Compliance Factory TP Compliance Season – documentation, benchmarks and compliance risks

As another season for the annual transfer pricing (TP) documentation compliance and reporting arrives, tax authorities in many countries intensively issued announcements to remind tax payers to strictly prepare the TP documentation for fiscal year 2019 in accordance with the local specific requirements.

Depending on the specific transfer pricing method applied, TPA has access to all the necessary financial databases to provide a full range of benchmarking analysis and financial data to determine appropriate arm’s length outcomes.

CUP/other method

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TNMM/RPM/CPM method

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Quantitative value chain analysis 

From a holistic standpoint, TPA applied statistical principles to conduct various quantitative analyses on the financial data of many global top-ranking companies in different industries. These quantitative analyses revealed a series of key value drivers (key financial indicators) for each of the specific industries. These key value drivers are derived from publicly available financial information, therefore, they are reliable and reasonable to be applied in benchmarking the profitability of specific industries. Our existing quantitative analysis per industry can be found below.

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Existing benchmarks

From year to year, TPA has performed a large number of benchmark analyses for various industries with respect to various function profiles. These benchmarking studies are readily available to assist multinationals to determine arm’s length outcomes in previous years. Below are some of our available benchmarks per function. Please contact us in case you are interested in finding any specific benchmarks for the past years.

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Compliance risks

The objective of TP documentation is mainly to help tax authorities 1) to evaluate the content and quality of the TP report (e.g. reporting of management structure, organizational structure, financial performance, functional analysis, intangible assets and comparability analysis etc.) and 2) to discover any substantial issues in related party transaction arrangements (e.g. long term losses, large number of transaction types, functional profile significantly deviates from value chain analysis, transaction with low tax jurisdictions etc.).

TPA has many years of TP compliance experience and can help taxpayers complete TP documentation in a timely, accurate and cost-effective manner, while reducing compliance risks.

For more information about the compliance regulations of various countries, please feel free to contact Ying van Galen Wang y.wang@tpa-global.com

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