Understanding Transfer Pricing
Transfer pricing refers to the prices charged for goods, services, and assets transferred between different business entities within the same company. Setting the right transfer prices is crucial for multinational companies with operations in different countries.
Transfer pricing aims to allocate profits between these related entities based on functions performed, assets used, and risks assumed. The goal is to arrive at an arm’s length price that unrelated parties would have negotiated. This helps companies comply with domestic tax regulations in each country of operation.
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Why Work with Us for Transfer Pricing Services?
As a leading tax consultancy firm in Dubai, we offer specialized transfer pricing services tailored to your business needs. Our experienced team of advisors has in-depth knowledge of international tax laws and transfer pricing practices. We take the time to understand your business operations, supply chains, industry benchmarks, and transfer pricing methods.
Some key benefits of partnering with us include:
Developing a transfer pricing policy and documentation that withstands tax authority scrutiny
Calculating and recommending the most appropriate transfer pricing methods
Conducting benchmarking studies to substantiate international transfer prices
Advising on advance pricing arrangements with tax authorities
Representing your interests during tax authority audits and transfer pricing disputes
Providing oversight and compliance support for ongoing transfer pricing obligations
Transfer Pricing Methods
There are five main transfer pricing methods approved by the OECD for establishing an arm’s length price:
Comparable uncontrolled price method
Resale price method
Cost plus method
Profit split method
Transactional net margin method
We help identify the most reliable method based on your specific transactions and the availability of comparable data. Our analysis considers functional analyses, economic conditions, business strategies, and other factors with the goal of full transfer pricing compliance.
How Can Transfer Pricing Help Your Business?
Implementing appropriate transfer pricing policies has important benefits for multi-national companies:
- Minimizing global tax liabilities and avoiding potential double taxation
- Supporting international expansion into new markets
- Justifying resource allocation and funding arrangements between group entities
- Demonstrating that related party transactions follow arm's length principles
- Reducing transfer pricing disputes and penalties from tax authorities
With a robust transfer pricing system validated by periodic documentation, companies gain tax certainty while optimizing after-tax profits across borders. Contact us today to discuss how our services can help strengthen your transfer pricing compliance.
