It was late morning on Saturday. Romy was asleep in her buggy, and I was sitting in the patio outside, listening to the birdsong, and feeling very smug about my solo parenting skills. But beneath all that, I knew there was a reckoning coming: the inspection when my boss Xiaofang returned home to Chateau Sutton after a week’s absence.
It turned out that the inspection on Saturday evening was relatively painless, mainly due to the fact that Xiaofang had just got off a 12-hour flight from Shanghai. My major let-down, though, was our girls’ hair. I had managed to lose our only de-tangling hair brush half way through the week, and the tangles in our three daughters’ hair were beginning to intensify. Especially with Norah: she could have hidden a 12-pack of colouring pencils in her hair, and no-one would have noticed.
If you look after a multinational corporate group, and you know that its Transfer Pricing is not supported by appropriate intercompany agreements, you might have a similar uneasy feeling about possible tax inspections. If your group has a simple structure, you may as well get the intercompany agreements all sorted in one go – it’s much more efficient than doing it piecemeal. If it’s a more complex group, you’ll probably want to prioritise your efforts.
Here’s a list of factors you may want to consider in your prioritisation:
- Imminent or expected tax inspections
- Supplies which are fundamental to the group’s value drivers
- Supplies to and from countries in low tax and no tax jurisdictions
- Supplies to and from other high risk countries, including those which regard ICAs as essential to TP compliance
- Types of supply with the highest volume / value
- Supplies where the nature of the supply is unresolved (e.g. distributor vs provider of logistics services, royalty vs service charge)
- Supplies which significant regulatory / legal implications, such as processing of personal data, licencing of intellectual property, financial services regulated entities
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