According to one global accounting firm, 63% of their multinational clients underwent a transfer pricing audit in the last year.  As regulatory agencies around the globe significantly increase their efforts in obtaining additional tax revenues, the question is no longer if a multinational will be audited but simply when.

In any transfer pricing study at Parro International we have two highly focused goals: 1) minimize controversy with taxing regimes and 2) enhance business operations by informing you how to apply the benchmarking knowledge obtained in a transfer pricing engagement to improve your operation.

These two goals form the bedrock of our value added approach, just one more reason to use Parro International for your transfer pricing advisory needs.  

The three steps to a solid transfer pricing methodology involve:

• Assessment of functions: By taking a unique approach, we turn this required step into an advisory benefit for you to improve supply chain management. A tax perspective is only one part of the analysis. By benchmarking each of your functions in its respective nation to your global competitors, we can provide strategic business suggestions to enhance operations and profitability. This step not only often improves cost but identifies those operations that may be moved to other countries to enhance supply chain management.

• Identify market comparability: Our extensive market research in a variety of industries creates an extensive amount of information regarding the cost of services, administration, and supply of tangible inputs in the environment in which you operate. While our valuations provide information about allowable proper tax transfer prices it is also used to provide you with additional information on your organization's strengths and weaknesses in the global marketplace. What's more, we can obtain additional market information in a third party confidential manner so your competiors can answer questions that they may be reluctant to answer directly.

• Documentation: Documenting your policies and procedures for cross national transfer of goods and services is the third step to support defensible pricing.  An increasing number of countries now require advance documentation (prior to transfer transactions). Providing an efficient, multi-country approach to these often onerous requirements has been found to be well worth engaging our firm to manage controversy with government entities.

What's New:

 A new wave of countries are entering the transfer pricing enforcement field. China, Columbia, Israel, and Turkey are greatly expanding transfer pricing revenue enforcement activities.  Historical acceptance of the OECD's arm's length principle is being subjected to divergence in interpretation and implementationof these principles.

New Zealand, Canada, and the UK are increasing resources and expanding the focus and sophistication of their transfer pricing enforcement programs.

These factors can catch a multinational company offguard.