The following article is part of a series of case studies which have been kindly contributed by Dr Harold McClure, a New-York based economist who has advised in the area of transfer pricing for many years. In an earlier paper on the application of the modified Resale Price Method (MRPM) for customs valuation purposes, I note:[1] Transfer pricing practitioners …

One of the things I love about attending conferences like TP Minds International last week, is that (as an adviser) you get insights into the real-life practicalities of managing TP risks, as opposed to just high level theory and crystal ball-gazing. One of the polling questions we asked on the panel session I hosted on TP audits was ‘Do you have …

In the ‘bad old days’ of TP, many advisers appeared to take a fatalistic view of intangibles and intellectual property: the economic analysis of IP ownership took place in its own separate silo, and no attempt was made to reconcile that with legal and commercial rights. The problem with this approach is that it results in an overall structure which …

One misconception that we hear time and time again from well-meaning TP advisers is the recommendation of putting variables such as mark-up percentages in an appendix to an intercompany agreement, ‘so that they can be updated easily.’ The idea is apparently that the relevant page can just be ‘swapped out’ on an annual basis. It doesn’t take …

Accurately scoping out intercompany transactions is the essential first step in creating, reviewing or updating intercompany agreements for TP compliance. Unless this is done correctly, the resulting agreements are likely to be gibberish, and your TP objectives may fail for lack of legal implementation. As I’m sure you know, the need for alignment …

As part of our series of checklists for creating, reviewing and updating intercompany agreements, we’ve published a new checklist covering business support services (including head office, back office, strategic management services, marketing services and other services not ‘resold’ to third parties). You can download it here. If you have …