The Crucial Need for Global Transfer Pricing Services
The Need for Global Transfer Pricing Services
More and more successful businesses are expanding into other countries. With this expansion comes the need to reconfigure their supply chains to keep costs as low as possible and make their products available at all their branches. This is where global transfer pricing services become a crucial part of your accounting services.
Transfer pricing plays a large part in determining the profitability of your efforts in transferring parts, services and products to different branches of your company in different countries.
Different Rules for Different Countries
For every foreign branch you send a shipment to, transfer pricing is the service that determines the ultimate price or profitability of that shipment. This is because the moment your shipment crosses a border, it becomes subject to all the taxes, tariffs and regulations governing the commodity in the country you’re shipping to.
Companies that are expanding into multiple countries can face serious losses if they’re unprepared to account for these extra costs. They can also face fines if they’re not in compliance with all the documentation that may need to be provided.
Increasingly Complex Regulations
Many companies see that having sound transfer pricing services is crucial the more they expand and complicate their supply chain. Expansion creates a situation where the costs of an international supply chain must be considered as a whole to find its true value to a company.
At the same time, transfer pricing services are necessary to keep business operational without government interference or incurring fines for non-compliance.
There are increasingly complex sets of tax rules and government regulations for international trade. OECD requires a global transfer pricing service provider to maintain a transfer pricing master file, a local file and a report for every country the company is doing business in.
The master file gives the company a clear view of the costs of their international transfers. It also supplies information about the individual branch business activities and their geographical locations and provides an in-depth view of the company’s global supply chain.
The local file zeroes in on the business activities of each branch. It’s the document that contains the data used to satisfy the government tax and tariff authorities and country regulations. The company headquarters use the country-by-country report. The report shows the revenues, profits and taxes paid by each of the company’s branches.
Using this three-tiered approach to transfer pricing allows the company to satisfy the policies of each country. It also allows the company to have a clear picture of the profitability and expense of each inter-branch transfer in the supply chain.
Mazars is a Global Transfer Pricing Service Leader
Mazars can use the expert services of over 44,000 professionals in over 90 countries to define the most efficient way to handle transfer pricing in each country in which your company does business.
For quality transfer pricing services, make an appointment with Mazars in Bangkok. They’ll help your company maintain profitability while expanding its services internationally.