Transfer pricing pertains to the prices established for transactions among companies in the same corporate group but situated in different countries. These transactions involve the transfer of goods, services, financial assets, or intangible assets and are subject to taxation in each country of operation.
Pricing transactions between related parties is a complex issue influenced by various factors such as tax rate disparities, local market conditions, and intellectual property value. As a result, the MMA team is having professional tax advisors and transfer pricing specialists to ensure that your transfer pricing practices comply with local regulations and best practices.
Arm’s Length Price
The concept of arms’ length price has been defined under Section 92F of the Income Tax Act. The use of arm's length pricing is intended to ensure that related parties do not engage in price manipulation to avoid taxes or shift profits to low-tax jurisdictions. By using arm's length pricing as a benchmark, tax authorities can assess whether the prices charged in related-party transactions are appropriate, and can adjust them if necessary to ensure that taxes are paid in the appropriate jurisdiction.
Types of services we offer
How we help
1
Conduct a risk assessment:
- Recognize transactions between related parties.
- Evaluate the likelihood of not following local regulations and the arm's length principle.
- Analyze the associated risks to the transactions.
2
Analyze functions and risks of related parties:
- Gain a comprehension of the activities carried out by each related party.
- Evaluate the risks that each party is taking on.
- Analyze the assets that each party is utilizing.
3
Determine the most appropriate transfer pricing method:
- Select the transfer pricing method that is most suitable.
- Take into account the functions performed by each related party in the transaction.
- Consider the risks assumed by each related party.
- Examine the assets involved in the transaction.
4
Benchmark prices against comparable transactions:
- Gather data on comparable transactions.
- Analyze the data to determine the arm's length range of prices.
- Assess whether the prices charged in related-party transactions are within the arm's length range.
- Determine whether any adjustments are necessary to achieve arm's length prices.
5
Prepare transfer pricing documentation:
- Create a record of the analysis conducted and the findings related to transfer pricing.
- Demonstrate that the transfer pricing practices comply with local regulations and the arm's length principle.
- Maintain documentation that supports the selection of the transfer pricing method and the determination of arm's length prices.
- Keep records that demonstrate that any adjustments made were consistent with the arm's length principle.
6
Provide ongoing support:
- Offer continuous support to maintain compliance with local regulations and best practices.
- Update the transfer pricing documentation to reflect any changes in the business or regulations.
- Assist with transfer pricing audits if required, including responding to audit inquiries and providing documentation to tax authorities.
- Provide advice on transfer pricing matters to ensure that the business remains in compliance with changing regulations and standards.
These steps may vary depending on the specific circumstances and requirements of the related-party transactions and the relevant tax authorities.
Applicability
Transfer pricing applies to cross-border transactions:
Transfer pricing rules are applicable when a company transacts with its related parties, such as subsidiaries, affiliates, or joint ventures, located in different countries and to certain entities located within the country.
Transactions covered under transfer pricing:
Transfer pricing rules cover transactions such as sales of goods, services, and intangibles, as well as loans, guarantees, and other financial transactions.
Applicability to both goods and services:
Transfer pricing applies to both tangible goods and intangible services.
Applicability to multinational corporations:
Multinational corporations are more likely to face transfer pricing issues as they have multiple entities operating across different countries.
MMA Approach
1
Experienced professionals:
Our team comprises transfer pricing experts who have worked across various industries and jurisdictions, providing deep knowledge of the latest regulations and best practices in the field.
2
Comprehensive services:
We provide a range of services tailored to the diverse needs of our clients, including documentation, compliance, benchmarking, and audit support, all aligned with their business objectives.
3
Technology-driven solutions:
Our advanced technology tools allow us to analyze large data volumes, identify trends, and provide actionable insights for faster and more accurate results.
4
Client-centric approach:
We prioritize our client's needs, understand their business objectives and develop customized solutions that provide value-added services to help them achieve their goals.
5
Expertise in complex financial areas:
Our team has deep expertise in complex financial areas such as FEMA Compliance, Transfer Pricing, Business Valuation, ESOPs, and Internal Audit.
Kpis To Measure The Service Quality
Costs
- Actual vs. budget costs.
- Budget needed for completion vs. budget remaining
Team Productivity
- Lead time and Cycle time.
- Team Velocity
- Deployment frequency
- Time spent vs. time planned (for iteracions or implementation of partic features)
Customer Involvement
- Time spent by a customer's employees fulfiling a vendor's requests
- Time of delays with requirements elicitation sessions on the customer’s side
User Satisfaction
- Overall customer satisfaction score
- The team's proactivity (problem-solving Skills, ability to give advice)
- The team's reliability (fulfilment of promises)
- The team's responsiveness (including availability)
MMA Transfer Pricing Service - Q&A
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Q: What services do you provide related to transfer pricing?
A: We provide a range of transfer pricing services, including documentation, compliance, benchmarking, audit support, and planning. Our services are tailored to the specific needs of each client and designed to provide practical solutions that align with their business objectives.
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Q: How do you determine the appropriate transfer pricing method for a transaction?
A: We choose the most appropriate transfer pricing method based on the functions, risks, and assets involved in the transaction. We analyze comparable transactions to establish the arm's length range and determine whether the prices charged in related-party transactions fall within the range.
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Q: What documents are required for transfer pricing compliance?
A: The documents required for transfer pricing compliance vary by jurisdiction but typically include a transfer pricing policy, documentation to support the policy, and financial statements and transaction records.
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Q: What is the role of technology in your transfer pricing services?
A: We leverage advanced technology tools and platforms to streamline our transfer pricing services and deliver faster and more accurate results. Our technology solutions allow us to analyze large volumes of data, identify trends and patterns, and provide actionable insights to our clients.
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Q: What is the benefit of working with experienced professionals for transfer pricing services?
A: Experienced professionals have a deep understanding of the latest regulations and best practices in the field and can provide valuable insights and guidance to ensure compliance and optimize transfer pricing strategies.
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Q: How can I learn more about MMA transfer pricing services?
A: Contact us today to learn more about our transfer pricing services and how we can help your business succeed in the complex world of transfer pricing.
