding possible penalties and tax adjustments. It also promotes transparency of internal transactions for corporate decision making.  

Legal Compliance and Sanction Avoidance

Having the Local File report within the deadlines established by the Tax Administrations allows companies to comply with current regulations and avoid significant penalties. The lack of a proper study can result in fines, interest and tax adjustments that seriously affect the financial health of the company.  

Optimizing Tax Efficiency

The thorough review of all related party transactions and the correct and proper analysis performed in a Transfer Pricing study allows for the identification of areas of improvement in the company’s tax efficiency. This can include optimizing the tax burden and identifying opportunities for more effective tax planning.  

Improving Transparency and Trust

The Local File is prepared every fiscal year to analyze the company’s behavior with respect to the operations carried out with related parties at the end of the period. Therefore, having an updated and accurate report improves the transparency of the company’s internal and external operations. This not only facilitates tax audits, but also increases the confidence of investors, business partners and other interested parties in the integrity of the company’s financial management.  

Risk Reduction

The Transfer Pricing study acts as a preventive mechanism against potential tax disputes. Adequate and timely documentation helps to justify the pricing policies adopted and to defend the company’s position vis-à-vis the tax authorities.  

Call to Action

Don’t risk your company’s financial stability – make sure you have a Transfer Pricing study in place on time and comply with tax regulations! Contact TPC Group today and find out how we can help you optimize your operations and stay in compliance with the tax authorities.