A must-have Checklist for your Company’s Transfer Pricing Strategy
With the advancement of globalization, transfer pricing has become a critical part of doing business. A global trading hub like the UAE has also clearly outlined its transfer pricing regulations and requirements. A lot of companies in the UAE consider compliance as the primary driver of their TP strategy.
However, apart from meeting compliance, adopting an effective TP strategy in the UAE provides multinational enterprises (MNEs) with key benefits such as the optimization of tax payments and identifying new sources of cash flow.
If you want to determine how you can benefit from a robust TP strategy while complying with all the requirements, it is essential to identify your goals and know the steps to achieve them. Transfer pricing consultants in Dubai can help you with developing a robust TP strategy.
In this blog, we explain the five areas that should be on your checklist for your company’s TP strategy:
Gather key TP material references
These references can include organizational and personnel charts, financial statements for group members, related-party transaction summaries, TP reports, benchmarking sets, Intercompany agreements (ICAs) and price lists. This is not an exhaustive list. You may include other materials that are relevant to your company’s transactions. You can have more information from the best transfer pricing consultants in Dubai.
Identify your transaction types
TP applies to a myriad of transaction types such as the sale and purchase of tangible goods, licensing intangible property (including cost-sharing arrangements), provision and receipt of services, financial transactions etc. However, the type of TP analysis you need to perform depends upon the nature of the intercompany transaction.
Consider the documentation
The following points must be considered while preparing an accurate TP documentation:
- The TP documentation should include the extent and coverage of information
- You must consider the quality of the analysis and how comprehensive it is
- It should be consistent across jurisdictions, across multiple tax years, and with reference to other available documentation
- The TP policies must align with the actual economic activity
- You must put in place clear policies for documenting related-party transactions
Monitor and make the right adjustments
Every company should keep track of the progress of its TP strategy and must be able to react quickly to any deficiency identified. At this stage, it is advisable to hire the services of transfer pricing advisers in Dubai. Having the following elements in place will also help you in this process:
- Transfer pricing reports
- Benchmarking sets
- Procedures and Policies
- Detailed intercompany agreements
- Segmented financial information with adjustments booked
Prepare to defend your transfer pricing policies
The global market conditions can become volatile at any time mainly due to supply chain challenges, global conflict, and increases in inflation and interest rates. Such factors may sometimes force you to deviate from your existing TP policy.
If any such changes occur, companies must be able to justify them. This requires extensive analyses of the anomalies and TP documentation to clarify why you adopted a different approach for a particular situation.
Hire the Best TP Consultants in Dubai, UAE
Having the best TP strategy is highly critical for your company. However, most companies get confused about setting the right prices, how to carry out the calculations and adjustments etc. This is where the best transfer pricing consultants in Dubai such as Tax Gian can come in handy for you.
Our highly qualified tax professionals can help you decide what to adjust in your data, systems, personnel, and processes. Tax Gian is a brand of Jitendra Tax Consultants (JTC) and a part of the two-decades-old accounting firm Jitendra Chartered Accountants (JCA). Talk today with our TP advisers in Dubai to receive advice on how to align your TP strategy with your business.
