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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:
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.
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The results of a multitude of surveys indicate that transfer pricing is consistantly rated as the most important tax issue facing organizations that provide goods and services across national borders.
New US IRB 2006 34 changes the proscribed method for transfer pricing back office administrative services in the US. The Service Cost Method is now recommended. Market benchmarking may no longer be required for your back office controlled administrative cross border transactions saving you a great deal of cost and effort. Internal Revenue Bulletin 2007-3 covers Regulation 2006-34 New Transfer Pricing Rules for Treatment of Services Under Section 482 is effective for years beginning after December 31, 2006. Contact us for the plain English summary and to find out what this may mean to you.