Transfer Pricing, in addition to being more than a tax requirement, can be strategic to boost the success and sustainability of your business. Aligning these policies with your business goals will allow optimizing resources, improving financial management, and complying with international regulations.
1. Definition of Strategic Goals
It determines how Transfer Pricing can contribute to your overall goals. For example, you might seek to optimize the tax burden, protect intangible assets, improve the competitiveness of a specific subsidiary, or ensure the efficient flow of resources among group entities.
2. Understanding Value Chains
It analyzes how intercompany operations generate value within the group. It identifies which subsidiaries perform key functions, manage significant risks, or own essential assets. This analysis should be reflected in pricing policies to remunerate each entity appropriately and/or respect the Arm’s Length Principle.
3. Design of Consistent Internal Policies
It develops clear and documented Transfer Pricing rules supporting your business model. These policies should be flexible to adapt to economic and regulatory changes. Conversely, they should always ensure that transactions comply with the Arm’s Length Principle.
4. Regular Monitoring and Adjustments
It periodically reviews transfer prices to ensure aligning strategic objectives and current regulations. Economic changes, such as inflation, cost structure, or the emergence of new rules, may require adjustments.
Aligning Transfer Pricing with business strategy reduces tax risks, strengthens your company’s competitive position, promotes better financial decision-making, and optimizes resource allocation within the group.
