Over the last few years, there has been a surge of transfer pricing audits and that is not expected to change anytime soon. A decade ago, a few countries had formal transfer pricing documentation requirements. As of 2008, more than 50 countries worldwide have documentation requirements. Companies can no longer view transfer pricing issues in isolation. The issues are global. Tax authorities are sharing information. When examined, this information is being scrutinised by highly trained examiners. And when authorities respond they do so forcefully, imposing harsh adjustments and significant penalties.
This new environment requires multi-national corporations (MNCs) to take proactive steps to understand their transfer pricing arrangements and documentation requirements. Risks must be identified and addressed. Disputes and audits must be avoided, managed, and resolved. Together, these issues must be coordinated and aligned across jurisdictions before they develop into larger business concerns.
How PwC can help
PricewaterhouseCoopers (PwC) has developed a Global Dispute Resolution practice to assist your company in identifying transfer pricing risks, and avoiding, managing, and resolving transfer pricing disputes and audits in a coordinated manner. Our dedicated teams of experienced professionals in the areas of transfer pricing, tax dispute management and resolution, economics, litigation support, financial reporting, and industries are strategically located in countries conducting aggressive tax audits. Consequently, we are able to address difficult and complex transfer pricing audits and disputes under one roof.
Our services include:
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Tax dispute avoidance techniques
Companies need to know where their transfer pricing audit exposures exist. Sound policies and processes provide a defensible model and help safeguard against tax audits and disputes. We may conduct quality documentation and inter-company agreement review, analyse your organization from a strategic perspective to identify and reduce tax and penalty exposures as well as recommend implementation of "best practice" policies related to inter-company transactions.
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Tax audit management practices
Our services in this area focus on recommending the establishment of certain processes to manage transfer pricing audits and examinations that may reduce the risk of income adjustments and avoid escalation of more involved disputes. We may assist you in your strategic response to a host of taxing authority requests.
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Tax dispute resolution alternatives
Our Global Dispute Resolution practice can work with you to develop strategies and appropriate practices at both the global and local level that may reduce prolonged disputes and the likelihood of litigation. Many of our professionals come from academia, industry, and prominent positions within the government. This experience places PwC in a strong position to identify technical and factual issues, analyse findings, prepare presentations, and assist in the resolution of a dispute. Among other services, this may involve APA negotiations, including preparation of the APA requests, development of factual positions, and expert witness support, negotiating with revenue authorities, and presenting the case to revenue authorities. Also, Competent Authority negotiations, including preparation of competent authority requests, compliance and procedural requirements, managing expert witness and other factual support, and presentation of the case.
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Global strategic planning of tax audit and disputes
We may assist you in developing a global strategy for managing transfer pricing disputes and examinations in the future. Specifically, we may advise on the proactive use of APAs, among other approaches. Moreover, we will recommend strategies consistent with your goals to utilise foreign tax credits, separate country net operating losses, foreign currency positions, tax holidays, and other tax attributes.
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Tax risk management, analysis, and disclosure
Our professionals may analyse your transfer pricing methodology and assist in developing sound documentation policies and processes that may provide a rationale and defensible approach to safeguard against transfer pricing non-compliance penalties and other exposures. Our process includes a comprehensive examination of transfer pricing positions that may affect FIN 48 and other regulatory disclosures.
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