Transfer pricing
From transactions structuring to benchmarking, preparation of the TP documentation and advance pricing agreements
Free advice
Transfer pricing
TP services
- Plan
- Administer
- Defend
Why consider?
The most common misconception in transfer pricing is that only a TP documentation is needed for TP compliance. This misconception is a result of a ‘symptomatic’ compliance that has become common in practice. Under the ‘symptomatic’ approach, companies do not control the prices and only prepare the TP documentation. Where the prices deviate from the arm’s length level, the prices are manipulated to prove compliance with questionable adjustments and argumentation.
In practice, the tax authorities are aware of this approach and successfully identify non-arm’s length transactions. To achieve a genuine compliance, a company should be aware of the market prices before the transaction was effected. After all, only where you have a target you may achieve it.
As a part of the methodology and a TP function development, we analyse transactions and the group in general to determine appropriate methodology for analysis: how to determine, control and document the results efficiently, rapidly avoiding tax risks.
Why consider?
In a group with a large number of related companies, transactions and interwined processes where the TP processes never were a priority, in is common to see a duplication or a neglect to price setting. This significantly reduces operational efficiency and increases risks. Where this is the case, implementation of well-built TP controls across multiple teams, education and templating is a must.
Why consider?
An advance pricing agreement is one of the few examples of tax treaties in Russia that provides certainty in pricing for up to 7 years. The advance pricing agreement significantly reduces the risks of a tax adjustment, amount of documents for a TP compliance and thus a burden on a tax team.
As part of the service we analyse the nature of the transaction and the market, and prepare a full set of documents to be submitted to the tax authorities and provide an on-going support in interaction.
Why consider?
A Russian TP legislation does not explain a TP compliance, meanwhile fines and average ‘tax bill’ increases. In this environment, the value of expertise in transfer pricing and acquaintance with current market practice is key. At the same time sadly even an in-depth expertise is often not sufficient. The number of resources required for compliance is significant and increases annually – not every team may afford to hire a dedicated TP expert or allocate resources for TP tasks. Finally, reporting requires access to specialised databases, which account for a significant portion of compliance costs.
Our team specialises in transfer pricing compliance both in accordance with Russian and international rules. We have access to the databases and expertise to prepare a turnkey documentation. Two out of 20 major Russian audit and consulting companies engage us to provide TP services to their clients on a turnkey basis.
Why consider?
In a small team with a few controlled transactions, database acquisition cost may quadruple the compliance costs. Moreover, access to a database does not mean the benchmarking is ready – benchmarking requires skilled resources that may utilise the database. Without a sufficient expertise, the risk of error significantly increases, depreciating the savings.
It is therefore a market practice to outsource part of the analysis in similar circumstances. We perform benchmarking in ASTRA, SPARK, TP Catalyst, Bloomberg, SnP and other databases, we analyse both external and internal sources, develop financial models and perform valuation.
Why consider?
Having a fiscal interest, tax authorities often apply approaches that increase tax charges. One of the widespread approaches is a selective application of the TP methods, the sources of information (ICA data / internal sources of information), sample cherrypicking and etc.
Meanwhile, application of an aggressive approach is quite difficult where a company has strong reasoning and did a good homework. We have a deep expertise in transfer pricing and are able to significantly strengthen your negotiating position to reduce the amount of additional tax or avoid additional tax at all.
Why consider?
The most common misconception in transfer pricing is that only a TP documentation is needed for TP compliance. This misconception is a result of a ‘symptomatic’ compliance that has become common in practice. Under the ‘symptomatic’ approach, companies do not control the prices and only prepare the TP documentation. Where the prices deviate from the arm’s length level, the prices are manipulated to prove compliance with questionable adjustments and argumentation.
In practice, the tax authorities are aware of this approach and successfully identify non-arm’s length transactions. To achieve a genuine compliance, a company should be aware of the market prices before the transaction was effected. After all, only where you have a target you may achieve it.
As a part of the methodology and a TP function development, we analyse transactions and the group in general to determine appropriate methodology for analysis: how to determine, control and document the results efficiently, rapidly avoiding tax risks.
Why consider?
In a group with a large number of related companies, transactions and interwined processes where the TP processes never were a priority, in is common to see a duplication or a neglect to price setting. This significantly reduces operational efficiency and increases risks. Where this is the case, implementation of well-built TP controls across multiple teams, education and templating is a must.
Why consider?
An advance pricing agreement is one of the few examples of tax treaties in Russia that provides certainty in pricing for up to 7 years. The advance pricing agreement significantly reduces the risks of a tax adjustment, amount of documents for a TP compliance and thus a burden on a tax team.
As part of the service we analyse the nature of the transaction and the market, and prepare a full set of documents to be submitted to the tax authorities and provide an on-going support in interaction.
Why consider?
A Russian TP legislation does not explain a TP compliance, meanwhile fines and average ‘tax bill’ increases. In this environment, the value of expertise in transfer pricing and acquaintance with current market practice is key. At the same time sadly even an in-depth expertise is often not sufficient. The number of resources required for compliance is significant and increases annually – not every team may afford to hire a dedicated TP expert or allocate resources for TP tasks. Finally, reporting requires access to specialised databases, which account for a significant portion of compliance costs.
Our team specialises in transfer pricing compliance both in accordance with Russian and international rules. We have access to the databases and expertise to prepare a turnkey documentation. Two out of 20 major Russian audit and consulting companies engage us to provide TP services to their clients on a turnkey basis.
Why consider?
In a small team with a few controlled transactions, database acquisition cost may quadruple the compliance costs. Moreover, access to a database does not mean the benchmarking is ready – benchmarking requires skilled resources that may utilise the database. Without a sufficient expertise, the risk of error significantly increases, depreciating the savings.
It is therefore a market practice to outsource part of the analysis in similar circumstances. We perform benchmarking in ASTRA, SPARK, TP Catalyst, Bloomberg, SnP and other databases, we analyse both external and internal sources, develop financial models and perform valuation.
Why consider?
Having a fiscal interest, tax authorities often apply approaches that increase tax charges. One of the widespread approaches is a selective application of the TP methods, the sources of information (ICA data / internal sources of information), sample cherrypicking and etc.
Meanwhile, application of an aggressive approach is quite difficult where a company has strong reasoning and did a good homework. We have a deep expertise in transfer pricing and are able to significantly strengthen your negotiating position to reduce the amount of additional tax or avoid additional tax at all.
Why to trust us
Experienced experts with more than 10 years experience each
Only experienced employees (more than 10 years in consulting) work on your project. The people you see at initiation of the project will execute the project, not interns. We do not involve employees without experience in projects.
Working solutions
Our team has experience not only in advisory but also in implementation of advice. All experts have both industry and advisory background
Industry acknowledgement
Our specialists have publications in leading industry media: RBC, Economy and Life. They speak as experts for large experts communities of PNK, Interfax, Aktion Group and others
Cases
All cases
Our team
Meet our leadership team. Each subject matter expert has more than 10 years in tax advisory
