Impacts of the Covid-19 crisis on transfer prices
The current crisis has affected many sectors at the international level and raises questions in different areas, including taxation and especially transfer pricing.
Transfer pricing is considered to be the most important tax issue facing multinational businesses today. The escalating variety and volume of intercompany transactions are accompanied by increasing enforcement activities at an international level.
Guide on the impact of Covid on transfer pricing
The Covid-19 pandemic has far-reaching consequences, and will have serious implications on transfer pricing for many multinational enterprises (“MNEs”). This is particularly challenging for businesses to manage due to the current lack of guidance from the OECD.
While preparing and updating transfer pricing documentation gives rise to significant compliance costs, it can also identify many tax saving opportunities. Consequently, effective transfer pricing policies are integral to group tax and risk management strategies, particularly in the current economic climate.
What are the benefits arising from the effective use of transfer pricing?
Transfer pricing should not be perceived as a compliance burden. Organisations with an effective policy should be able to benefit from:
- improved cashflow
- better cost control and performance management
- a lower effective tax rate
An effective risk management strategy should provide certainty that transfer pricing exposures are managed efficiently and give assurance to directors, auditors and other stakeholders that the policy can be supported if challenged.
How Mazars can help you
We provide advice on all aspects of transfer pricing, including:
- Design your transfer pricing policy
We work with multinationals to devise and implement commercially sensible and robust transfer pricing policies.
- Compliance and documentation
Working closely with senior management enables Mazars to prepare a transfer pricing study which is not only compliant with local regulatory requirements, but works for your business. Our studies will act as a first line of defence in the event of a tax authority challenge.
Want to know more?
Marie-Hélène Revaz Executive Director - Geneva
